Introduction – THE JOURNEY BEGINS
An Eleatic Stranger: “When a person supposes that he knows, and does not know, this appears to be the great source of all errors of the intellect.”
Stranger: “And this, if I am not mistaken, is the kind of ignorance which specially earns the title of stupidity.”
(from Plato’s Sophist)
* * *
This book is not intended for academics. It is not meant for people who want to study, research, test or theorize about cognitive mechanisms, mental processes, thinking dispositions, mental modelling, or even Kantian epistemology (however much fun that might be). It has no exhibits, charts, graphs, diagrams, mnemonic tools, colored bars, circles, straight arrows, curved arrows, circular arrows, double-ended arrows, never-ending arrows, or flow charts to memorize.
It is much simpler than that. Because thinking is simple. It’s just rarely taught as such. There is a reason there are no advanced degrees in “Thinking.” We just assume that if we learn how to do something, we will necessarily learn how to think also.
After all, thinking is a skill. And like throwing a ball, almost anyone can do it. But doing it well is more difficult and, as we all painfully know, more rare. The fact is, thinking’s very simplicity is what makes it so deceptively challenging.
So this book could have been titled: A Guide to Thinking, but then, I suspect, no one would have read it. Everyone knows how to think. At least, we like to think so.
But thinking is not the same as thinking well. Thinking broadly. Thinking critically. For that, people need reminders – and they need practice. And given today’s changes in the workplace, that ability is increasing in importance. Consider this quote from Tony Wagner, a Harvard professor: “We can teach new hires the content, and we will have to because it continues to change,” he told The New York Times, “but we can’t teach them how to think – to ask the right questions – and to take initiative.”
Yes, it is remarkable that we have known the importance of critical thinking for thousands of years, yet few of us are taught the subject. Not really. Not directly. We are expected to pick up the skill, figure out the process, divine the techniques, and remember the steps from our various studies in geometry, physics, law, medicine, business, etc.
That is a shame, because, as Plato recognized, it is the false supposition of knowledge, the blindness to assumptions and presuppositions, that repeatedly and inevitably lead to confusion and failure – in our business and in our lives. Yet still, we are not taught how, or convinced of the need, to identify these.
Worse still, how often we fall into the trap in both our personal and professional lives with all our nodding and empty acknowledgements of empty phrases, business jargon and “industry-speak,” spoken and accepted, as if the imprecise and artificial words we accept and create have clear and self-evident meanings. Like walking the same route to work every day, we slip into routine, not just with our lives, but also in our thinking. We take things for granted. We assume that we know and we stop questioning fundamental premises. We pick up what we mistakenly believe is the impressive language of others, with their affectations of hifalutin speech and imprecise words, and repeat it without thinking as if that, in itself, will at least let others think we’re smart. And then, most destructive of all, we use that to dupe ourselves into thinking we are thinking.
* * *
from Chapter 1 – BACK TO BASICS
* * *
“Thinking is like loving and dying. Each of us must do it for himself.”
(Josiah Royce, American philosopher and historian)
* * *
When was the last time you sat in a meeting, in a classroom, or at the dining room table and wanted to scream: “Wait! Wait! That makes no sense!”
Yes, that’s what I thought. It can be painful to listen to an opinion or argument that “makes no sense.” And it can be painfully obvious when we watch others fail in their thinking. We know the person is confused. Their thoughts are a jumble. Their argument is incoherent. Why can’t they see it? The sad part is that when you attempt to roll back the conversation and discover where the error in logic occurred, you are likely to be met with a look from which you correctly infer you are wasting your time.
The fact is, however, almost no one “makes no sense.” Even the most tortured, wrongheaded reasoning usually makes sense in some tortured, wrongheaded way. The conclusions, presumably, accurately state the opinion of the speaker. We will not dispute that. Of course it makes sense, the person argues, it’s what I believe.
However, when attempting to determine whether those conclusions make sense, what we typically mean is: Do the conclusions logically follow from clearly understood and articulated beliefs? Indeed, it is usually the case that, in a painfully nonsensical argument, the conclusions simply do not flow from the premises. Or the premises are unclear. Or that the stated opinions will lead to absurd conclusions. That is, in essence, what is illogical. The end in some way does not match the beginning. That’s what we mean when we say someone makes no sense.
