Critical Thinking

Engage the Fox on Radio

If you are in the listening mood, I have done a couple of radio interviews recently that outline some of the critical thinking basics outlined in Engage the Fox.

Take Action Get Profits with Michele Scism, How Critical Thinking Can Drive Profitability. I’m on at the 13 minute mark (thanks GSL!)

560 CFOS Owen Sound, ON

Monday Morning QB: Five things we learned from Superbowl XLIX

I adore Superbowl. I love any spectacle that everyone is watching as a collective and I love eating junk food. Plus, roman numerals are the best. So Superbowl is a natural even though instead of the great US commercials, we Canucks get ones for Home Hardware’s Ultimate Spin Mop.

I kid you not. We have to watch the Superbowl commercials the next day on You Tube. But still, we love Superbowl, in part because you can learn so many lessons about business:

1. You need to engage your stakeholders

Nationwide Insurance decided to feature an ad using a child who drowned. Ouch. This is a risky strategy anytime. But to play such an ad during Superbowl? I have to think that this was one of those decisions that involved very few people. Did they ask football fans what they thought? Bereaved parents? Anyone? Based on the swift negative reaction on social media, they did not engage their stakeholders. They are now claiming that they were not trying to sell insurance, but trying to start a conversation. Well, they sure did that… Carroll’s was not the only bad call of the night

2. When you let others shine, you shine too.

So, Katy Perry. Pretty good, huh?The video floor was very cool and the structure that flew her around during Firework was inspired. And yet, Katy knew that when it comes to delighting your audience, it’s best to have a trick in your back pocket. Enter Lenny Kravitz who was good, and then Missy Elliot who shone shone shone. In fact Miss Missy’s Lose Control had a streaming uptick of 1396%. But did we think less of Miss Katy? Nope, we thought more of her. When you surround yourself with great people, you look great too.

3. Be careful with over thinking decisions when emotions run high.

Not sure if the Seahawk’s Peter Carroll made the Worst Call Ever, but it sure as heck wasn’t a good one. Seattle was one yard — one yard! — away from a probable Superbowl win, when they decided to pass instead of run in the ball. When stakes are high, it’s important to think critically. Running, especially one yard, is typically a safer strategy than passing. As Darrell Royal pointed out in 1963, “three things can happen to you whenever you throw the football, and two of them are bad. You can catch the ball, you can throw it incomplete, or have it intercepted.” Whoops.

4. Play to your strengths.

Compounding everyone’s feeling that this was a bad call was the fact that the Seahawks failed to use one of their biggest assets. Running back Marshawn Lynch is know as “Beast Mode” for a reason. According to The Guardian (where everyone gets their US football analysis, no?), he was this good. I’m not a football expert, but if I were running a football team and had a guy nicknamed Beast Mode based on his ability to run in the ball,  and I needed to run in the ball to win a really big prize, well, I have to think that I’d take advantage of that. The key takeaway here is when you have experts in house, use them.

5. You never know who your heroes might be.

Four years ago, Patriots rookie Malcolm Butler was working at Popeye’s after being kicked out of school, with a not very promising future in football. Last night, he won the Superbowl for the Patriots based on an incredible interception. Let everyone in your company have the chance to be a winner and they just might show you the amazing things they can do.








8 Habits of Effective Critical Thinkers

Critical thinking is the ability to make decisions, solve problems, and take appropriate action in a systematic fashion. It has been identified as one of the key skills required for future success by educators, business leaders and governments. 97.2% of managers surveyed by the American Management Association for its 2012 Critical Skills Survey believed that critical thinking skills were important to drive future growth of their organizations. The same group, however, believed that only 10% of their employees were fully competent in critical thinking. As most of us could improve our thinking skills, here are eight simple ways to become a better critical thinker at work and in life:

