As a strategic business coach, one of my core responsibilities is leveling up leadership skills on the senior team. I like to say, if you want to grow and scale a business, you have to grow and scale its leadership. And one of the key skills I focus on is critical thinking.
As a business grows in size, so does the complexity and scope of its problems and challenges. Without good critical thinking skills, leaders will make poor decisions and fail to take advantage of strategic opportunities. Very often, what holds the business back from reaching its true potential is a lack of leadership’s foresight and effective problem-solving skills.
Here are five key things that I focus on when working with leaders to improve their ability to identify, analyze, solve, and implement effective problem-solving strategies.
1. Gather more and better data
The first thing I emphasize is that most teams try to make decisions with limited and poor quality data. Good critical thinkers start by collecting as much high-quality data as possible. They don’t take things at face value. They question summaries and dig to make sure that they really understand what’s happening on the ground and maximize the raw information they have to work with.
This includes both structured and unstructured data as well as quantitative and qualitative information. It’s also important to look at history and trends and to compare the data you’re looking at with other benchmarks and norms. Good thinkers don’t rely upon summaries and averages, they go back to the source and get the raw information.
2. Learn how to separate fact from inference
Once you’ve collected information, it’s key to understand the difference between facts and inferences. Too often leaders will make assumptions about what’s really true and treat them as facts when what they are really dealing with is an inference. This creates a shaky foundation for any future thinking and decision-making.
A fact is objectively observable by other people. An inference is something that includes an assumption or an opinion that may or may not be true. If you literally drive from New York to L.A and it takes 58 hours, that’s a fact. If you use a map to calculate the distance and estimate an average speed to get to 58 hours, that is an inference. Don’t confuse the two.
3. Break things down to first principles
I encourage leaders and teams to think in first principles. These are the fundamental building blocks in thinking and decision-making. They are the core elements that are true regardless of situation and context.
They generally are found by asking clarifying questions, considering alternatives, and testing assumptions. Once you have a good set of first principles, you then have the elements that you need to start creating new options and new solutions that you can be confident in.
For example, the first principle in tennis is that a ball hit with topspin will fall faster than one hit with backspin. A good tennis player knows how to use this in different scenarios to create strategic effects. By combining this with other principles, an expert player can make plays that leverage their strengths and exploit their opponent’s weaknesses.
4. Develop effective models
Another tool that can be very effective for teams and leaders is thinking in terms of models or analogies. While these are an abstraction and reduction of reality, and therefore wrong at some level, they can be useful for simplifying a situation and quickly finding alternatives and strategies.
For example, economies of scale is a model for how price changes with volume. While a specific situation may not follow the model perfectly, it can help a business figure out how to gain efficiencies by increasing the volume while holding costs the same.
The trick with models is to know where and why they work and how they can fall short. Models can help you quickly generate insights and strategies, but you need to be aware of their limits and not get lulled into a false sense of security about reality.
5. Continuously challenge your assumptions
Maybe the most important thing I focus on with leaders and teams is to create ways of testing and validating their assumptions quickly. If left unchecked, an assumption can lead to poor thinking and bad decision-making. This can be avoided by quickly going out into the real world and seeing if what you’re assuming holds up in the field.
By developing your critical thinking skills, you’ll improve your decision-making and ultimately get better outcomes and long-term results. And while some of these steps may take some time and energy, they are good investments and will yield strong returns.