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Critical Thinking Chesapeake 3/6/13

This document discusses critical thinking and provides examples to illustrate key points. It begins with a brief biography of the author, Andrew L. Urich. It then provides several quotes from business leaders who failed to think critically about emerging technologies and underestimated their potential. The rest of the document offers tips, anecdotes and research findings about how the brain works and how to apply critical thinking skills. It emphasizes focusing on what matters, identifying value drivers, embracing diversity, and facing reality.

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Critical Thinking Leading Innovation and Value Creation Andrew L. Urich, J.D. Puterbaugh Professor of Ethics & Legal Studies Spears School of Business Oklahoma State University aurich@okstate.edu www.andrewurich.com
Critical Thinking Don’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 Workings The 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 Workings The 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 Workings The 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
Applications Using 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
Beliefs You 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___.
Beliefs Filters 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 2009 Passenger 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 1.  Face reality
Focus on What Matters JD Power Top 10 Reliability 2004 2007  Buick 145 Porsche 110  Lexus 145 Lincoln 114  Cadillac 162 Buick 115   Mercury 168 Lexus 115   Honda 169 Mercury 121   Toyota Toyota 178 178 Toyota Toyota 128 128   BMW BMW 182 182 Honda Honda 132 132  Lincoln 182 Ford 141  Lincoln 182 Ford 141  Subaru 192 Mercedes 142  Subaru 192 Mercedes 142  Jaguar 197 Acura 143  Jaguar 197
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
Calipari Focus 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 Focus Loss of Trust & Respect  Trust Issues  Consumers  Dealers  Workers  Beat up suppliers  Banks, Public opinion  Shareholders - Bondholders
Value Focus Loss 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 Focus Japan 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 Billion R&D and capital spending  1997 GM = 40 Billion
Face Reality Ross 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 Reality Ask 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 Reality Let’s ignore gas mileage
Face Reality No 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.
Applications Management 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
Applications Jack 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 Test In 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 Future vs. 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-awareness Metacognition “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 Creation Goals 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 Management Andy 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 Thinking Imagine  “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!