Success in business is multi-faceted, but one thing’s fairly obvious: without critical thinking skills, vital business decisions would be a disaster. We know it’s necessary, but what is critical thinking and how does it apply to business decisions?
Critical thinking is “disciplined thinking that is governed by clear intellectual standards,” says Michael W. Austin Ph.D. from Psychology Today, quoting his favorite text. “This involves identifying and analyzing arguments and truth claims, discovering and overcoming prejudices and biases, developing your own reasons and arguments in favor of what you believe, considering objections to your beliefs, and making rational choices about what to do based on your beliefs.”
Critical thinking helps you make decisions that circumvent impulse and emotion. Decisions made impulsively can cost your business thousands of dollars.
Information believed to be true drives decisions
Decisions are made based on presumed facts. All statements of fact should be verified prior to a decision. For example, there might be word in your industry that the demand for your services is going to skyrocket in the next three years due to a government policy change. If that’s true, you’ll need to hire more people and probably expand your operations. If it’s not true, taking those actions are an unnecessary expense.
It’s clearly impossible to know what the future will be like in three years, but you can investigate the source of the claim to see if it holds any merit. If it does, critical thinking means assessing the effects of all possible decisions you could make, considering the possible setbacks, and finally making the decision most in alignment with your goals.
Critical thinking can lead to profitable decisions
In 1914, Henry Ford made one of the best business decisions in history. He decided to reduce his employee workday by one hour, move to three shifts per day instead of two, and more than double his employees’ daily pay rate. Ford decided to spend an extra $10 million per year to improve productivity and his workers’ lives. That decision wasn’t made on impulse in five minutes, but the result of advice from Ford’s devoted lieutenant, James Couzens.
There’s no doubt that Ford carefully considered the $10 million yearly expense from every angle. Among the information he likely considered is the fact that workers all over the country were quitting their jobs when they became too physically demanding. Ford wanted his workers to be productive and healthy, and made the decision to spend more money to earn more in the long run. It worked.
Get your decision-making process out of your head
Critical thinking doesn’t happen completely in your head. It can’t. There are far too many details to remember. Part of critical thinking involves identifying the connection between ideas and determining whether the evidence supports those ideas. Another part involves recognizing strengths and weaknesses in arguments that you’d base your decision on. All of this needs to be documented outside of your brain.
There are a multitude of apps that support critical thinking by making the process visual. For example, Setapp describes more than ten apps to help you outline, plan, and structure your decision-making process. It’s easier to make connections between ideas when working with images like the ones produced by mind map apps iThoughtsX and XMind.
That’s quite a process to go through each time you have to make a business decision. Some decisions need to be made quickly, almost instantly. Or do they?
Don’t cave into the pressure to make instant decisions
This one’s tough. In the business world, there’s talk that a person should be able to make split-second decisions about everything, and “sleeping on it” is an excuse to procrastinate. Some say you should be able to make any decision in under five minutes, and if you can’t, put all your options in a hat and draw. That’s a recipe for failure.
It’s easy to make a lightning-fast decision when you won’t suffer the consequences of a poor outcome. For example, if company expenses don’t come out of your pocket, it’s easy to make split-second financial decisions without carefully considering all options. You have nothing to lose. If you make a mistake, as long as it’s not too big, you can apologize to your boss, call it a learning experience, and move on.
Critical thinking prevents damage control
Critical thinking can’t protect your business completely, but it will prevent many bad decisions and poor outcomes. By training yourself out of impulsive decision-making, you won’t have to do so much apologizing or damage control.