  1. The five second rule.  Nope, this isn’t about the edibleness of that cookie you just dropped on the floor. We are talking about the brief pause you should take before making a decision. Some decisions require the triune or instinctive brain (“Hungry!), others the limbic or emotional brain (“That cookie would make me feel better”), and the rest the neocortex or rational brain (“That cookie fell where the wet dog was sitting and therefore should not be eaten.) By taking a brief pause of a few seconds, we allow the appropriate brain the time to function.
  1. There is no “I” in Critical Thinking. (Scratch that, there are several of them.) Thinking is, in many ways, an individual activity (“group think” and “sharing a brain” are not overly positive terms.) This does not mean that most decisions should be made in isolation however. The more people who are involved in making a decision, the more successful it tends to be. With differing points of view, you will get better ideas on the table as each person can draw from his or her experience (“My aunt once got very sick from eating a cookie off the floor.”) Effective critical thinking involves four key skills: gathering information, generating ideas, evaluating options and gaining agreement. Nobody has equal strength in all four areas. The best thinking happens when several people pool their individual thinking strengths to arrive at a collective solution.
  1. Not my circus, not my monkeys. You can waste a lot of time and energy trying to change what is outside your sphere of influence. Take a page from the oft-quoted Serenity Prayer: accept the things you cannot change; change the things you can; and learn to recognize the difference. Put your time and energy into the issues over which your have control: your team, your clients, your product line… If someone else’s cookie falls in the floor and they eat it, that’s not your concern.
  1. Assume nothing. Have you ever been at a training session where the guy at the front of the room reminds you that to assume makes an “ass” out of “u” and “me.” Annoying, huh? It’s also totally correct. Critical thinkers never assume. They ask open questions to find the information they need, rather than trying to confirm what they already think (“Cookies on the floor are fine to eat, right?”) Don’t assume that other people think the same way that you do: ask them for their perspectives. You’ll arrive at better solutions this way.
  1. No bandaid solutions. Often we are so eager to fix the problem that we don’t take the time to figure out what the problem really is. A big trap here is correlation versus cause. Correlation means that two things happen at the same time. Cause means that one thing causes the other. Let’s say that ever since your birthday, you’ve been dropping cookies on the floor. Has age made you clumsy? Perhaps. Or perhaps the new hand cream your aunt gave you for your birthday is making your hands slippery. Critical thinkers always seek root cause.
  1. Stay at the reins. Plato, a 5thC BC philosopher, used the concept of a charioteer driving two horses to describe human nature. One horse had an ethics-driven code of conduct. The other one simply followed his emotions and appetites. The job of the charioteer, Plato’s symbol for the rational mind, was to keep these two horses going in the same direction. Critical thinkers keep a tight hold on the reins to bring reason and emotion into balance. They know that just because we want to believe the cookie is edible, doesn’t mean it is.
  1. Don’t jump to conclusions. Perhaps your significant other always eats the last cookie. So when you get home from work and see that the cookie you have been craving all day is gone, you blame your spouse. He looks guilty. There are crumbs all over the floor. Jumping to conclusions too quickly can lead one to wrong information and poor decisions. Before you start to yell, take a look at the dog in the corner with the oatmeal-cookie crumb beard… Critical thinkers draw conclusions from their evidence, not evidence from their conclusions.
  1. Consider the risk. A lot of life focuses on risk mitigation. Think about fire safety: we install smoke alarms, fire hydrants, fire extinguishers and emergency exits. While these things reduce the damage of fire, they do nothing to prevent the fire in the first place. In order to prevent a fire, you must do complicated things like update building wiring to prevent electrical fires, initiate strategic ground fuel burns and tree cuts to prevent wildfires, and disallow smoking and campfires in high risk areas to prevent controlled fires from spreading. Installing a couple of new batteries in the smoke detector each year is so much easier. Effective critical thinkers know how important prevention is, however. They will keep their kitchen floors sparkling clean so that if someone happens to drop the cookie, there is little risk it will make them sick.

Keeping the above points in mind will make you an effective critical thinker: you will solve problems more easily, reach better decisions, and will have more agreement from stakeholders. Your life will be easier, you will be more popular, and your enemies will have more reason to hate you. But hey, that’s the way the cookie crumbles.

Beware The Borg

Once upon a time there was a group of like-minded people who worked for a major bank. They worked well together, went out for lunch together often, and even their mannerisms were alike. Other groups remarked on their cohesiveness, referring to them (in their less-kind moments) as The Borg, in reference to a group of Cyborgs on Star Trek who, basically, shared a brain.

For a long time, theirs was the group of choice. They had more deal flow, they got bigger bonuses, and they seemed to have so much darned fun. Even the most misanthropic among us looked upon The Borg with a degree of envy, as they seemed to lack the competition and infighting that plagued the other groups.

The last time I’d been struck by such cohesive gang was when I was interviewing with the consumer packaged goods companies right out of school. At one such company, I was taken out for lunch by a happy bunch who spent the hour telling me how they loved working together so much that they also chose to be friends outside of work. They ate lunch together, played ultimate frisbee, and a number of them had even decided to get married. If one of the senior category managers had not waxed on at length about his personal dream of seeing the entire population in diapers (even though his category was baby goods, it still put me off) I might have signed on.