It is true that very often for most of us, beliefs and conclusions, when lined up in a row, are not logically consistent. But this does not mean the person is wrong in their conclusions or that their beliefs “make no sense.” It simply means they have failed to understand their own reasoning and have likely assumed or accepted a number of starting points and definitions they don’t even recognize.
No matter the reason, these speakers think they know something that, in fact, they do not know. I would not go so far as to call them all stupid necessarily, but there is clearly an element of that in their thinking.
Whether it’s questions of business or how we should live our lives, we are all guilty of inconsistencies to varying degrees. No one develops all their opinions and ideas as strictly logical outcomes or effects of their underlying and fundamental beliefs. Indeed, none of us can identify and define all of the assumptions on which we base our beliefs. And we certainly do not always behave in accordance with them. In fact, identifying beliefs, establishing from there definitions of good and bad, designing a system of morality to codify right and wrong, defending the conclusions and then acting perfectly in accordance – well, we’ve been attempting that for millennia. And just look around to see how well we’ve all done.
* * *
from Chapter 2 – THE REAL WORLD
* * *
“Unless a leader knows where he is going, any road will take him there.”
(Theodore Levitt, Harvard Professor)
* * *
Sailors use stars (or satellites nowadays) to show them their position. In business, I suppose, that’s the reason consultants were invented – not to be stars (though many of them think they are) but to help us locate ourselves and to show us our position. Is there any better reason why so many times we hire a consultant to tell us exactly what everyone at the company already knows? Is there a more valuable goal than to get that “outside perspective?” To have someone examine us from afar, and to tell us if we are both where we believe we are and if we’re indeed headed in the direction we think?
In one way, that is valid. As we saw in an earlier chapter, we would never ask a triangle to define itself and then place itself within two intersecting circles. No, it’s not a capability of the triangle. It must be done from outside.
In another way, however, a consultant is not the answer. They are just temporary bystanders whose role is to point us in the direction we’ve been wanting to go. Ultimately, we cannot hire them forever to do the same job. They don’t run our business – otherwise, presumably, they’d be CEO. And the more we rely on them, the less their perspective can remain outside. No, it’s our job to see clearly and learn how to develop perspective. We must be accomplished at seeing our company clearly. And with some practice, we’ll find we can do a better and better job.
The skill here is to develop our ability to remove ourselves from our day-to-day myopia, in which we see little farther than the edge of our desk, and to understand our position in the context of the world. One can never find their position by looking straight down. One can never develop new understandings by using the same words. We must see new worlds around us and discover the new ones where we live. Only in this way can we begin to bring other ideas and apply them in new ways. Without this skill, we will find it impossible to create new ideas from the old sclerotic ones that plague us.
Yes, the reality is – and the irony is – that we must learn how to create and pull new ideas out of our thinking using our existing ideas to think beyond our ideas. That, of course, is not easy. To accomplish this, we must first break our established – and comfortable – organized way of thinking, something the sociologist Peter Berger describes as our “nomos.” This “nomos,” he explains, must be taken for granted by us for it to be useful in our day-to-day lives. We cannot live all the time questioning everything. We must order the world and our society within it and accept it without thought as we live and work every day, using our “nomos” (our usable understanding of ourselves and the world) to provide a semblance of stability and predictability. I’m certain we all recognize this to varying degrees in our lives.
That might, in fact, be fine if change in our lives never occurred. Or if we were not responsible for a company that must confront change and unexpected challenges from outside every day. But if we are, and if our nomos must adapt to the new world that’s around it, then we must learn how to step back constantly from ourselves, from our fixed way of seeing things. We must understand that a snapshot of a flowing river is a deception regarding the true nature of a river. Rivers flow. That is their nature. And our company – and our life – is flowing whether we see it or not.
* * *
I mentioned early in Chapter 1 that an accounting professor once expressed her desire to spend several classes delving into the importance of critical thinking in accounting. For example, she said, she would love to explore the concept of “cost” with her class – the concept of it, the definition of it, the use of it.
