Your mind is a categorization machine, busy all the time taking in voluminous amounts of messy data and then simplifying and structuring it so that you can make sense of the world. This is one of the mind's most important capabilities; it's incredibly valuable to be able to tell at a glance whether something is a snake or a stick.↵
For a categorization to have value, two things must be true : First, it must be valid. You can't just arbitrarily divide a homogeneous group. As Plato put it, valid categories carve nature at its joints-as with snakes and sticks. Second, it must be useful. The categories must behave differently in some way you care about. It's advantageous to differentiate snakes from sticks, because that will help you survive a walk in the woods.↵
So far, so good. But in business we often create and rely on categories that are invalid, not useful, or both-and this can lead to major errors in decision making. Consider the Myers-Briggs Type Indicator, a personality assessment tool that, according to its publisher, informs HR decision making at more than 80% of Fortune 500 companies. It asks employees to answer 93 questions that have two possible responses and then, on the basis of their answers, places them in one of 16 personality categories. The problem is that these questions demand complex, continual assessment. Do you go more by facts or by intuition? Most of us would probably answer, Well, it depend-but that's not an option on the test. So respondents have to choose one camp or the other, making choices they might not reproduce if they were to take the test again. Answers to the questions are summed up, and the respondent is labeled, say, an extravert rather than an introvert or a judger rather than a perceiver. These categorizations simply aren't valid. The test isn't useful either: Personality type does not predict outcomes such as job success and satisfaction. Why, then, is Myers-Briggs so popular? Because categorical thinking generates powerful illusions.↵
Categorical thinking can be dangerous in four important ways. It can lead you to compress the members of a category, treating them as if they were more alike than they are; amplify differences between members of different categories; discriminate, favoring certain categories over others; and fossilize, treating the categorical structure you've imposed as if it were static.