I Like Big Books, I Cannot Lie
Yesterday evening, in London, in the shadow of a six foot replica book, a new ground-breaking tome was unleashed on the world: System1, Unlocking Profitable Growth.
A whirlwind summary of the content was entertainingly delivered by the authors themselves – John Kearon, Tom Ewing and Orlando Wood. To prove what a page-turner the book truly is, the six foot version had each of its pages (one addressing each chapter) turned as the overview progressed.
The gathered throng were then treated to a lively and wide-ranging panel discussion where Rory Sutherland, Vice Chairman of Ogilvy, Professor Patrick Barwise, from London Business School, and Stefan Barden, a specialist in advising high growth businesses, spoke eruditely about the issues raised in the book.
A few of the notable observations were:
- It’s not just routine low-value purchases which rely on System 1 thinking but substantial decisions too, such as buying houses.
- Why must ‘behavioural economics’ still include the word ‘economics’ when economics refers to a one dimensional theory which is creatively limiting? It is about people.
- Rational decisions need a level of information that is simply not available in the vast majority of instances so probabilistic decisions using System 1 thinking are inevitable.
The understanding of consumer decision making in minimising risk was a major theme of the discussion. The research methods used by System1 Group not only pick winners but, almost as importantly, they very clearly throw out losers. Reducing risk is critical in investment decisions but our use of System 1 thinking to do this has its roots in evolution. Emotional traits which help us avoid disaster, such as fear (e.g. of snakes) are something we inherit rather than need to be taught. Disaster avoidance behaviour also explains why some wildly successful brands (such as McDonald’s) are absolutely brilliant at not being terrible.
Disaster minimisation informs all sorts of activity – from “herd behaviour” (Mark Earls, the Herdmeister was suitably present) to making conventionally wrong decisions to avoid criticism, rather than being unconventionally right. At a time where being unconventionally right is becoming more and more desirable to win in the marketplace understanding of such behaviour is paramount.
Before the bubbly flowed, we were treated to a fantastic musical interlude as a specially-commissioned song by Daniel Cainer gently ridiculed the book, its content and colour and put wide smiles on attendees’ faces.