For a doctor, she said, we know that critical thinking is vital. A diagnosis must be formed from various tests and measures. But with accounting, her students too often believed all they need do was fill in the right boxes. They just wanted to know if something was a debit or a credit, an item of revenue or expense. Once they knew, they would put it on the right line. She was struggling, she said, to explain the importance of their more deeply understanding how many concepts were involved.
After all, cost necessarily involves the concept of value, and value, in the end, is but a circular concept. If “cost” is simply what is exacted from one thing in exchange for something else (whether it’s real or intangible, or let’s say an object, or time, or information, etc.) then the cost to one party is the accepted value of what is received from another party. Or perhaps the value of what is received is merely the value of what is paid. In other words, if you give me your car in exchange for this rock I found, then the cost of that car, to me, is this rock.
I paid nothing for the rock. However, by our definition of “cost,” didn’t the value of the rock suddenly assume the value of the car, however that might be measured? Can I truly say the rock had no value and that giving it away presented no cost to me if I traded it to buy a car? If I had kept the rock, I would have known that, by some estimations, it was worth a car and I could have kept it as an asset at that value. Maybe I could have bought five bicycles for this rock. So the rock has value and we can calculate the cost of one bicycle. Now, let’s ask the obvious question: what if that rock I found was a diamond? What if I had spent five years of my life, living alone in deprivation in the wilderness, to find that rock? Does that change the cost of the car to me? Do either of these two new facts in any way substantially change this discussion?
Or maybe better yet, consider this real-life example: As Twitter was preparing to sell shares in the company for the first time, The New York Times had a story about how many companies, including Twitter, were restating their income for investors to show the company’s results “through the eyes of management” – a practice that just happened to make their results look more attractive. Although accounting rules said one thing, these companies preferred to remove from their expenses the “pesky cost of doing business,” as The Times explained. So the “cost” of issuing stock options, or the “cost” of amortizing certain assets, like the value of projects in development they purchased that had yet to pay off, was removed. The companies argued that these paper transactions or losses should not be used to measure the company’s true results – as no cash was being transferred, it distorted the company’s actual expense.
There is certainly a logic in that. (The use of EBITDA – Earnings Before Interest, Tax, Depreciation and Amortization – has been going on and justified for decades.) However, the question remains if I give someone a piece of paper that promises them something in return for their working for me, aren’t I giving them something of value, even if no cash changes hands? And doesn’t that transfer of value have to be reflected somehow? “To back out those intangibles is bogus,” said an accounting expert who was quoted in the Times story.
For example, consider if my company gave a friend of mine, a mining expert, the chance to own one-half of a mountain that I believed was full of gold. He would only get his half if he helped us find the gold.
Now, that piece of paper has an unknown value at present but, I could argue, it did not “cost” me anything to give him. One hundred years from now, it might still have no value if no gold was ever found or we never started digging.
But let’s assume we strike it rich and the mine is suddenly worth $100 million. The piece of paper is now worth half that amount and because he helped us find the gold, my friend collects his half-share. That is now $50 million that my company has effectively transferred to my friend. Did it still “cost” my company nothing? My friend was “paid” $50 million. It didn’t come from nowhere.
So now, tell me, what is the “cost” that we record and when should have we recorded it?
* * *
Chapter 4 – OPENING A VEIN
* * *
“If you simplify your English … when you make a stupid remark its stupidity will be obvious, even to yourself.”
* * *
The only people I know who enjoy writing are those people who don’t have to do it.
For the rest of us, the thrill of self-discovery and self-expression that we theoretically experience by putting words to paper is terrific when we are writing poetry on our vacation. But when we are suddenly faced with a requirement to write a business plan for our company, to justify the expense of a new project, to provide a competitive overview of our industry, or simply to send a short memo to our boss recommending some rudimentary next step, we often find that the hypothetical thrill is replaced by the emotions more identified with the recognition of our mortality: denial, anger, bargaining, depression, and finally, acceptance.
