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Critical Thinking for Managers

Critical Thinking for Managers

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Published by: Asutosh333 on Jun 18, 2009
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The Path to Critical Thinking
5/30/2005Few of us are effective critical thinkers—who has time? The good news, says
Stever Robbins
, is that this skill can belearned. by Stever RobbinsCan you write a refresher on critical thinking?We business leaders so like to believe that we can think well, but we don't. Only one in seven even reaches thetop 10 percent of quality thinkers.1The rest of us haven't even read a book on critical thinking, much less practiced. We could fill a book on the topic, but instead, let's indulge in the highlights of what makes for good criticalthinking about decisions.What's logic got to do with it? Nothing! We don't use logic to decide, or even to think. And a good thing, too, or the advertising industry would bedead in the water. Unfortunately,
all 
of our decisions come from emotion. Emotional Intelligence guru DanielGoleman explains that our brain's decision-making center is directly connected to emotions,
then
to logic. So, as anygood salesman will tell you, we decide with emotion and justify (read: fool ourselves) with logic.Purely emotional decision making is bad news. When insecurity, ego, and panic drive decisions, companies becometoxic and may even die. Just look at all the corporate meltdowns over the last five years to quickly understand whereemotional decision making can lead.Critical thinking starts with logic. Logic is the unnatural act of knowing which facts you're putting together to reachyour conclusions, and how. We're hard-wired to assume that if two things happen together, one causes the other. Thislets us leap quickly to very wrong conclusions. Early studies showed that increasing light levels in factories increased productivity. Therefore, more light means more productivity? Wrong! The workers knew a study was being done, andthey responded to
any
change by working harder, since they knew they were being measured—the Hawthorne Effect.We also sloppily reverse cause and effect. We notice all our high performers have coffee at mid-morning, andconclude that coffee causes high performance. Maybe. Maybe not. Maybe high performers work so late and are sosleep deprived that they need coffee to wake up. Unless you want a hyper-wired workforce, it's worth figuring outwhat really causes what.There are many excellent books on logic. One of my favorites is the most-excellent and most-expensive
Minto Pyramid Principle
by Barbara Minto. It's about logic in writing, but you can use it for any decision you want to think through in detail.The trap of assumingYou can think critically without knowing where the facts stop and your own neurotic assumptions begin. We aren't built to identify our own assumptions without lots of practice, yet the wrong assumptions are fatal.When we don't know something, we assume. That's a fancy way of saying, "we make stuff up." And often, we don'trealize we're doing it. When our best performers leave, our first (and perhaps only) response is to offer them more
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 pay, without realizing that other motivations like job satisfaction or recognition for accomplishments might be moreimportant.Finding and busting "conventional wisdom" can be the key to an empire. For decades, the standard video rental storemodel assumed that people wanted instant gratification and, to get it, they were willing to drive to a store, pay a rentalfee for a few days' access, and then drive back to the store in a few days to return the movie. Thousands of big andsmall video rental parlors popped up across the country using this model. But Reed Hastings challenged thoseassumptions. He calculated that people would trade instant gratification for delayed, and would pay a monthly fee if they could have movies mailed to them, which they could keep as long as they liked. The result? Netflix. Estimated2005 revenue: $700 million.Assumptions can also cripple us. A CEO confided that he never hires someone who backs into a parking space. Hislogic (and I use the term loosely): The person will use time at the start of the day so they can leave more quickly atthe end of the day. He assumes face time equals results. In whose world? Many people tell me they get more done inan hour at home than in eight hours in an interruption-prone office. How many great employees will he miss becausehe's not examining his assumptions?Some assumptions run so deep they're hard to question. Many managers can't imagine letting people work fewer hoursfor the same pay. "If they go home earlier, we have to pay them less." Why? "Hours = productivity" is true of assembly lines, but not knowledge work. Research shows that it's not how much you work, but the quality of the work time that drives results.2But in most workplaces, hours count as much as results. Next time you're grappling with a problem, spend time brainstorming your assumptions. Get others involved—it'seasier to uncover assumptions with an outside perspective. Then question the heck out of each one. You may find thatone changed assumption is the difference between doing good and doing great.The truth will set you free (statistics notwithstanding)Have you ever noticed how terrified we are of the truth? We're desperately afraid that the truth will reveal us asincompetent. Our situation really
is
hopeless. We really aren't as great as we pretend. So we cling to our beliefs nomatter how hard the truth tries to break free.Guess what, recording industry: Electronic downloads
have
