Critical Thinking

Source: LinkedIn Course

1. What is Critical Thinking?

Critical thinking is important because Critical thinking sets good solutions apart from hasty decisions.

There are many issues: such as identifying stakeholders, information sources, bottlenecks, and lag times => Need Critical Thinking

Cause vs. Consequence

Look back to identify the cause. We’re solving a problem, not a symptom.

New problems could emerge if we implement the recommendation.

Break big problems into small ones

E.G. Profit Problem => Revenue Drop & Cost Increase…

Ask questions like:

• What is your big problem composed of?
• What smaller issues drive it?

When/How do you know that you have broken down a problem sufficiently? => When solutions begin to become obvious

2. Thinking the Problem Through

1. Define the problem statement:
   • Clear problem statement is essential for effective problem solving.
   • Problem statement clarifies goals, boundaries, success criteria, constraints, assumptions, stakeholders, and timelines.
   • A clear problem statement avoids wasted efforts, revisions, and confusion.
2. Understand the real question
   • Don’t jump to solutions, understand why the question is being asked.
   • Ask “why” multiple times to uncover the root cause of the stakeholder’s concern.
   • Aim to solve the real problem, not just the symptoms.
   • Deeper understanding leads to better solutions.
   • Ask:
     • What’s really driving the request?
     • Why do they care?
3. Ask focusing questions:
   • What’s the real question? – Uncover the root cause behind the problem.
   • Who are the stakeholders? Stakeholders & Influencers: – Identify those who can support or hinder the solution.
   • How will we measure success? Objectives & Timing: – Define success metrics (quantitative & qualitative) and deadlines.
   • What is the Scope? Scope: – Determine what’s included and excluded in the problem.
   • What are the Constraints? Constraints: – Consider limitations like budget, time, regulations, etc.

Examining Past Efforts for Critical Thinking

1. When defining a problem, consider past attempts to solve it:
2. Has this problem been addressed before? Learn from past efforts to avoid wasted work.
3. What were the outcomes? Identify successes, failures, and what’s different now.
4. What limitations existed previously? Understand past constraints to inform current solutions.
5. Who was involved? Seek input from veterans who tackled the problem before.

Use new lenses to think critically

When defining a problem, consider these approaches to broaden your perspective:

1. Changing Point of View:

• View the problem from different stakeholders’ perspectives (CEO, frontline staff, customers, etc.).
• Consider how their roles and experiences shape their definition of the issue.

2. Changing Context:

• Break free from your functional silo (e.g., finance vs. IT).
• Reimagine the problem from a broader perspective.

3. Changing Reality:

• Ask “what if” questions to explore alternative scenarios:
  • Removing constraints
  • Adding resources
  • Implementing different approaches

By using these lenses, you gain a richer understanding of the problem, leading to:

• Clearer direction: Identifying the core issue for innovative solutions.
• Diverse solutions: Exploring options beyond your initial perspective.

Example: Collections Problem

• Initial view: Agency management issue (relationship & performance)
• Other perspectives:
  • Strategy: In-house vs. outsource collections?
  • Incentives: Are commission rates optimal?
  • Training: Do frontline staff have the necessary skills?

By considering these viewpoints, a wider range of solutions emerged.

Actionable Tip:

If stuck in your own perspective, seek input from someone outside your area. Explain the problem and ask for their definition. Leverage their viewpoint to gain a fresh perspective.

Critical thinking about different lenses can help uncover solutions you might have missed with a limited scope.

How to find root causes

• Don’t rush to solve, define the problem first:
  • Understand the root cause, not just symptoms.
  • Ask “why” multiple times to get to the real issue.
  • Consider past efforts to avoid wasted work.
• Develop a well-defined problem statement:
  • Specify goals, boundaries, success criteria, and constraints.
  • Identify stakeholders and timelines.
• Think critically before proposing solutions:
  • Understand why you’re asked to solve the problem.
  • Ask “what’s the real question?” to uncover the core need.
  • Consider different perspectives (stakeholders, contexts) to broaden your view.
  • Analyze past efforts to learn from successes and failures.
  • Think about causality: root causes, consequences, and potential unintended effects.

