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“For making smart decisions, critical thinking skills matter more than IQ”

Adam Grant, Thinkers50 (number 8!)

“You want me to study how to think and how to make business decisions? But I do these things successfully, on my own, every day!”

This is the first reaction managers have at the beginning of one of my Thinking and Deciding in Business courses. Nevertheless, participants understand quickly the value of the information they receive („during Saturday’s course I had a strong change of perspective on some choices I make every day” – MBA participant) and the value of the practical projects (“excellent for our company, I must say; applied in practice simultaneously with writing” – MBA participant).

But how can I convince a successful manager, who may not even know that managerial thinking can be studied and improved, to try a structured approach on how (s)he decides in strategic situations? How can I convince her (him) to stay flexible and curious? To read Haidt, Kahneman, Cialdini, Heath, Pantiş and Adam Grant? Harvard Business Review and Biz? To listen to podcasts by Andreea Roşca and Paul Olteanu? To enroll in an MBA or, together with the team, in a course designed for their company?

How we learn

A few words on how we learn stuff: Humans do not come into this world with a blank-slate mind, but with a sort of an operating system already in place, helping the newborn acquire and organize new information and favoring certain patterns of thinking. We then learn to think and to decide naturally, starting in our early childhood.

Then, in school, we are taught what to reason. In the absence of any structured education on how to reason and to decide, it is mainly learning by doing. We practice every day, in our personal and professional lives: when we listen to a speech made by a political candidate or we read a business proposal, when we try to find the best arguments for convincing a friend to go to the movies or a client to try our service, when we choose the movie to go to or a project to invest in.

The more flexible amongst us employ a scientific mindset, look at the outcome, and use trial-and-error to improve their future thinking and deciding. It is painful, slow, and costly, but it works. Somehow. The less flexible amongst us automate and solidify certain patterns of thought that might have worked once and apply them continuously, without much thinking. Indeed, counterintuitively, we often think without thinking. Unidentified assumptions, biases, and thinking patterns are the main reasons behind personal and professional failures.

As Carl Jung famously put it, “until you make the unconscious conscious, it will direct your life and you will call it fate.”

Even for those with a flexible mindset, learning from experience is slow, undependable, and may come too late. Sometimes it is even “impossible, when the events are rare or feedback is absent or unreliable” as German psychologist Gerd Gigerenzer and his collaborators showed in a 2008 study. For instance, when we consider leaving our corporate job to open a specialty coffee shop, there may not be past decisions that can inform us on how to think things through. Also, the results may come after many years and may be too unclear (ok, I am satisfied with doing what I love, but I earn less, and I don’t like the insecurity of being an entrepreneur) to guide our next big decision. The same with internationalization, M&As, hiring key people, and navigating a crisis.

Should we study thinking or deciding?

Why don’t we introduce, then, Thinking or Deciding as subjects to be studied in school, like Math and Physics. Aren’t they as important? Don’t we need to understand the ins-and-outs of human thinking and deciding as much as we need to understand Pythagoras’ theorem and Einstein’s energy equation? Don’t we need to practice these as much as we practice music or sports?

What if there would be subjects called Thinking or Decision-making? Until they are introduced in our schools, we teach them as part of our business education. In management, we can learn how to order and assess our criteria for choosing a supplier over another, how to identify hidden assumptions in our plans, and how to deal with the irrational tendency to continue failing projects.

What would I say to a successful manager who is skeptical about training his/her managerial thinking? I would emphasize the benefits of two cognitive perks that occur after such a course or workshop: the habit of thinking about our thinking – metathinking – and the knowledge to address complex issues through a structured, step-by-step process. Let’s take them one at a time.

Metathinking or thinking about thinking

“Let’s look carefully at the way we think” is not a new advice. It was given, some time ago, by Socrates and Buddha, and today it is one of the main pillars of the Cognitive Behavioral Therapy. And yet, analyzing our own thinking does not come naturally. It is neither pleasant (because we might identify errors in our thinking and we don’t like that), nor easy (because the mind is used to automatize its functioning). However, with a little bit of practice, we can get used to metathinking.

