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It is all too easy for accountants to get buried by the minutiae of existence. But reading Thinking, Fast and Slow by Daniel Kahneman could improve your business and your life.
Most of us are probably heartily sick of being told that the latest over-hyped self-help book will change our lives. From long experience, only about one book in a thousand could conceivably have that kind of powerful impact.
Everyone is different but many accountants might discover that Thinking, Fast and Slow by Daniel Kahneman could just be that one publication in a thousand.
A week before reading it, this writer had never heard of the author, nor his seminal volume. In retrospect, that sounds unbelievable, given that the decade-old book has practical applications for anyone in business, while it also offers useful ideas about how to improve every reader’s quality of life more generally.
In addition, although he is primarily a psychologist, Kahneman is obviously a big hitter across the piece, having won the Nobel Prize for Economics in 2002.
Fortuitously for me, a friend who held a high-profile executive role in a financial institution dropped into conversation and recommended a book that has clearly had a significant influence on his life and work.
One of the pleasures of reading this book is that although he clearly has long academic experience and impeccable credentials, the Israeli psychologist turned author has a knack of explaining complicated concepts in language so simple that even a run-of-the-mill accountant can understand it.
Primarily, he achieves this by using everyday examples that everyone can readily understand and convert into their own lives and language.
The main thrust of Thinking, Fast and Slow follows the path of behavioural economics and runs in many directions but in particular, it is very strong on decision-making and the ways that bias, which can often be wholly illogical, will change people’s outlook and behaviour. While most of us are likely to be excited by the prospect of a new book that could boost our practices, it is also impressively instructive regarding the strange ways in which people behave.
The title gives away the game about some of the most exciting concepts, in particular the interaction between two different modes of thinking – the instantaneous reaction contrasted with the lesser used but often more valuable considered view.
Rather than writing a formal book review, it might make more sense to point out some of the practical applications that prospective readers will discover and emphasise that these could genuinely increase both the top and bottom lines for any accountancy practice, in addition to making life rather pleasanter along the way.
It is hard to know where to start, since there are so many riches buried within its covers. For example, by understanding the psychology of buying and selling, we should be able to improve our marketing strategies no end. In addition, applying surprisingly simple principles will help to optimise pricing models, while at the same time reducing the time that we all waste in arguments over fees with even our favourite clients.
On a different tack, utilising probabilities could massively help not only with sample sizes for auditing and then interpreting the resulting data, but also negotiating fees with clients, settlements with HMRC and even salary reviews, whichever end of that transaction you might be sitting on.
People figure large and this is where the author’s experience as a psychologist is so helpful. There is a strong possibility that the average accountant will learn much that they haven’t previously considered regarding the ways in which people behave in particular situations. This could be a game changer whenever you are on the recruitment trail or dealing with individuals who appear to be awkward but may just have found themselves painted into what they regard as an unacceptable corner.
Gushing can be tiring both for the writer and the reader so the final word is simple. Go and invest a few pounds in a copy. The upside could be worth millions, while the downside for anyone who fails to be infused will be limited to a small outlay and a few hours of valuable time.
Readers who find the underlying concepts in this book attractive might also wish to try Nudge by Kahneman associates Richard H Thaler and Cass R Sunstein, which is less business-focused but has many useful lessons about how to influence people without the need to browbeat or bully. The principles could prove helpful to marketing and dealing with both clients and colleagues effectively.