changed the nature of your business. Start asking howyou'll add value in a world where finding, packaging, and distributing sound is a commodity. Hey, ailing airlines: Oil'sexpensive, customers won't pay much, and you have huge capital costs. That hasn't stopped Southwest, Jet Blue, andothers from making a fortune. Nothing tells the truth like solid data and the guts to accept it. But it's difficult in practice. When was the last time youidentified and collected data that contradicted your beliefs? If you found it, did you cheerfully change your belief, or did you explain away the data in a way that let you keep your comfortable pre-conceptions?Here is a great exercise for your group or company. Have your general managers list your industry's UnquestionedTruths, which they then must prove with data. When a Fortune 500 CEO recently ran this exercise, Surprise! Some"absolute truths" were absolutely false. Now he can do business his competitors think is nuts. Analysts will say he'soff his rocker, until his deeper knowledge of truth starts making a small fortune.One caveat: Be picky about where you get your data. The Internet can be especially dangerous. The miracle of technology lets one bad piece of data spread far and wide, and eventually be accepted as truth.Help! I've been framed! Not only may your data be disguised, but the whole problem itself may be disguised! It seems obvious: we're losingmoney, we need to cut costs. Not so fast! How you "frame" a situation—your explanation—has great power.Remember assumptions? Frames are big ol' collections of assumptions that you adopt lock, stock, and barrel. They become the map you use to explore a situation.You're negotiating an acquisition. You're chomping at the bit. It's WAR!! Competition is all. The frame is combat!
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Or, you're negotiating an acquisition. You're on a journey with the other party to find and split the value buried at theX. You still track your gains and gather intelligence, but the emphasis is on mutual outcomes, not "winning."In a zero-sum one-time negotiation, a combat frame may be the best tool. But in a negotiation where you're free todevelop creative solutions that can involve outside factors, the journey frame could work best. "Instead of $100K,why don't you pay $75K and let us share your booth at Comdex?"Frames have great power! Presented with a potential solution to a problem and told, "This course of action has a 20 percent failure rate," few managers would approve. When that same solution is presented as having an 80 percentsuccess rate, the same manager is going to consider it more deeply— 
even though a 20 percent failure rate means the same thing as an 80 percent success rate!
The frame changes the decision.Are you brave in the face of failure? Most people aren't. I recommend the responsibility frame: "What aren't we doingwhat we should?" The responsibility frame sends you searching for the elements of success.The beauty is that no one frame is right, just different. The danger is when we adopt a frame without questioning it.You'll do best by trying several different frames for a situation and exploring each to extract the gems.People are our greatest asset. ReallyCritical thinking isn't just about what happens in our own brains. When you're thinking critically in business, bring inother people! We don't consider the people impact in our decisions often enough. In fact, we pooh-pooh the "softstuff." We feel safe with factors we can calculate on our HP-12B. But in truth, business is about people. Multibillion-dollar mergers fail due to culture clash.Customers, suppliers, partners, employees.
They're
as much a part of your business as that sparkly new PC you use to play Solitaire. How will your decisions change
their 
lives? Imagine being them and let your imagination change your decisions.The Gallup organization estimates that 70 percent of America's workers are disengaged, and disengaged workers aredramatically less productive, creative, and committed than engaged workers. Yet few strategy meetings ask, "Howcan we engage our employees more?" It's as if we say people are our greatest asset—but we don't really believe it. If you want to improve your critical thinking, get other points of view.A stitch in time saves nineOf course you know you should think about the consequences of your actions. But with information overload,quarterly earnings pressure, sixty-hour weeks…who has the time? We don't think much beyond the end of our nose.But technology leverages the effects of our decisions throughout the organization and even across the globe. So goodthinking demands that you consider consequences over many timeframes. Think out a month, a year, a decade, manydecades. That tanning booth looks great when you consider how you'll look in a week, but is it worth looking like aleather overcoat ten years from now?Long-term junkies like me are great at creating ten-year plans, but managing next month's cash flow? Not likely.Short-term junkies are more common; they're the ones who discount to make this quarter's numbers, while tanking thecompany in the process. You can do better by considering multiple timeframes.I could go on, but there's plenty here to chew on. Think about a decision you're making, and pull in the rigor:Make sure you understand the logic behind your decision.1.Identify your assumptions and double-check them.2.Collect the data that will support or disprove your assumptions.3.Deliberately consider the situation from multiple frames.4.Remember the people!5.Think short
and 
long term.6.Good luck.
The Path to Critical Thinking - HBS Working Knowledgehttp://hbswk.hbs.edu/archive/4828.html3 of 46/11/2009 12:34 AM

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