A CEO, whose daughter asks him to buy her the latest phone just because all her colleagues have one, will immediately tell her that this reason is not enough and will ask her to explain how exactly that phone will be useful to her. It is easy to identify a weak argument when it comes from someone else. However, an hour later, at work, the same CEO may decide without any intrinsic argument to implement the latest managerial practice (BPR? MBO?) only because all the players on the market have already implemented it.

Doing something blindly, just because others do it, is wrong. But when we do it ourselves, the mistake is not so obvious to us anymore. Investigating our own thinking, however, especially when stakes are high, identifies such reasoning errors (or lack of reasoning) that we normally overlook.

The human brain is lazy and pushes us to use it as little as possible. It will use shortcuts, look at similar situations differently, choose instinctively and rationalize afterwards. Even if we are perfectly capable of thinking well, our lazy brain may choose to walk mindlessly (sic!) on beaten paths (in the example above, beaten by others).

It is good to be aware of when this happens. And to train not only our thinking skills, but especially, when stakes are high, our inclination to use them. How do we do that? We take a look at the way we think. When facing a strategic decision, we can ask ourselves “how will I make that decision?”, write the answer somewhere, and then do as we wrote.

Before launching an important project, we can gather the project team and identify our hidden assumptions by performing a pre-mortem analysis. However, such simple techniques can be applied only after a manager has gone through a process of making his thinking flexible, so that he may accept that he can be wrong and understand the benefits of structured thinking. I believe this change of mentality is the main benefit that yields from training our managerial thinking.

The step by step process of thinking

Most managers believe they address strategic problems properly, in a logical, sequential way. However, when trying to give a recent example of a situation when they have gone through specific steps, managers realize that in reality they address strategic issues in a much more unstructured way. And yet, every step has its purpose.

Starting with understanding and defining the problem, continuing with finding the root cause, then with formulating the objectives, identifying a set of potential solutions, analyzing them using a predetermined set of criteria, and choosing one of the solutions. Obviously, followed by implementation, feedback, adjustment and so on.

Each step, taken seriously, gives tangible results; each step, missed, may lead to poor solutions; the whole process, when learned properly and practiced often, yields not only better solutions, but also a systematic, almost philosophical understanding of situations.

If we neglect the first step, for instance, we may be inclined to define a problem as a lack of something and narrow our search for potential solutions. When we define our decreasing sales as a lack of something – “we don’t have enough salespeople” – we may overlook alternative solutions, such as improving product market fit or finding alternative sales channels.

The second step is diagnosis. In Principles, Ray Dalio says that even though diagnosis takes a short time, between 15 minutes and an hour, and saves a lot of future trouble, it is ignored by most managers. Root cause analysis is on everyone’s lips, 5-Whys and Ishikawa are well known, and yet, 99% of managers have never really done them, with pen on paper. And I have seen managers whose perspective dramatically changed after such a five-minute exercise.

Then, identifying two or three possible solutions to choose from also seems common sense. However, a study by Paul Nutt reveals that 70% of strategic decisions are made by top management teams after considering only one option. A kind of incomplete choice, not between at least two options – “A or B?”, but only “whether or not to do A”. Another study shows that if we evaluate at least two options, the chosen solution can be 6 times more efficient!

I will not justify all the steps in the sequential approach to solving a complex problem. Nor do I think this process is set in stone; it must be adapted to the situation and to the person. However, understanding it well and practicing it often can lead to a rational, helpful habit of approaching problem solving.

Introspection and step-by-step decisions, two of the benefits that result from training our managerial thinking, are useful not only for business, but for any aspect of our lives. Will you give it a go?

Radu Atanasiu teaches Thinking and Deciding in Business at Bucharest International School of Management. Managers can train their managerial thinking in the MBA program (in partnership with the Maastricht School of Management), in the Fast Track program (mini-MBA) and in the workshops adapted for companies.

Bucharest International School of Management (BISM) launches in September 2021 three undergraduate programs (facultate) in partnership with Abertay University in the UK, so that young business enthusiasts can study in Romania following the curricula and with a diploma from Great Britain. Details and registration on bism.ro.

A Romanian version of this article first appeared in Biz magazine.

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