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Critical ThinkingLeading Innovation and Value Creation
Andrew L. Urich, J.D.
Puterbaugh Professor of Ethics & Legal Studies
Spears School of BusinessOklahoma State University
Critical ThinkingDon’t try this at home!
I prefer being given the correct answers rather than figuring them out myself.
I don't like to think a lot about my decisions as I rely only on gut feelings.
I don't usually review the mistakes I have made.
I don't like to be criticized.
I don’t have the courage to move outside my self-imposed limits.
Critical Thinking
“There is no reason anyone would want a computer in their home.”
President of world’s second largest computer
company (DEC) arguing against the PC in 1977
Critical Thinking
“The world potential market for copying machines is 5000.”
IBM turning down the eventual creators of Xerox
Critical Thinking
“I think there is a world market of about five computers.”
Founder of IBM in 1943
Critical Thinking
“Who the hell wants to hear actors talk?”
Warner of Warner Brothers arguing against the need to add sound to silent movies
Critical Thinking
Obama and McCain spent $1 Billion on their 2008 campaigns – Absurd?
Coca-Cola spent almost $2 billion trying to get us to drink sugar water in 2008.
Critical Thinking
“Sensible and responsible women do not want to vote.”
President Grover Cleveland, 1905
Critical Thinking
“We don’t like their music and guitar music is on the way out anyway.”
Decca record executive turning down the Beatles, 1962
Critical Thinking
“Television won’t last because eventually people will get tired of staring at a plywood box every night.”
Daryl Zanuck, 20th Century Fox Movie Producer, 1946
Critical Thinking
“Everything that can be invented has been invented.”
Commissioner of US Patent Office arguing to President McKinley to close down the Patent Office in 1899
Why Don’t They Give Us an Owner’s Manual For Our Brain?
Why is Charlie Sheen an Actor?
What Happened to GM?
Why is it So Hard to Face Reality?
Three Tips for Critical Thinking?
The Secret to Happiness
Why Don’t They Give Us an Owner’s Manual For Our Brain?
The Brain’s Inner WorkingsThe Wiring 100,000,000,000 neurons (brain cells)
15,000 synaptic connections each
By age 15 half are gone and the superhighways are up and running.
These mental pathways become the filter–producing recurring patterns of thinking, feeling and behavior.
Examples: Empathy–confrontation–authoritarian–dogmatic–emotions–tolerance for uncertainty.
The Brain’s Inner WorkingsThe Parts The brain is full of zero sum games
Ever find yourself feeling conflicted? Competing modules MRI research on picturing yourself as old
Stanford study No payments until 2010 Disagree– brain off Agree-- pleasure
The Brain’s Inner WorkingsThe Parts Parts of the brain
Amygdale-fear responses Fleeing the stock market like you are fleeing a lion
Prefrontal cortex – recently evolved – controls voluntary actions
Logical and analytical Limbic system - oldest physical part of the brain
The rat brain – Impulses gut reactions
Amygdale: Fear Responses Total US Stock Market
1982 value = $1.2 Trillion Return 1982 to 2007 13.3% Theoretical 2007 value $28.2 Trillion Actual value $18.7 Trillion Lost to market timing $9.5 Trillion
NASDAQ 9.6% Return 1973 – 2002 4.3% Actual average return to NASDAQ
investor
Zweig, Jason, Money Magazine, December 2007, page 76
Your Strength
Strength is a recurring pattern of thought, feeling, or behavior that can be productively applied.
Strength is more important than experience, brainpower, and willpower.
You cannot teach strength.
Your Strength
What to notice, what to ignore What to love, what to hate Your motivations, ego, altruism How you think - practical or
strategic Your attitude - optimistic or cynical Your filter is your Strength
The Strength of Great Accountants
Innate love of precision
Happiest moment is when the books balance
Gallup survey
ApplicationsUsing Your Brain
Exploit your strength! Don’t correct weaknesses, work around them. Skills and knowledge can be taught, Strength
cannot. Here’s what we can change!
Core beliefs New skills and knowledge Your values Self-awareness Capacity for self-regulation Hidden strengths
“Our minds are like inmates, captive to our biology, unless we manage a cunning escape.”
Nassim Taleb The Black Swan
Why is Charlie Sheen an Actor?
Why Do We Do What We Do?Albert Einstein
“Fear or stupidity has always been the basis of most human action.”
Worst paper ever….