Not to make light of Kübler-Ross’ serious discussion about death, but if you have ever handed an assignment to someone at the office that required them to write a 50-page report on some topic, or you have begun discussions with a class of MBA students about their thesis requirement, then you very likely saw these folks go through something pretty close to those five stages as they walked away, shook their heads, sat, mumbled, paced, drank coffee, and complained for the next week or two, until they finally started writing.
Yes, to most people (to all people?) writing is painful. It can be slow and agonizing. It can even be terrifying. Unlike almost any other activity we perform, writing is where we are forced to accumulate our thoughts (if we can discover them), articulate them, organize them, and then put them on paper, disclosing them, exposing them, allowing the world to see if, in fact, they make any sense – if we, in fact, make any sense.
But what choice have we got? As Richard Paul, founder of the Center for Critical Thinking at the University of California, Sonoma, once explained very simply: “Communication, in short, is always a transaction between at least two logics.” And there’s no better way to test and communicate the intricacies of our logic than by writing them down. Because if you cannot explain your logic in a way that other logics can follow, then you – it stems from Paul’s statement – are simply not communicating.
Now, the truth is I would prefer not to have to write about writing. Most likely, you would have preferred that also. Thinking is more fun. Like running a marathon, I’d much rather sit with my cup of coffee and a doughnut and picture it for five hours than be out there trying to run that far.
But there is no escaping the need. Thinking and writing are inextricably bound together. Good writing cannot exist without good thinking. And good thinking cannot be tested – and does very little good – if not eventually written down and communicated to others.
In many ways, this process is little more than taking those fleeting thoughts we have in the shower – the ones that seem so linear and complete, rich and ingenious – and putting them on paper where they can actually be seen. To be exposed to the light. To see if the pictures make sense.
More than likely, they do. At least to a degree. But no matter who you are, the pictures you paint in words in the abstraction of thought are likely to be sorely incomplete. You’ll discover that your thoughts jumped too many steps. You forgot important factors. You assumed too much. But you probably won’t know it until you see what’s missing before you. And that’s why we write.
Besides, as we saw with Euclid, only by drawing that first circle can we move on and add many, many more shapes without forgetting that first circle was there. Listing our proofs, as Spinoza did, in a particular order, allows us to build a new proof that follows from previous proofs until we can “prove” the existence of God. But we must see it before us so we can move much farther along.
In practice, writing slows down our thinking, or even freezes our thoughts, so we can review what we’ve done. And we can see all the gaps, and illogical jumps, that occurred in our thinking. And after we fix them, what have we done? We have thought critically – and well.
Keep in mind, our goal here is not to practice writing, whether it’s a case study or a novel. That is not the type of writing we are focusing on, though we will discuss different methods later for conveying a set of facts effectively.
No, the writing we are concerned with here is the one that requires and tests our critical thinking skills. We will assume, for the most part, that the facts are before us, as if we had just read a case study or listened to our friend complain about her relationship. It was our job as a friend to accept those facts and help sort them and analyze them. To discover what information was missing. To discern what ultimately was at issue. And to help our friend understand things more clearly and to ask the right questions.
Our task here, then, is not merely to relate all the facts. Our job is to consider these facts further, to organize them clearly, and to communicate them well. Sound easy? It’s not. Writing is never easy. “You simply sit down at a typewriter, open your veins, and bleed.” That was how “Red” Smith, one of America’s great sportswriters, described writing a newspaper column every day.
Ok, we won’t ask you to do that. We just want you thinking. Thinking about writing. Because that is the first step. Ask any writer: if they knew what they wanted to say and how they wanted to say it, then the actual writing would be the simplest part.
* * *
Chapter 5 – LITTLE BOXES ON A HILLSIDE
* * *
Little boxes on the hillside,
Little boxes made of ticky tacky,
Little boxes on the hillside,
Little boxes all the same.
There’s a green one and a pink one
And a blue one and a yellow one,
And they’re all made out of ticky tacky
And they all look just the same.
* * *
Ah, how we love to fill in boxes. What a feeling of accomplishment it gives us. What a semblance of thought. What an appearance of purpose. What a sense of control.