Back at The Borg, trouble was brewing, however. While all of that togetherness made for a tight-knit and happy group, it was also contributing to some fairly significant groupthink.  Groupthink is more likely to occur among groups of people who — no surprise here — think the same way. When there is little diversity of thought, there tends to be little conflict, and people tend to get along really, really well. It makes for a lovely place to work until the wheels fall off. In the case of The Borg, the wheels fell off in a fairly significant way. The group was involved in asset securitization and packaging up, among other things, CDOs. The Borg had morphed into The Big Short.

Now we are not blaming that one little group for the entire financial market collapse of 2008, but a closed culture can often result in blind spots. It is interesting that whenever there is a highly dysfunctional entity, people often remark on how strong the corporate culture was (think of Tyco’s culture of pushing the envelope or the investment banking culture of attempting to offload risk.) Yes-men are rewarded, naysayers are not tolerated, and the very thing that can make companies strong — clear goals and an aligned workforce — can also derail them. Dissent and conflict are not comfortable, but they are necessary for organizations that want to think through issues critically. It’s good to have a few foxes around to point out when the emperor has no clothes.

I’m not suggesting that we fill our companies with iconoclasts — a clear, cohesive culture is an effective way of getting things done — but I am suggesting that whenever we see evidence of The Borg forming, it makes sense to add in some new blood, to recruit a different type of candidate, or to shuffle the  deck chairs a bit.

Hurry up please, it’s time

There is this wonderful passage in Anne Lamott’s Traveling Mercies. The writer is with her best friend Pammy, who is in the last stages of a terminal illness.

We were at Macy’s. I was modeling a short dress for her that I thought my boyfriend would like. But then I asked her whether it made me look big in the hips, and Pammy said, as clear and kind as a woman can be, “Annie? You really don’t have that kind of time.”

We really don’t have the time to waffle around and second guess simple decisions. Buy the dress. Don’t buy the dress. Move on. Life’s short.

The same is true in business, where people — who would be reluctant to throw away, say, 3/4 of their profit margin — think nothing of taking a month to decide on something that ought to take a week. Big companies are interviewing candidates 10-12 times over several months before making a decision on a mid-level hire. Investors do due diligence for the better part of a year before deciding to move forward or pass on a deal. People hold two and three hour meetings where items on the agenda are discussed but no decisions are made. True, there are some bet-the-farm decisions that need careful consideration and time to elicit buy-in from all the stakeholders, but for most issues, there is no one right answer and any decision would be preferable to taking so much time. So why do we lallygag when it comes to making a choice?

Lack of process. If you don’t have a good decision making process, you tend to feel that you are missing a critical piece of information. You don’t have confidence in your methodology so you look for more data, ask more people, do more analysis. Sometimes this is a good thing but often it’s just burning daylight. A good process will help you know the difference and encourage you to move forward if appropriate.

Discomfort with ambiguity. We hate making decisions in situations where ambiguity prevails. One of the benefits of a liberal arts education  — in addition to helping one sound like a smarty-pants at dinner parties and preparing one for an excellent career as a barista  — is that it you learn very quickly that there are no right answers and you never have perfect information. Writing all of those papers on odd topics (The Voice of the Child in Western Canadian Prairie Fiction. Seriously.) teaches one to survey a huge body of information and take a defensible view on the topic. You quickly learn that if you waffle around and wait for perfect information, you’ll be doomed. Memorize this phrase: “good enough for who it’s for,” then move on. It’s what artsys do.

We feel like we are moving quickly. We tweet, we text, we answer emails until our thumbs seize up. We digest more information in a week than people used to absorb in a year. We jump on and off planes and Skype and go to endless meetings. And every 3 months, we are judged on our performance. So we must be making decisions quickly too, right? Wrong. Decisions require some focused thinking and that rarely happens while tweeting, in a meeting, or jumping on and off planes. An hour or two thinking critically about a decision can save weeks or months of time.

It feels like a high stakes game. The reality is, making decisions involves taking risks. A good decision making process helps to mitigate the risk but nothing is for sure. We are so averse to loss, that the potential to make a mistake can cause us to freeze. But doing nothing is almost always worse than doing something: as T.S. Eliot wisely noted, the world ends not with a bang but a whimper. A company that wants to move forward knows that mistakes will be made and will make its people feel secure in spite of that. Making a bad decision should not be a career killer; making no decision should be.

There is safety in numbers. Once upon a time, if you wanted to hire someone, you called a trusted recruiter and a few weeks later you were taking the new guy to lunch at The Keg. If the guy turned out to be a jerk, you fired him and started anew. Now if you make a wrong hire, you and your company can be slapped with a law suit: high stakes. Best you involve HR and recruiters in the process and CYA by using behavioural interviews, reference checks, background searches, and psychological assessments. Oh, and bring the candidates in for a dozen interviews with lots of people to see if something weird comes up. If you happen to hire a bozo, there will be so many other fingerprints on the mess that you can tiptoe away. Phew!

