Critical and StrategicCritical and StrategicThinkingThinking

Browne & Keeley’s Cr.Th. Q’sBrowne & Keeley’s Cr.Th. Q’s1. What are the issues and the conclusions?

2. What are the reasons supporting the conclusions?

3. Which words or phrases are ambiguous?

4. What are the value conflicts and assumptions about value priorities?

5. What are the descriptive assumptions?

6. How good is the evidence?

7. What significant information is omitted?

8. Are the statistics deceptive or misleading?

9. Are there any fallacies in the reasoning?

10.Are there rival causes, i.e., other explanations or interpretations of the evidence or these findings?

11.What other reasonable conclusions are possible?

Some Un-critical ThinkingSome Un-critical Thinking

Heavier-than-air flying machines are impossible.– Lord Kelvin-British mathematician, physicist, and president

of the British Royal Society, c. 1895.

A severe depression like that of 1920-21 is outside the range of probability.– Harvard Economic Society-Weekly Letter November 16,

1929

More Un-critical ThinkingMore Un-critical Thinking

Gone with the Wind is going to be the biggest flop in Hollywood history.– Gary Cooper, 1937, after turning down the role of Rhett

Butler

They couldn't hit an elephant at this dist_____– General John B. Sedgwick-Union Army Civil War officer's

last words, uttered during the Battle of Spotsylvania, 1864

Some Common FallaciesSome Common Fallacies1. Slippery Slope: assuming that a proposed step will set off an uncontrollable chain of undesirable

events2. Searching for Perfect Solution: unwilling to solve part of a problem3. Equivocation: using a key word with two or more meanings in an argument4. Appeal to Popularity : falsely assumes that something favored by a large group is desirable5. Appeal to Questionable Authority: citing an authority who lacks special expertise on the issue at

hand6. Appeals to Emotions: using emotionally charged language to distract from relevant reasons and

evidence7. Straw Person: Distorting one’s opponent’s point of view so that is it easy to attack8. Attacks: Attacks a person or a person’s background, instead of the person’s ideas9. Either-Or: assuming only two alternatives10. Wishful Thinking: assuming that, because we wish X were true or false, then X is indeed true or

false11. Explaining by Naming: assuming that a name for some event or behavior adequately explained

the event12. Glittering Generality: Use of vague emotionally appealing virtue words13. Red Herring: An irrelevant topic is presented to divert attention from the original issue14. Begging the Question: an argument in which the conclusion is assumed in the reasoning.15. Hasty Generalization: drawing a conclusion about a large group based on experiences with only

a few members 16. Faulty Analogy: using an analogy in which there are important relevant dissimilarities 17. Causal Oversimplification: explaining an event by relying on causal factors that are insufficient…18. Confusion of Cause and Effect: confusing the cause with the effect of an event19. Neglect of a Common Cause: failure to recognize that two events may be related because of a

3rd factor20. Post Hoc: assuming that a particular event, B, is caused by another event, A, simply because B

follows A in time.

The Socialist Democrat Establishment of America wants to shut Pro-American Voices Up!

(2008, on a tee-shirt, with this capitalization)

The history of forcing fluoride on humans through the fluoridation of drinking water is wrought with lies, greed and deception. Governments that add fluoride to drinking water supplies insist that it is safe, beneficial and necessary, however, scientific evidence shows that fluoride is not safe to ingest… The lies of the benefits of water fluoridation will continue to be fed to the public, not to encourage health benefits to a large number of people, but to profit the military-industrial complex. (2007)

The number one economic threat to our nation and our well-being is the price of a gallon of gas. We as individuals and our nation are at risk. We have watched the price of gas sharply increase and to this day our Congress has done nothing or even indicated they have a plan. The quickest and most helpful thing Congress can do to reduce the price of gas right now is to lift the moratorium on drilling for oil in the U.S. and offshore. Drilling offshore can be done safely now! Other nations are doing it now! (2008)(2008)

Strategic ThinkingStrategic Thinking

1. Identify & focus on important issues

2. Select key, relevant information

3. Recognize systemic properties

4. Understand through:

– Distinguishing causes from effects

– Clarifying (tacit) underlying assumptions

– Considering issue in a larger context

– Maintaining a long-term view

Strategic Thinking (cont.)Strategic Thinking (cont.)

5. Appreciate implications & consequences

6. Generate alternatives & evaluate objectively

7. Integrate logical/rational & creative/generative thinking

8. Remain flexible

9. Act in the face of emotional discomfort

Strategic Thinking (1 page)Strategic Thinking (1 page)1. Identify & focus on important issues2. Select key, relevant information3. Recognize systemic properties4. Understand through:

– Distinguishing causes from effects or symptoms– Clarifying (often tacit) underlying assumptions– Considering the issue or situation in a larger context– Maintaining a long-term view

5. Appreciate implications & consequences6. Generate alternatives & evaluate objectively7. Integrate logical/rational & creative/generative thinking8. Remain flexible9. Act in the face of emotional discomfort

Another View of Strategic ThinkingAnother View of Strategic Thinking

Thinking more Thinking more deeplydeeply to distinguish to distinguish underlying causes and issues from more underlying causes and issues from more obvious symptomsobvious symptoms