Using critical thinking tools

Critical Thinking for Business Improvement:

• Business Model Blowup: Rethink how you deliver value:
  • Market definition
  • Go-to-market strategy
  • Product/service delivery methods
• Revenue Blowup: Expand your reach and income:
  • Products & services
  • Pricing strategies
  • Geographic markets
  • Customer base
• Cost Blowup: Eliminate waste and streamline operations:
  • Identify and reduce inefficiencies
  • Leverage technology and automation
  • Restructure processes

Example: Skybus Airlines

• Revolutionized the airline industry by unbundling services and reducing costs.
• Offered significantly lower fares despite not being successful long-term.
• Impact: Industry adopted unbundling practices, leading to price changes for flyers.

Actionable Tips:

• Ask challenging questions to spark innovation:
  • Business Model Blowup:
    • How would we do things differently if starting today?
    • How can we double a key metric in two years?
  • Revenue Blowup:
    • Who can create more value for our customers?
    • How can we triple revenue or profits in five years?
  • Cost Blowup:
    • How would we run the business with ⅔ fewer people?
    • How would I eliminate my own job (to identify work to automate or delegate)?
    • What’s the most wasteful thing we do, and how can we stop it?

By critically thinking about these areas, you can identify opportunities to improve your business model, become more competitive, and achieve greater efficiency.

The Five Whys for Critical Thinking

The Five Whys is a powerful tool to uncover the root cause of a problem. Here’s how it works:

1. Identify the problem. (e.g., Stock price plummeted)
2. Ask “Why?” repeatedly. (e.g., Why did the stock price fall?)
3. Don’t settle for the first answer. Keep digging deeper.
4. The 4th or 5th “Why” often reveals the root cause. (e.g., Incentive plan tied to market share)

Benefits:

• Uncovers deeper insights beyond surface-level explanations.
• Identifies the true root cause for effective problem-solving.
• Leads to solutions with a lasting impact on the organization.

Example:

• Problem: Stock price plummeted.
• Why? Missed earnings.
• Why? Discounted prices.
• Why? Retaining customers.
• Why? Discounts for market share growth.
• Why? Incentive plan tied to market share.

Actionable Tip:

When facing a problem, ask “Why?” repeatedly. Don’t stop at the first answer. By uncovering the root cause, you can develop solutions that address the real issue and create a positive impact.pen_spark

The Seven So Whats for Critical Thinking

The Seven So Whats is a tool to analyze the consequences of a decision. Here’s the process:

1. Identify your recommendation/action. (e.g., Change incentive plan)
2. Ask “So what?” seven times.
   • Consider potential consequences at each step.
   • Focus on impacts on the business, market, employees, and potential reactions.
3. Uncover potential opportunities and problems.

Benefits:

• Analyzes consequences beyond the immediate impact.
• Identifies potential positive and negative outcomes.
• Allows for proactive planning to avoid problems and seize opportunities.

Example:

• Recommendation: Change incentive plan.
• So what? We need to figure out how to implement it.
• So what? We might need to find someone to design the new plan.
• So what? We might need to hire a Vice President of Compensation.
• So what? We might need to deprioritize other hiring searches.
• So what? We might need to adjust supply chain goals.

Actionable Tip:

When making a recommendation, ask “So what?” seven times. Consider the consequences for the business, market, employees, and potential reactions. By thinking ahead, you can identify opportunities and avoid unforeseen problems caused by your actions.

80/20

How to successfully conduct analysis

This section offers critical thinking tips for conducting effective data analysis:

High Road: Aligning Analysis with Purpose

• Problem Focus: Ensure your analysis directly addresses the high-level problem you’re trying to solve.
• Benefit Estimation: Evaluate the potential impact of the analysis before investing time in data collection.
• Testing Your Thinking: Verify if the results support or refute the recommendation you intend to make.