Data overload. Columbia University’s Sheena Iyengar ran the famous “jam test,” which showed that when we are faced with  too many varieties of jam, we are unable to choose which one to buy and so we simply walk away. An abundance of choice leads to decision paralysis. We now have more data available on our phones than was once stored in the best graduate school libraries.  We are used to data being able to solve our problems. We think that the answer lies “out there” and with a bit more time we will stumble across the one piece of data that will help us make the perfect decision. We never have perfect information so just decide already. The quick brown fox — not the perfect fox — jumps over the lazy dog: speed up.

Decision making is not a proxy for having a crystal ball. When we are asked to make decisions that have a future impact (in other words when we are asked to make any decision), we want to have some certainty about the future before moving ahead. Of course, this is impossible but we demand it nonetheless. When I worked in banking, we toiled away at creating pro forma financial statements that showed, say, if a company post-aquisition had any hope of repaying its loans. From this, we then created projections of the financial statements based on all sorts of assumptions about the future, some of which were wildly optimistic. We’d then present our findings to senior members of the bank who sat on “Deals Committee.” People were very serious and gruff and asked us if we were “certain” of our numbers. Were we certain of projections of pro formas? Um, OK, we can go with that…

The hips don’t lie (but the numbers might.) At this same Deals Committee, we noted that people seemed to derive more certainty from numbers than from any other type of information. People would rather make a decision based on these projections of pro formas than drill down to understand the underlying assumptions. So showing a spike in EBITDA three years down the road got more airtime than determining if there was a good succession plan for the aging CEO or if the industry that they dominated was on the wane. Numbers feel safe but they are not gospel. By looking at the entire picture, you can feel more comfortable moving ahead.

Values aren’t clear. When you go to McDonald’s do you get flummoxed when they ask you if you want to supersize your meal? Of course not. You have your own pre-established heuristic when it comes to fast food. Fast Food = Fat = “No thanks.” Or Supersize = Good Value = “Yes please!” Yes or no is easy. If you walked in to the place with no sense if you valued health over bang-for-your-buck, your decision would be more difficult. If your company values are clear, you make people’s jobs that much easier.

You are out of practice. Practice making unimportant decisions quickly. Many decisions require wading through information, detailed analysis, stakeholder consensus building, and careful deliberation. Many decisions don’t. We are used to demanding that we make the best decision rather than a decisions that suits our needs. As Gretchen Rubin points out in her book The Happiness Project, Satisficers are happier than Maximizers. Find a solution that works and go with it. Practice making unimportant decisions quickly. You can practice by playing videogames (studies show that it helps.) You can flip a coin. I have one of those unazukin dolls that were popular a few years ago. It’s basically a mashup of a Russian matryoshka doll, Fisher Price Little People circa 1975, and a Magic 8 Ball, and when you ask it a yes or no question, it randomly nods or shakes its head (clearly unazukin is Japanese for “too much discretionary income.”) If it’s not all that important I let the unazukin decide.


Innovating innovation

A while back, The New York Times Magazine ran a terrific article, In Pursuit of the Perfect Brainstorm, about companies who are paying a lot of money ($200,000 for a one-day session) to (un)consulting firms like Jump Associates to help foster innovation and creativity.

Author David Segal gave a glimpse into the world of hired innovation:

Last month, in a small room on the fifth floor of a high-rise building in San Mateo, Calif., three men sat around a table, thinking. The place was wallpapered with Post-it notes, in a riot of colors, plus column after column of index cards pinned to foam boards. Some of the cards had phrases like “space maximizers” or “stuff trackers” written on them. Many had little three-dimensional ink drawings and titles, like “color-coded Tupperware horizontal stacker.” It looked as if these guys had been locked in and told they couldn’t leave until they dreamed up 1,000 of the wackiest home-storage items they could imagine.

The accompanying photo shows a “group stretch” on a rooftop of an office building. The people look a bit awkward — two of the guys appear to be doing “The Robot;” if you saw the Black Eye Peas’s Tron-inspired Superbowl half-time show a few years ago, you’ll have the right image in your mind.

The piece presents the whole thing as being a bit silly; as a rule of thumb, when profiled by the media, people who charge up to $500,000 per month for consulting services rarely go unscathed. Plus, we’ve all been to those corporate retreats where some enthusiastic functionary has determined that what we need to regain our profitability is a good game of whirlyball. The next day, of course, it’s back to business as usual. (The exception was years ago when one of the senior people had way too much to drink at an offsite and revealed during one of the “sharing moments” that she did not think her husband was the father of one of her kids. It was not business as usual after that one, but I digress.)