“People have two legs, animals have four, except fish which have none.”
Basis of Human Action and Decision Making?
Beliefs Act out your beliefs Desires Pursue your desires
Instinct Succumb to instinct
BeliefsYou act out what you believe? I believe the world is a dangerous
place. I believe people should______. I am skeptical of all claims. An “ideal” manager does ______. The best investment philosophy
is___.
BeliefsFilters and Reinforcements
Desires Cialdini knows where our desires
come from Are we honest about our desires?
Mark Cuban and flattery
Desire to feel good Desire to feel safe
I have to scare you first. First I create the disease – then I
create the cure.
Living by Instinct“Nature, Mr. Allnut, is what we are put in this world to rise above”
Rose Thayer (Katherine Hepburn) The African Queen
Human Animals – Instinct…...................Human Beings – Critical Thinking Wealth/Greed................................... Altruism and charity Seek security at all cost....................Get out of your comfort zone Preserve status quo..........................Change Meeting society’s expectations...........Be authentic to yourself
(following the herd).......................... (think for yourself) Traditional gender roles.................... Equality of the sexes Tribalism (nationalism)..................... Multi-culturalism Praise authority................................ Question authority Praise and follow the leader.............. I don’t need a leader Consistency is safe............................Strive for improvement Guided by personal experience...........Critical thinking Freewill???........................................Free Will!!!!! Surviving........................................Living
Basis of Human Action and Decision Making? Beliefs, Desires & Instinct
You do what you feel obligated to do.
You do what is the easiest. You do what makes you feel safe. You do what you’ve always done.
You Might Be Thinking Critically If…..
You change a core belief. You get outside your comfort zone. You admit you were wrong about
something important. You increase your self-awareness. You do something you wouldn’t do.
What if I like what I do?
Punch-line Early in life we get theories of the world
– the theories make sense – but making sense is not the same as being correct.
Beware of your Brain’s wiring! Your brain is programmed
What Happened to GM?
Smart People Trying Hard
GM History
1950’s - Half of all cars in the US
GM History 1980 - 853,000 to 284,000
worldwide
1999 “The most versatile vehicle on earth”“Lifestyle support vehicle”
1999 “The most versatile vehicle on earth”“Lifestyle support vehicle”
1999 “The most versatile vehicle on earth”“Lifestyle support vehicle”
1st Q 2009Passenger cars
Toyota 19.4% GM 15% Honda 12.4% Nissan 10.2% Ford 10.0% Hyundai 6.2% Chrysler 5.2% Mazda 3.4% BMW 3.2% VW 3.2% Kia 2.6% Subaru 2.6%
Volvo 0.8% Saab 0.2%
What is Critical Thinking?
Using your brain to create value for yourself and your organization!
Making decisions and taking action based on reason, evidence and analysis.
Focus on what matters Identify drivers of value Embrace diversity Face reality
1.
Focus on What MattersJD Power Top 10 Reliability
2004 2007 Buick145 Porsche 110 Lexus 145 Lincoln 114 Cadillac 162 Buick 115 Mercury 168 Lexus 115 Honda 169 Mercury 121 Toyota 178 Toyota 128 BMW 182 Honda 132 Lincoln 182 Ford 141 Subaru 192 Mercedes 142 Jaguar 197
2004 2007 Buick145 Porsche 110 Lexus 145 Lincoln 114 Cadillac 162 Buick 115 Mercury 168 Lexus 115 Honda 169 Mercury 121 Toyota 178 Toyota 128 BMW 182 Honda 132 Lincoln 182 Ford 141 Subaru 192 Mercedes 142 Jaguar 197
2004 2007 Buick145 Porsche 110 Lexus 145 Lincoln 114 Cadillac 162 Buick 115 Mercury 168 Lexus 115 Honda 169 Mercury 121 Toyota 178 Toyota 128 BMW 182 Honda 132 Lincoln 182 Ford 141 Subaru 192 Mercedes 142 Jaguar 197
2004 2007 Buick145 Porsche 110 Lexus 145 Lincoln 114 Cadillac 162 Buick 115 Mercury 168 Lexus 115 Honda 169 Mercury 121 Toyota 178 Toyota 128 BMW 182 Honda 132 Lincoln 182 Ford 141 Subaru 192 Mercedes 142 Jaguar 197 Acura 143
Focus on What Matters
BMW “We don’t make automobiles [we make] moving works of art that express the drivers love of quality.”
