“Critical thinking is thinking about thinking while you’re thinking, in order to make your thinking better.” – Dr. Richard Paul, Chairman, National Center for Excellence in Critical Thinking

Among the things that business owners leaders must consistently do in order to achieve and sustain competitive advantage is to make good decisions. The foundation of that good decision making is Critical Thinking.

There are three keys to ensuring that you are critically thoughtful in your approach to making business decisions, including those that involve addressing problems or taking advantage of opportunities:

1. Understanding the context in which the situation arises;

2. Exercising “evidentiary judgment;” and

3. Considering counterargument before finalizing a decision.

Critical Thinking Key No. 1: Understanding the Context

A desire to decide quickly, and to make the decision process efficient and consistent, sometimes leads us to treat past experiences as “binding precedent” for future actions.

We say, “I’ve seen situations like this one before, so I know what I should do here.” Or, “My business should/must do X, because X is what we have always done.” Or, a management team member will say, “We can’t do Y, because we tried Y before and it didn’t work.” Sometimes, what we’ve seen before is a very good predictor of what we should do now. And sometimes it isn’t.

Experience, as Ben Franklin said, can be a great teacher. However, experience can also mislead us if we fail to account for context differences between those past decisions and the challenge or opportunity we are currently facing.

To help you and your business team make more context-savvy, critically thoughtful decisions, start with the following questions:

• What do I think I already know about the situation at hand? How do I know it?

• What beliefs and assumptions do I have about the situation (based on my prior experience, or otherwise)?

• What possible biases do I have about this situation?

• How might my past experience be different from the current situation?

Critical Thinking Key No. 2: Exercising Evidentiary Judgment

When making decisions that involve problem solving, the goal should be to identify root causes and then arrive at a solution that addresses, eliminates or at least mitigates those causes. This requires gathering, evaluating and synthesizing high-quality supporting data, recognizing that not all data is equally relevant or reliable.

One potential evidentiary pitfall that critically thoughtful business owners/leaders take care to avoid is relying on anecdotes, instead of data, to identify the root causes of a problem. Imagine, for example, that a manager speaks to three different customers who say they are no longer patronizing your business because of reason X. To the manager who hears the same rationale from three different customers, it may seem reasonable to conclude that reason X is the cause of declining business. After all, he thinks, “two is a coincidence and three is a pattern.”

In a business that has hundreds or thousands of customers, however, should an owner adopt a solution that is based on what three customers happened to tell one manager? No.

Critically thoughtful business owners and leaders seek, and, in fact, demand, high-quality, comprehensive evidence before deciding what the problem is, what is causing it and how it should be solved. They ask:

• Where did the data come from?

• Is the source an expert? Does the source have an interest in the outcome?

• How was the data obtained?

• Is this data set representative of our customer base as a whole?

• Are there any outliers? If so, how do they affect the conclusion?

Critical Thinking Key No 3: Inviting Counterarguments Before Deciding

Agreement among management team members makes for a harmonious workplace. And yet, when harmony comes at the expense of counterargument, critically thoughtful decision-making is undermined.

Even if there appears to be consensus in support of a particular decision, a business owner/leader should insist upon rigorous counterargument before adopting that solution. Why? Because there is no such thing as a perfect solution to a complex problem, and the only way to uncover the downside of a seemingly optimal solution is to invite dissenting points of view.

Nearly every solution is potentially constrained by internal resource limitations (money, time, expertise) and external factors (political, economic, regulatory). Moreover, there are always unknown future contingencies that add risk and uncertainty to every solution we adopt. Critically thoughtful business owners and leaders do not ignore the risks of, or constraints upon, proposed solutions. They do not try to quell those who express doubt or concern. Instead, they embrace dissenting and countervailing points of view, because they recognize that doing so helps the business arrive at the best possible solution under the circumstances — a solution that takes full account of the potential risks and includes a plan to manage those risks as effectively as possible.

Business owners and leaders should make it a practice to invite and incorporate counterargument into their decision-making process. For any significant decision, the leaders should allow a team member to play “devil’s advocate” and poke holes in any proposed solution – no matter who is proposing it. The devil’s advocate should ask, “Why might this proposed solution fail, and what can we do to minimize the likelihood that it does?” Only when the business owner/leader is satisfied that she has thoroughly considered this question and arrived at a thoughtful and honest response should she proceed to adopt the proposed solution.

Summary

Business owners and leaders who value and develop strong critical-thinking skills become more effective decision makers and stewards of company resources. By understanding the context, developing evidentiary judgment and engaging in rigorous counterargument analysis, business owners and leaders are better able to address issues, solve problems and seize opportunities – including those that others who are less critically thoughtful may fail to appreciate. And that, of course, is the ultimate competitive business advantage.