Category Archives: Uncategorized

Managers Need to Take Time to Think

Although the author of this piece focuses on strategic thinking, strategic thinking is in fact a sub-type of critical thinking. The author says that “The goal of strategic thinking is to find strategic insights.” In other words, the goal of strategic thinking is to sort good strategic hypotheses (hypotheses about which strategies will work best) from bad ones.

From the MIT Sloan Management Review: The Lost Art of Thinking in Large Organizations, by Duncan Simester

If you ask managers in a large organization to approach a strategic business problem, their focus often quickly narrows to proposing solutions. When asked why, many respond that they don’t have time to think.

How did we arrive in a state where managers do not recognize that thinking is part of their job? The answer reflects a relentless focus on execution in many large companies. A company becomes big by finding a successful business model — and then scaling it massively. This necessitates building a finely tuned system with highly standardized processes. To get promoted in such an environment requires an almost singular focus on execution. In other words, it requires action more than thinking. However, once executives are promoted to a senior level, these new business leaders must be able to think strategically. Ironically, the very skills in execution that led to their promotions often make these executives ill-equipped for their new roles, since their strategy thinking muscles have withered from disuse….

Cognitive Biases and Bad Decisions

cognitive_biasesHere’s a piece from  Business Insider that explains 20 cognitive biases that screw up your decisions .

Cognitive biases are subconscious mental tendencies, usually rooted in intuition, that lead us into errors of judgment or decision. Many of them have been very well documented by psychologists and experimental economists. They’re notoriously hard to avoid, but certainly knowing about them is a good start.

Thinking Critically About Stats

Statistics (whether about the global economy or about your own sales) play an important role in management. But there’s an enormous body of literature demonstrating that human beings do not have a very good intuitive grasp of stats. Even people with training in statistics are capable of falling prey  to various fallacies and cognitive biases. Here’s a useful interview with Prof. David Spiegelhalter about his working helping people understand statistics better.

A Cambridge professor on how to stop being so easily manipulated by misleading statistics

“…We know, for example, that “relative risks” can be used to look impressive. Twice a small number is still a small number. We know that talking in whole numbers—so many people out of 100—is clearer than talking in percentages or decimals. We know if done right, visual representation can often do a better job of explaining numbers, especially to those with low numeracy.

We’ve used this knowledge, worked with psychologists around the world, to build guidelines for how people can best communicate risk. But there are still things that we haven’t got a good answer to. For instance, we know that people think 30 out of 1,000 is bigger than 3 out of 100. We know that we make numbers look bigger by manipulating the denominator. As a statistician, the perception of numbers is new to me. I thought people would know that 3 out of 100 is equal to 3% is equal to 0.03. But they are very different!”…

Persuasion: Picking Your Premises

A recent scientific study highlights the importance of thinking critically about the kinds of reasons we use when we try to convince an audience.

In this short NY Times article, The Key to Political Persuasion, professors Robb Willer and Matthew Feinberg describe a set of experiments they did that looked at what kinds of reasons people find persuasive. The basic lesson, when it comes to political arguments:

“…you should frame your position in terms of the moral values of the person you’re trying to convince.”

The kinds of examples that Willer and Feinberg focus on: if you want to convince someone with politically conservative views that some new policy initiative is a good one, you need to ground your argument in reasons that dovetail with conservative ideology — even if you don’t think those are the best reasons.

There’s a cynical take on this, namely that it may be effective to argue in bad faith, by putting forward reasons that you don’t actually believe in, in order to persuade your audience.

But that’s not the only way to understand the point here, and it’s not the most constructive lesson to draw from Willer and Feinberg’s experiments.

Imagine you are trying to promote some plan of action, whether it’s a new government policy or a new corporate strategy or a destination for your family vacation. Now imagine you can think of 5 or 6 perfectly good reasons in favour of that course of action. You probably don’t want to launch all of those reasons at your audience — that’s probably overkill. You want to make a focused argument. But then which of those reasons will you actually put forward?

The results provided by Willer and Feinberg suggest a straightforward strategy for honing your argument: make use of those premises that are most likely to dovetail with views your audience already holds. In argumentation, what matters isn’t which premises you believe are best, but which premises your audience is most likely to accept. The whole goal of argumentation is to take people from premises they accept to a conclusion that they don’t (yet) accept. Adopting controversial starting points defeats the whole purpose.

A further leadership lesson flows from this: if you want to lead people, you need to understand them well enough to know what reasons for action they will find compelling. And you need to understand yourself well enough to know which reasons you will be drawn to, so that you can avoid being biased by your own preferences. You need to know yourself in order to be able to focus on others.

The article focuses on political persuasion, but the focus on politics is almost entirely incidental. The key lessons here really are about persuasion in general, and about leadership.
reasons- mine yours ours

Thinking Critically About Extended Warranties

Insurance is one of the greatest ‘inventions’ of all time. It allows consumers to ‘transfer risk’ (for a fee) to an entity (either a corporation or a collective) that is better able to absorb it. But that doesn’t mean that insurance is always a good deal. Take, for instance, extended warranties. Extended warranties, especially on small consumer goods, are almost always a bad deal. So, you need to think critically when offered one. The blog entry linked below explains how to do that:

Check out: When buying the ridiculously expensive extended warranty makes sense

What Role for Critical Thinking in Corporate Social Responsibility?

This blog entry which I wrote for Canadian Business talks about how some of the core skills of critical thinking can (and indeed should) be applied to a company’s corporate social responsibility (CSR) efforts.

Three questions to ask yourself about corporate social responsibility

A further element of critical-thinking-for-engagement is to help employees see that active support for your CSR program makes sense given what they already value and believe in, and that it’s OK for them to bring those values—their generosity, their sense of community, their passion for the environment—to work with them. In other words, give your employees a pro-CSR argument that is grounded in their own values and beliefs. Doing so requires thinking critically about the various arguments in favour of social responsibility, understanding their structure, and deciding which ones both work logically and are rooted in starting points your employees can accept.

Fallacies Made Visual

squirrelIf you haven’t seen it, you really should check out the Illustrated Book of Bad Arguments. It’s about argumentative fallacies, and as the title implies it includes some lovely drawings to illustrate some key fallacies.

According to the preface, “This book is aimed at newcomers to the field of logical reasoning, particularly those who, to borrow a phrase from Pascal, are so made that they understand best through visuals.”

You can buy the book on Amazon but you can peruse it for free on the book’s website at the link above.