Thinking more Thinking more broadlybroadly to recognize to recognize systemic linkages, interactions, and systemic linkages, interactions, and patternspatterns

Thinking Thinking long-termlong-term as well as short-term as well as short-term about implications and consequences about implications and consequences

Strategic Thinking CaseStrategic Thinking Case

Apply strategic thinking to the case, Apply strategic thinking to the case,

making notes for yourselfmaking notes for yourself

Discuss in groupsDiscuss in groups

Report out with total class discussionReport out with total class discussion

Southwest Airlines StrategiesSouthwest Airlines Strategies

Be a short-haul niche player (initially)Be a short-haul niche player (initially)

Fly frequently between pairs of cities not Fly frequently between pairs of cities not too far apart (not hub-and-spoke system)too far apart (not hub-and-spoke system)

Use uncongested secondary airportsUse uncongested secondary airports

Fly only one type of aircraft (737 family)Fly only one type of aircraft (737 family)

SW Strategies (cont.)SW Strategies (cont.)

Fierce cost controls & no frills (no Fierce cost controls & no frills (no assigned seats, no onboard food, direct assigned seats, no onboard food, direct ticket sales, ticketless travel)ticket sales, ticketless travel)

Differentiate through focus on operations, Differentiate through focus on operations, service, people, cultureservice, people, culture

Foster good labor-management relationsFoster good labor-management relations

Expand later, including in EastExpand later, including in East

Aggressive fuel hedgingAggressive fuel hedging

Southwest Airlines PerformanceSouthwest Airlines Performance

Started 1971Started 1971

Profitable in 1973 and 36 consecutive Profitable in 1973 and 36 consecutive years sinceyears since

Only one of top ten profitable after 9/11Only one of top ten profitable after 9/11

2001-2005: $2.1 B profit while ten largest 2001-2005: $2.1 B profit while ten largest lost $59 Blost $59 B

2008: # 267, $11 B sales, $178 M profit 2008: # 267, $11 B sales, $178 M profit while ten largest lost $4 Bwhile ten largest lost $4 B

Highest market cap of any airlineHighest market cap of any airline

64 cities in 32 states64 cities in 32 states

481 planes (various 737 versions)481 planes (various 737 versions)

Strike-free after 36 years of operationsStrike-free after 36 years of operations

High on Fortune’s “best to work for” lists High on Fortune’s “best to work for” lists and various lists re customer satisfactionand various lists re customer satisfaction

S&P report 7/22/09 said:S&P report 7/22/09 said: We believe LUV is the financially strongest U.S. airline. It has posted 36 consecutive years of profitable operations, and we see the quality of those earnings as high. In addition, LUV has ample cash, and its debt to total capitalization is significantly below peer levels, by our analysis. We think these measures warrant a premium valuation to peers and the S&P 500.

Strategic Management ProcessStrategic Management Process

Strategic Management ProcessStrategic Management Process

DIAGNOSIS FORMULATION IMPLEMENTATION

Question

Where are we (the org. in context of its environment)?

Where do we need/want to go?

How do we get there?

Output Set of critical issues (CIs) plus understanding...

Strategy-level recommendations to ensure success & address the critical issues

Successful implementation (implementation plan, for this course)

St. Mgt. Process: DiagnosisSt. Mgt. Process: Diagnosis

Identify & critique current mission, objectives, & strategies

Analyze external & internal environments to evaluate performance plus identify SWOT & CIs

External: competitive environment (5-force model) + societal environment (political/legal, technological, economic, sociocultural) + stakeholders

Process: Diagnosis (cont.)Process: Diagnosis (cont.)

Internal functional areas: financial; marketing; production/operations; technology; organizational

No set protocol. Do what is necessary to understand & develop CIs. Analysis is a means to this end

Both immediate and long-range problems. ID causes rather than symptoms

Process: FormulationProcess: Formulation

Formulate rich range of alternatives

Evaluate alternatives

Select a set

Need clear recommendations with supporting justification

May revise mission, objectives, strategies

Three levels of recommendations: corporate, competitive, and "other"

Process: Formulation (cont.)Process: Formulation (cont.)Recommendations should be:

– Effective in solving problems

– Practical

– Feasible

– Cost-effective

– Acceptable to key stakeholders

Is vital to ensure that all CIs have been addressed adequately

Process: ImplementationProcess: Implementation

Plan is a set of basic action steps addressing: what, how, who, where, when & why - is necessary to make the strategy work

Resources (financial, human, physical, technological)

Obtaining & maintaining support for changes

Reward systems

Timing (especially sequencing & constraints)

Organization structure

Tracking & control systems

Leadership, managing change

Strategic Management ProcessStrategic Management Process

DIAGNOSIS FORMULATION IMPLEMENTATION

Question

Where are we (the org. in context of its environment)?

Where do we need/want to go?

How do we get there?

Output Set of critical issues (CIs) plus understanding...

Strategy-level recommendations to ensure success & address the critical issues

Successful implementation (implementation plan, for this course)