GM: Car guys and bean counters– no marketing
Focus on What Matters
Focus on What Matters
Focus on What Matters
Focus on What Matters
Emphasis on Big Picture
CalipariFocus on what matters
Relentless marketing– Image Think differently Inspire dedicated fans Big picture (China) Look for big challenges
What Matters Most?
Iraq and Afghanistan
What Matters Most?
Iraq and Afghanistan Mine Resistant Ambush Protected
Value FocusLoss of Trust & Respect
Trust Issues Consumers Dealers Workers Beat up suppliers Banks, Public opinion Shareholders - Bondholders
Value FocusLoss of Trust & Respect
Loss of commitment Playing favorites Keep your head down and get along Stop working start having meetings
(Sr. VP of Nothing) Lack of Fun
Innovation Creativity
Value FocusJapan has robots we need robots
Embrace Diversity
Group think Stability over conflict Continuity over disorder Status quo over change
50 year old decision making structure Conformity over rebellion
Same design centers Run off renegades
De Lorean fired at GM -- Iacocca fired at Ford
Face Reality Market Value versus Cumulated Strategic
Investments at General Motors
1980 GM = $13 Billion
1980-1997 $167 Billion or $332 BillionR&D and capital spending
1997 GM = 40 Billion
Face RealityRoss Perot on the Subject
From 1980 to 1985 GM spent $45 billion in capital investments but only increased worldwide market share by 1%.......
"For the same amount of money, we could buy Toyota and Nissan outright, instantly increasing market share to 40%.”
Gorilla dust
Face RealityAsk Rick Wagoner why GM isn’t more like Toyota. (69/70)
“We’re playing our own game – taking advantage of our own unique heritage and strengths.”
Face Reality “I don't know anything about cars. A business
is a business, and I think I can learn about cars. I'm not that old, and I think the business principles are the same.” Ed Whiteacre
Face RealityLet’s ignore gas mileage
Face RealityNo money in small cars
Face Reality
Who’s Reality Bob Lutz
Global warming “is a total crock of [expletive].” “Hybrids like the Toyota Prius make no
economic sense.” “Imminent GM bankruptcy was always fiction,
created by Wall Street and the media.”
Bureaucracy & the Status Quo Risk taker to Risk avoidance Cash poor to Cash comfortable Contribution to Playing favorites Opportunities to Problems Create value to Doing your job Marketing & sales to Finance & bean-counting Momentum to Inertia Working to Meetings END
Does Bureaucracy Materialize Out of Nowhere?
Applications
Have you clarified exactly how you create value for Chesapeake?
Focus on value creation and avoid activities that are not central to your strategy.
Appreciate and seek diverse (and contrarian) points of view
A fun and exciting atmosphere fosters creativity and productivity
Rage against bureaucracy and the status quo.
ApplicationsManagement Issues
Leader sets the tone Processes often get in the way Bloomberg abolished titles Conflict breeds creativity Presentations– one-way
communication Promote and reward risk taking and
attempts at innovation
ApplicationsJack Welch Bureaucracy Busting
Be relentless and outrageous Celebrate impassioned
boundaryless people Love the people who hate meetings Encourage managers to swing for
the fences Create a culture of excitement END
Do We Always Think the Same Way?Did GM Think About This?
Global Product Development Tom Stephens, who runs the company's power-train unit Carl-Peter Forster London, Germany and Greece BMW, Opel
Finally!Mary T. Barra
Three Tips for Critical Thinking?
Tips for Critical Thinking
1. Put yourself in a position for good things to happen
2. Self-awareness
3. Make things happen
4. Be happy?????
Junkfinger Test Tattoos
Traffic tickets
Brushes with the law
Being sick
Promptness
Pets
If You Don’t Want to Fall in the Grand Canyon--Don’t Go to Arizona
What I do today affects what happens
tomorrow.
Junkfinger TestIn the Business World
Inconsistency
Excuses
Making enemies at work
Always talking, never listening
Accept things as they are
Acting uninterested – not engaged
Lose credibility
Goldfinger
Behavior and attitude that put you in a position for good things to happen:
1. ?2. ?3. ?4. ?5. ?
Most people end up where their behavior indicates they want to be.
Cannot Predict the Futurevs.