Jump hopes its methods are stickier. As the article points out, what Jump’s clients have recognized is that we are in an “innovate or die” world, where good leaders are no longer required to simply move the needle by trimming costs or growing sales but might have to totally reformulate the business model in order to survive. Often they find themselves surrounded by technically competent people who are either unable or unwilling to bring the necessary creative thinking skills to the table to make that leap.

Case in point: a coupe of years ago I was encouraged to apply for a job with a major financial institution. The role sounded pretty cool, involving lots of the “big picture” stuff. I suspected that they were interested in me because I have wholesale banking experience and therefore would have some internal credibility. I also thought they’d be interested in some of my recent experience doing more creative work: work that informed my business thinking every bit as much as my MBA had. So imagine my surprise when the interviewer started to ask me about things I’d done in 1996.

For those needing a refresher because it was so long ago, 1996 was when DVDs were launched, Fargo was the sleeper hit at the box office, Charles and Diana divorced, and people were doing the Macarena. Remember that? Me neither. I had to Google it.

In 1996 I had a job title that sounded a lot like the job title for which I was being interviewed. The jobs were totally different, the times were totally different, but the titles were the same. The answers I gave about the work I did back then aligned quite nicely with the questions they were asking. Of course, given that I was, you know, a mere kit when I held that role, we got into the whole “are you senior enough for this role?” discussion. Ugh. It was frustrating for them and exhausting for me (try to think specifically about work you did when the Spice Girls were big…)

The problem is one that Roger Martin identified in his interview with IdeaConnection. He discusses the importance of framing your thinking based on which of the three stages your business is in: mystery (the “who knows what’s going on here” stage: I have a mental image of Shaggy and Scooby driving around in the Mystery Machine, open to a variety of ideas), heuristic (“we sort of know what’s going on and here are some general rules of thumb to help everybody out”: e.g. when profiled by the media, people who charge up to $500,000 per month for consulting services rarely go unscathed) and algorithmic (“we totally know what’s going on and have developed this elegant formula so we can be more efficient”.) If you think about what stage your business is in, you can apply the appropriate thinking. In the case of this financial institution, they were building a new group to drive change. The job description was ambiguous. Had they been doing something they’d done a million times before, like hiring a new Branch Manager, the interview style would have made sense. But they were clearly in mystery mode (hence their initial interest in my eclectic background) and needed a more flexible way of recruiting than following the standard tick box algorithm. Because nobody seemed to be thinking about the process, we ended up in 1996.

It wasn’t the interviewer’s fault. She was clearly overworked. She didn’t seem clear on her mandate. And chances are she wasn’t being paid to deviate from the script. Most people are fairly bright and start a job enthusiastic and engaged, but after time they get ground down. It takes bravery to put new ideas out there, to think creatively, and to declare “hey I’m trying to solve a mystery over here” while everyone else is busy filling out their tick-sheets. Organizations have traditionally rewarded the algorithms (x = easier better faster cheaper) and heuristics (“nobody ever got fired for buying IBM.”) The guy driving the Mystery Machine often is overlooked: his work is too ambiguous, too hard to measure. If innovators, who tend to play a lot in this space, want to prosper, they tend to go work for themselves.

Firms like Jump have prospered as companies realize that they need to bring innovation and creativity in-house. As Segal points out, “in recent years, much of corporate America has gone meta — it has started thinking about thinking. And all that thinking has led many executives to the same conclusion: We need help thinking.”

Bringing in outside help can be an important signal to employees that things are changing: that creative thinking and innovation are valued and rewarded and it will no longer be business as usual.

Bring on the Post-it Notes and the robot arms.


Wanted: Accountants Who Can Think

In a study on recruiting within the accounting profession, Grant Thornton LLP found that a majority of CFOs identified their major recruiting challenge as “not enough individuals in the market with the necessary soft skills (e.g., critical thinking and problem solving, negotiating and communication.)” Specifically they were looking for candidates with “greater use of judgement in the application of accounting principles” and “increased reliance on data analysis to enhance decision-making.”

Many CFOs interviewed found that “accounting professionals possess deep theoretical knowledge which is due to the emphasis on rules-based accounting and modeling in the United States, yet those same individuals struggle when asked to conduct a general analysis or diagnose an issue from a practical or business application perspective.”

The accounting world been criticized over the past few years after some headline- dominating blunders and it’s refreshing to see that CFOs are recognizing the role that critical thinking can play in shaping the profession.