So ok, the song lyrics above were written in 1962 about houses in California and the homogeneous existence of bourgeois Americans. But I can’t stop humming the tune every time I see a new analytic method by some consultant looking for a reason to publish an article and create a new acronym for his new and improved approach to new and improved strategic thinking.
Don’t misunderstand. I do it. We all do it. It’s human nature, I suppose, to break things apart and to place the pieces into boxes before drawing lines and arrows to show how they all get put back together. We have SWOTs, PESTELs, CAGEs, six hats, matrices, diamonds and the list goes on. Indeed, we’ve all seen too many articles and books where the creation of boxes was the product being sold – not the process of filling them, or understanding how.
As for all these newfangled approaches, there appears to be no end in sight. Scholars, consultants, professors, self-proclaimed experts of all shapes and sizes just keep creating more. (You have to wonder, with all these people studying this for so many years, how any genuinely new approach can only now be discovered.)
“This problem of strategic fragmentation has worsened in recent years, as narrowly specialized academics and consultants have started plying their tools in the name of strategy.” So concluded Donald C. Hambrick and James W. Fredrickson writing for the Academy of Management Executive in 2005 (before unfortunately jumping in there with a new approach of their own).
But let’s take our own advice for a moment and define what we mean. What is a strategy and why do we care?
A strategy, in essence, is nothing more than recognizing that the world is always changing and that you, or your company, will not be the same in the future as you are today. So, before you lies a choice.
- Either, have no strategy, float along in response to the vicissitudes of existence. React. Respond. And become whatever you become whenever you become it.
- Or, decide what it is you want to become (based on your or someone else’s desires) and when you want to become it. Then do your best to figure out how to use what you have to get there. That is strategy.
Or if you prefer a much more bookishly impressive attempt, which by the way says the same thing: “Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.” (Italics from the original) (From Fundamentals of Strategy, Pearson Education Ltd. 2009)
Now, I honestly don’t know if having a strategy or living a completely floating existence is better. But if you have a job or a life that has defined you, in part, as being responsible for the future of others, then you have already made a choice. You must try to plan for the future. And you have the responsibility to follow a strategy.
As Kees van der Heijden stated very simply in The Principles of Scenario Planning: “Strategy has as its main aim the continuation and growth of the organisation.” Now, I would argue with the premise that “growth” is a necessary part of an organisation, depending on how it is defined, but “continuation” seems appropriately included – whether it’s for a business, a family, a household, or just for yourself.
So now that we know what strategy is, let’s see how we do it. It’s time to see how we apply what we’ve been rediscovering from our childhood and practicing these past 100-plus pages.
In other words, let’s take all this knowledge and now practice what we have and see how these experts want us to do something with it – something useful, something constructive, and perhaps, even something that’s profitable.
Never lose sight of the fact that setting a strategy is scary. It takes courage. It is why so few people go to the effort. They know it’s important, but like writing our Last Will and Testament for when we die, it’s an exercise that fills many people with dread. Because in choosing any strategy, you are forced to make choices and set limits to your goals. It’s no different than what some philosophers call our existential “finitude;” it exists for companies as well. As soon as you choose something, you (momentarily, at least) negate all other options.
* * *
One of the clearest examples of how powerful the simplest of understandings can be came in an interview I conducted in the mid-1980s with Jim Ling, the founder of LTV Corporation. I asked him how he could have created one of the world’s largest conglomerates from his small electrical contracting company in Dallas. (He started his company in 1947 and lived for a while in the back of the shop.) Within 10 years, his company was publicly traded and by 1969, it had purchased more than 30 large industrial firms and had nearly 30,000 employees involved in the aerospace and airline industries, steelmaking, sporting goods, meatpacking, car rentals, electronics, and pharmaceuticals. During out conversation, I asked him several times and in several ways how he had managed all this from such a small start-up company and in such a short amount of time. Each time, he smiled softly and shrugged, saying over and over: “Peter, money is fungible.” It was as simple as that. Money is fungible. What more did you need to know? Whether it’s over here or over there, in this form or that form. His point was made. Once you understand what you do well enough that its fundamental principle can be summed up in just three words, your battle is won in finding the path to success.