What is critical thinking and how is it helping leaders make better decisions?
Leaders make decisions every day based on explicit assumptions and non-emotive, rational processes.
Or do they?
The latest economic crises highlighted a plethora of bad decisions, made by well-educated leaders using the best tools and data available. As these decisions are analysed and criticised, an alternative school of thought is becoming mainstream. Both behavioural economics and neuroscience confer that decision-making is, in fact, emotional, irrational and based on tacit assumptions.
Savvy decision-makers are now turning to both technical and cognitive tools to guard against making poor decisions. One such tool is critical thinking, an indispensable management aid right up there with emotional intelligence.
Critical thinking is neither creative nor strategic thinking; it is a way of striving for the highest level of reasoning and judgment that lead to sound decision-making. It is thinking about thinking. The critical thinking process involves 3 main actions.
1.Become aware that mental biases exist
A mental bias is a distortion in the way we perceive reality and process information. We should all know how they affect our thinking in order to avoid them and their consequences. Over 100 mental biases have been documented. Psychologists Amos Tversky and Daniel Kahneman first introduced the idea of mental biases, or mistakes, in 1972 and the latter was awarded a Nobel Prize in 2002 for this work. Here are three common mental biases\:
Framing effects:Packaging is a multibillion-dollar industry because how an object is presented affects its desirability. How a problem is framed or presented has been shown to have far reaching consequences on our conclusions as well.
Have a look at this sequence of numbers 5-4-9-1-7-10-3-2. 6 And 8 have been omitted. Can you see where they belong? Tricky, isn’t it?
This problem presented numerically, which makes you think in numbers. In fact, these numbers are in alphabetical order, which is hard to see if you are in a numeric frame of mind. Those trained in creative subjects and critical thinkers are capable of purposefully changing their frame or perspective on a problem to come up with better solutions, faster. Decision making tools that encourage different points of view such as De Bono’s Six Thinking Hats or Systems Thinking help to avoid falling into such framing traps. However, decision makers should acknowledge that their initial frame of mind may not be the only one nor the best with which to tackle a problem.
Confirmation biasis a systematic error where we look for, recall or interpret information so that it confirms our own point of view. Perhaps you have your heart set on a certain product that you research on the internet before buying. You may notice that you gather more positive than negative reviews.
This bias can lead to disastrous decisions, especially in organisational, military and political contexts where leaders tend to surround themselves with like-minded people rather than those who really challenge their decisions.
Have you ever signed up for a gym membership or timeshare and used it less than you expected, or used a new credit card more than you promised yourself you would? Have you ever been dead sure of an answer only to be surprised by an unexpected outcome? Our inbuilt overconfidence allows us to triumph over many of life’s setbacks but can have an adverse impact on the quality of our decision-making. We can be overconfident in our abilities and fall in love with our decisions when our ego is left unchecked.
2.Reduce biases that lead to suboptimal outcomes
Admitting that each of us makes mental mistakes is the first and most critical step in the critical thinking process. Thereafter the quality of our decision-making can be significantly boosted with some simple steps.
*Look for evidence that tests your ideas, not merely confirms them.
*Before dismissing negative feedback, try to defend it.
*Actively seek out at least 2 contrary opinions, if they aren’t forthcoming.
*Calibration is an effective way to keep overconfidence in check. To calibrate your decision-making prowess, track the Results of every professional decision that you take. You will soon detect behavioural patterns in both successes and failures.
These steps are surprisingly hard to do. However, if you want to make the best possible decisions, you will need to take the necessary steps to avoid mental biases.
Conventional wisdomalso leads to all sorts of decision-making evils. If the status quo or other conventional thinking is an input in decision-making, it is seldom challenged because it’s widely accepted. Rooting out any given facts in a problem and challenging the assumptions underlying them may change the dynamics and conclusions of the problem. Questioning popular thinking is uncomfortable and requires one to make unpopular decisions, but for a critical thinker popularity is not more important than sound judgment.
3.Using reflective thinking regularly
When children fail we comfort them with the time-tested phrase; “It’s OK to make a mistake but learn from it so that you don’t repeat it.” When we succeed at something no-one says; “That’s awesome, what did you learn from your success?” Learning from successes is as important as learning from failures. Reflecting on and learning from our successes helps us identify areas of positive deviance. This shows what worked and what we should do and not only avoid next time.
Learning from other’s mistakes and successes is a risk-free way of becoming a better thinker. However we seldom explore other people’s foibles as they usually happen in a context different to our own. Can a CEO in manufacturing learn from the mistakes of a stockbroker or a politician? Yes. Whilst the outcome of the error is indeed irrelevant for the CEO, the thought process and mental mistakes involved are applicable in various decision-making contexts.
Becoming a critical thinker is much like learning a new language. We can read about it extensively, but it’s only when we practice that we begin the process of improving our thinking, our decision making and hence the quality of our professional and personal lives.
History is littered with disastrous decision-making. The build-up of the dotcom bubble in the late 1990s showed symptoms of confirmation bias and herd behaviour. Many investors ignored information showing an impending downturn in stock valuations as these contradicted their own blue-sky assessments. In the build up to the war on terror, George Bush seemed to seek out evidence only in support of his theory on Iraq. Critical thinking could have changed the course of history in both cases.
A stunning success of critical thinking comes from a construction materials company in Watsonville, California; Graniterock. They craved a reputation for delighting their customers and in one smart strategy they changed the frame within which their clients perceived them, reduced overconfidence from sales and management staff, challenged conventional wisdom and forced immediate calibration on their entire organisation. How? The following was printed on their invoices: “If you are not satisfied for any reason, don’t pay us for it. Simply scratch out the line item, write a brief note about the problem, and return a copy of this invoice along with your check for the balance.” (www.jimcollins.com)
This was a radical and extremely successful policy that has changed over time, but its premise still underlies their customer strategy today. (www.graniterock.com)
Author: Prof. Tremaine du Preez is adjunct Professor for Critical Thinking at S P Jain Center of Management and author of Think Smart, Work Smarter published by Marshall Cavendish 2011. She is also an international keynote speaker and author on both critical thinking and leadership.
When faced with critical decisions, are you equipped to think critically?
What is critical thinking and how is it helping leaders make better decisions?