Low Road: Streamlining the Analysis Process

• Targeted Data: Only analyze data relevant to the defined scope of the problem.
• Time Efficiency: Avoid getting bogged down in excessive data analysis.
• Focus on Insights: Don’t waste time on unnecessary refinement for rough estimates.
• Prioritize Impact: Focus your efforts on uncovering answers with the most significant impact.

Key Points:

• Critical thinking should be applied throughout the entire analysis process.
• Analysis should be purposeful and efficient.
• Regularly revisit the high-level problem to ensure alignment.

Actionable Tip:

Be mindful of how you spend your time when analyzing data. By applying these critical thinking principles, you can solve problems more effectively and efficiently.

Considering the Implications of Answers in Problem Solving

This section emphasizes the importance of analyzing the broader implications of solutions found through problem-solving:

• Identify Similarities & Differences: Compare the solution to past experiences to find recurring themes.
• Evaluate Relative Size of Recommendation: Assess if the solution has a significant enough impact to pursue.
• Explore Connections to Other Problems: Look for connections between seemingly unrelated problems.
  • What does it mean for the BROADER problem
    • Past learnings can be applied to new situations.

Benefits:

• Uncovers hidden opportunities beyond the initial solution.
• Allows for efficient application of past knowledge to new problems.
• Leads to more effective and impactful problem-solving.

Example:

• Corporate strategy analysis identified a prioritization process for resource allocation.
• This process was later applied to a technology team struggling to prioritize numerous projects.
• By recognizing the common theme of prioritization, a solution was derived from a seemingly unrelated experience.

Actionable Tip:

When analyzing solutions, think critically about their broader implications. Look for connections to past experiences and explore how learnings can be applied. This extra step can unlock valuable opportunities and lead to more effective problem-solving.

Practice Critical Thinking

How to Teach Critical Thinking to Others

This section provides a guide on fostering critical thinking skills in your team:

1. Introduce Critical Thinking Tools:

• Teach the Five Whys, Seven So Whats, and business model “blow-up” techniques.
• Explain problem scoping for effective analysis.

2. Create Opportunities for Practice:

• Encourage the application of these tools in daily problem-solving.
• Expect deliverables that reflect the use of critical thinking methods.

3. Provide Coaching and Feedback:

• Focus on how they arrived at answers, not just the answers themselves.
• Discuss if they used the 80/20 rule for efficient analysis.
• Ensure they considered the high-level problem and potential consequences.

4. Hold People Accountable:

• Require them to think through consequences before finalizing recommendations.
• Gently redirect those who haven’t used critical thinking methods effectively.

Benefits:

• Empowers your team to think critically independently.
• Leads to faster and more effective problem-solving.
• Improves the overall quality of team decisions.

Common Pitfalls in Critical Thinking and How to Avoid Them

Pitfall #1: Jumping to Answers Too Quickly

• Cause: Failing to fully understand the problem before seeking solutions.
• Solution:
  • Clearly define the problem and its root cause.
  • Use tools like “focusing questions,” prior effort evaluation, and alternative perspectives.

Pitfall #2: Focusing on Symptoms, Not Root Causes

• Cause: Mistaking symptoms for the underlying issue.
• Solution:
  • Utilize techniques like “blowing up the business model” and “Five Whys” to identify core issues.

Pitfall #3: Focusing on Unimportant Issues

• Cause: Addressing problems with minimal impact on the bigger picture.
• Solution:
  • Apply the 80/20 rule to prioritize efforts towards issues with significant impact.

Pitfall #4: Taking Analytical Results at Face Value

• Cause: Failing to analyze and interpret the meaning of data.
• Solution:
  • Move beyond raw data (“high road”) and consider the implications for the problem and organization.
  • Look for connections between findings and past experiences.

Pitfall #5: Not Considering Future Consequences

• Cause: Failing to anticipate the long-term effects of solutions.
• Solution:
  • Use the “Seven So Whats” tool to explore potential future consequences of recommendations.
  • Consider potential reactions from competitors and the organization.

Key Takeaway:

By understanding these pitfalls and applying critical thinking tools, you can avoid them and arrive at more effective solutions.