1. 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
2. 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.
3. 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
4. Critical Thinking
“The world potential market for copying
machines is 5000.”
IBM turning down the eventual creators of Xerox
5. Critical Thinking
“I think there is a world market of about
five computers.”
Founder of IBM in 1943
6. Critical Thinking
“Who the hell wants to hear actors
talk?”
Warner of Warner Brothers arguing against the
need to add sound to silent movies
7. 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.
8. Critical Thinking
“Sensible and responsible women do
not want to vote.”
President Grover Cleveland, 1905
9. 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
10. 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
11. 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
19. 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.
20. 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
21. 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
22. 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
23. 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.
24. 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
25. The Strength of Great
Accountants
Innate love of precision
Happiest moment is when the books
balance
Gallup survey
26. 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
27. “Our minds are like inmates, captive to
our biology, unless we manage a
cunning escape.”
Nassim Taleb
The Black Swan
29. 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.”
30. Basis of Human Action and
Decision Making?
Beliefs Act out your beliefs
Desires Pursue your desires
Instinct Succumb to instinct
31. 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___.
33. 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.
34. 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
35. 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.
36. 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?
37. 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
45. 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%
46. 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
47. 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
48. 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
57. Value Focus
Loss of Trust & Respect
Trust Issues
Consumers
Dealers
Workers
Beat up suppliers
Banks, Public opinion
Shareholders - Bondholders
58. 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
60. 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
61. 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
62. 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
63. 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.”
64. 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
68. 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.”
69. 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
71. 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.
72. 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
73. 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
74. 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
77. 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?????
78. Junkfinger Test
Tattoos
Traffic tickets
Brushes with the law
Being sick
Promptness
Pets
79. If You Don’t Want to Fall in the
Grand Canyon--Don’t Go to Arizona
What I do today
affects what
happens
tomorrow.
80. 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
81. Goldfinger
Behavior and attitude that put you in a
position for good things to happen:
1. ?
2. ?
3. ?
4. ?
5. ?
82. Most people end up where their
behavior indicates they want to be.
83. 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
85. 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
86. 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
87. 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.”
88. 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?
89. 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.
90. 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
91. 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
92. 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
93. 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
96. The Secret to Happiness
Self-delusion
Hypocrisy
Ignorance
97. 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.
98. The Secret to Happiness
Why?
Researchers believe
that the same skills
required for
competency are the
same to recognize
incompetence.
99. 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
100. The Secret to Success
Focus on what matters
Identify drivers of value
Embrace diversity
Face reality
Wonder, worry and doubt!
102. 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.
Editor's Notes
People vs. Deer World’s worst sentence “ People have two legs, animals have four, except fish which have none.” Old joke Reactive life vs. Proactive life Free will can be measured on a continuum
--1990’s Congress and the President declared it the decade of the brain. --Lewis L. Judd, former director of the National Institute on Mental Health said “The pace and progress of mental health is so great that 90% of what we know about the brain has been learned in the last 10 years. Positron Emission Tomography (PET) and MRI allows scientists to see the brain work -- if she has a 4 lane highway for empathy, she will feel the emotions of everyone– if not, she will hurt people’s feelings by saying the wrong thing at the wrong time Synapses are the connections between the cells By age three– up to 15,000 synaptic connections per neuron
Emotional part of the brain sends a smile message and the voluntary mussel module sends a concerned look message One talent prospers at the expense of another Impulses and gut reactions The rat brain loves short cuts (heuristics) Dumping stocks in a down market is the same as fleeing a lion-- ,loss avoidance
People vs. Deer World’s worst sentence “ People have two legs, animals have four, except fish which have none.” Old joke Reactive life vs. Proactive life Free will can be measured on a continuum
Once your mind is inhabited by a certain belief you will tend only to consider factors proving you right. Therefore the more information you get the more certain of you are certain of your rightness
Mercedes 2.4% Audi 1.2% Mini 0.8% Volvo 0.8% Mitsubishi 0.8% Landrover 0.6% Saab 0.2%
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.
Image focus is an offensive concept– it implies image is more important that substance Memphis State John Calipari 5 years no tournament Graduation rate 0% Attendance 40% Relentless marketing to players, recruits, fans and corporate boosters “ When you are building a basketball program you are trying to create a love affair.” FedEx Fred and advisor (He asks me about management and organization) Sold 1000 tickets at a barbeque at his house 2.5 million on advertising– all private money Image matters – class attendance, 4 star meals, waiting room (plasma and Xbox), traveling academic advisors Graduation rate 79% Marketing in China 300 Million kids play the sport Host coaches in Memphis Met national team Hires Chinese coaching intern Calipari at UMass Logo Opened his own store He pushed orders Kept adverting $$ for Radio & TV shows Pushed season tickets – got a cut Scheduled high profile games appearance fees $63,000 to more than $1 million
Existing technology used in South Africa Pentagon arguing for ships fighters and radar Pentagon brass afraid they would end up surplus $1 million each Ordered $20 Billion worth 16,000 vehicles Bought ballistic steel before deciding who would build the vehicles 60 years no president has failed to replace Sec of defense– even in the same party