Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.
Understanding critical thinking
Critical thinking is a practice that has been debated and honed for around 2,500 years, but the term itself was likely first introduced in 1910 by American philosopher, psychologist, and educational reformer John Dewey.
In his book How We Think, Dewey described critical thinking as an “active, persistent, and careful consideration of a belief or supposed form of knowledge in the light of the grounds which support it and the furthest conclusions to which it ends.”
Dewey also wrote his book to help readers take inspiration from the natural curiosity, fertile imagination, and love for experimentation that many children possess.
Richard Paul and Michael Scriven’s definition from the 8th Annual International Conference on Critical Thinking and Education Reform in 1987 is also worth a mention.
Paul and Scriven considered critical thinking to be an intellectually disciplined process where information was actively and skilfully conceptualized, analyzed, applied, synthesized, and evaluated.
This information – gathered from observation, reflection, experience, reasoning, or communication – forms the basis of one’s actions and beliefs.
In its pure form, Paul and Scriven argued that critical thinking was “based on universal intellectual values that transcend subject matter divisions: clarity, accuracy, precision, consistency, relevance, sound evidence, good reasons, depth, breadth, and fairness.”
The qualities of a critical thinker
At the core of every critical thinker is the ability to be an active learner who questions ideas and assumptions rather than simply accepting them at face value.
That is, they are not passive recipients of information and will always strive to ensure that the information present best represents the bigger picture.
To that end, the critical thinker can:
Determine the relative importance of different ideas, arguments, or facts.
Identify reasoning errors or inconsistencies.
Tackle problems in a systematic fashion.
Easily understand the link between ideas.
Build, recognize, or appraise arguments.
Critically reflect on their own assumptions, beliefs, and values to learn from past experiences and improve in the future, and
Substantiate and communicate their reasoning to others.
Critical thinking skills that are important in business
Here are just five critical thinking skills that are important in business:
Evaluation of alternatives
Successful businesspeople can accurately evaluate a list of options and establish priorities.
They can also determine the quality of each alternative and, as we touched on earlier, explain the rationale behind their decisions.
Decision-making in precise contexts
Critical thinkers use deductive reasoning to anticipate outcomes and predict logical consequences.
They use this skill to consider the implications of directives, policies, and regulations.
Decision-making in ambiguous contexts
Conversely, critical thinkers use inductive reasoning to make decisions in circumstances that are ambiguous, uncertain, or risky.
These decisions are the ones most likely to succeed given the available information.
Problem analysis
Where the individual can identify the key components of a complex problem and then address it with robust analysis and interpretation skills.
Strong critical thinkers can interpret and evaluate data across numerous different formats to solve a problem in the most efficient way.
Critical thinking examples
To conclude this piece on critical thinking, we’ll describe a few of the ways it may be useful in business today.
Risk assessment
In finance, wealth management firms must routinely evaluate new legislation to determine whether it will affect their ability to deliver client returns.
This requires careful analysis of the data, problem-solving (determining how the firm can work around the new legislation), and creativity (open-mindedness to the various scenarios or outcomes that could impact operations and client satisfaction).
In this context, critical thinking is key to turning a profit and avoiding compliance issues.
Recruitment
The objectivity of critical thinking is also crucial during the recruitment process.
Now more than ever, HR departments must be able to analyze hundreds or even thousands of applications to select the best candidate.
Objectivity means the firm does not favor a certain candidate because of their age, gender, race, connection with another employee, or any other factor.
Critical thinking plays a key role here since confirmation bias is sometimes unconscious and can prevent the organization from recruiting the best talent.
Collaboration and problem-solving
Critical thinking is also important in team-based problem-solving which invariably includes some form of brainstorming or ideation.
Organizational teams that employ critical thinking first encourage all team members to contribute and then analyze their input in a logical and constructive way.
The most effective teams recognize any weaknesses or negative points in a colleague’s argument and use evidence to support their assertions.
Asking the right questions
Critical thinkers also understand the importance of asking the right questions to arrive at the most accurate conclusion.
Some of the questions that encourage an active line of inquiry include:
Outcome-based questions
When an employee feels they could benefit from the skills or experience of a co-worker, outcome-based questions are ideal.
When someone is asked how they would act in a certain situation, the employee may learn new perspectives or possibilities.
Structural questions
These questions deal with processes or systems and how they function.
Since processes and systems have been honed over time via trial and error, structural questions reveal efficiencies that can be applied to one’s own endeavors.
Reflective questions
To develop critical thinking skills based on real-world scenarios, employees can ask someone to reflect on an experience and explain their thought processes at the time.
Open-ended questions
These questions encourage longer, more detailed answers that are more likely to provide useful or relevant insights.
Key takeaways
Critical thinking involves analyzing observations, facts, evidence, and arguments to form a judgment about what someone reads, hears, says, or writes.
At the core of every critical thinker is the ability to be an active learner who questions ideas and assumptions rather than simply accepting them at face value.
Critical thinking is an integral part of business. Just a few of the scenarios where it is effective include recruitment, risk assessment, collaborative problem-solving, and question-based learning or research.
Convergent thinking occurs when the solution to a problem can be found by applying established rules and logical reasoning. Whereas divergent thinking is an unstructured problem-solving method where participants are encouraged to develop many innovative ideas or solutions to a given problem. Where convergent thinking might work for larger, mature organizations where divergent thinking is more suited for startups and innovative companies.
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and any eventuality. It also discourages the tendency for individuals to default to the most obvious choice.
Systems thinking is a holistic means of investigating the factors and interactions that could contribute to a potential outcome. It is about thinking non-linearly, and understanding the second-order consequences of actions and input into the system.
Vertical thinking, on the other hand, is a problem-solving approach that favors a selective, analytical, structured, and sequential mindset. The focus of vertical thinking is to arrive at a reasoned, defined solution.
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.
The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.
The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.
Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.
Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.
The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman in 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.
Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.
The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.
Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.
The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.
The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