Spreadsheets and Models Predict Future
Late 70s Energy Crisis
Early 80s Latin American Bank Defaults
Mid 80s Junk Bonds, Michael Milken
Late 80s S&L Crisis
Mid 90s Derivatives crisis
Late 90s Dot-Com Collapse
2000 Long-Term Capital Management
2008 Sub-prime Mortgage Debacle
Before 2015 Unexpected disaster
The Future of Gold
Focus on Unknown Unknowns vs.
Focus on the Known
Risk Management - Mirage Hotel in Vegas Hundreds of Millions on
Cheating Detection Employee Monitoring Probability and Diversification Theft Protection
Four biggest losses: Tiger attacks Siegfried or Roy Contractor wires hotel with dynamite Forms not turned in to IRS Owner’s child kidnapped
Self-awarenessMetacognition
“The truth will set you free……….but first it will piss you off.”
Werner Erhard, founder, est Training
“The greatest of all faults, I should say, is to be conscious of none.”
Thomas Carlyle (1795 – 1881) Scottish writer
Make Things Happen(3 kinds of people)What Do You Really Want? (Personal Philosophy)
Do most people suppress their personalities and their dreams?
Picture your 70th birthday
Reeboks says “Life’s short– Play hard.”
I say “Life’s long– Do something.”
Value CreationGoals and Goal Setting
What do I really want?
How do I set effective goals?
How do I increase the likelihood of good things happening and reduce the likelihood of bad things happening?
The Trick to Setting Effective Goals Worry about the means not the
end.
In other words, set goals that are within your control that can lead to good things– as opposed to outcome based goals.
End based goal:Impress the boss/Get
promoted
Act with enthusiasm, show your passion and demonstrate self-confidence
Don’t just do what you’re told– Develop the habit of doing things impressively
Identify the prototype employee and emulate that person
Professional Image Program
PRO-ACTIVITY HOUR: Spend one hour a week planning and reflecting on how success is measured and why certain people are favored
Ends based goal:Be a millionaire/Retire
early
Study investing and business opportunities for three hours a week
Draft a budget and stick to it
Figure out what “matters” and do the those things first
Get two jobs
Ends based goal: Vice president by age
35 Arrange four networking lunches per month
Volunteer for high profile/difficult projects
Find a mentor and stay connected
Try and make every co-worker/client into a friend and supporter
End based goal:Find a good spouse
Put yourself in places where “good spouses” hang out
Don’t date losers while you’re waiting for a winner
Project the image that attracts “good spouses”
Be proactive not passive
Priorities of ManagementAndy Roddick
Work Hard Have fun Be a good teammate Learn from mistakes Win
The Secret to Happiness
The Secret to Happiness
Self-delusion
Hypocrisy
Ignorance
The Secret to Happiness
Ignorance is Bliss“People who do things badly are supremely
confident in their abilities—more confident, in fact,
than people who do things well. Not only do they
reach erroneous conclusions and make
unfortunate choices, but their incompetence robs
them of the ability to realize it.”
Dunning, David Journal of Personality and Social Psychology December 1999.
The Secret to Happiness
Why?
Researchers believe that the same skills
required for competency are the same to recognize
incompetence.
Critical ThinkingImagine
“Imagination is more important than
knowledge.”
Einstein
“The reasonable man (woman) adapts himself to the world. The unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on unreasonable men (women).”
George Bernard Shaw
The Secret to Success
Focus on what matters Identify drivers of value Embrace diversity Face reality Wonder, worry and
doubt!
References
Ailes, Roger. You Are the Message. New York. Doubleday, 1988. Bazerman, Max H. Smart Money Decisions, Wiley & Sons, 1999 Buckingham, Marcus, First, Break All the Rules, Simon & Schuster, 1999. Cialdini, Robert B. Influence: Science and Practice. 3rd Ed. New York:
Harper Collins, 1993. Ghemawat, Pankaj, Strategy the Business Landscape, Addison Wesley,
NY 1999. Golman, Daniel, Emotional Intelligence, Bantam Books, New York, 1995. Hirshberg, Jerry, (Founder Nissan Design International) The Creative
Priority, Harper Business, NY, 1999 Koch, Charles G., The Science of Success, Wiley & Sons, 2007. Lakoff, George, Moral Politics, Paul, Richard. Critical Thinking. Santa Rosa, CA: Foundation for Critical
Thinking, 1993. Pink, Daniel H. The Whole New Mind, Riverhead Books, NY, 2006. Schramm, Carl J. The Entrepreneurial Imperative (HarperCollins) 2006.