…rethinking value creation, reimagining Critical Thinking as an impactful tool
Business people make countless decisions every day. Some are good decisions that move the business forward towards value creation. Others are poor decisions that hurt the business and reduce its value. To rethink value creation is to develop the leadership mindset to create an environment that supports and improves decision-making. Leaders with critical thinking abilities are open-minded and can effectively engage in problem-solving and understand the important use of quality information to inform business decisions.
Peculiar to today’s business environment is the conflicting variables of discontinuity and disruptions. Dealing with these non-financial factors increasingly plays a critical role in value creation. What’s needed is a new enterprise value approach in which organisations balance decision-making within a broader construct of how to exchange value with all stakeholders through critical thinking. A new continuous value creation process enables organisations to listen, assess, act, measure, adjust and evolve their decisions to create sustainable long-term value and impact.
Meanwhile, the increasing demand to foster critical thinking in our corporate space in order to enhance value creation is no doubt a critical issue of business concern. This is because the innovativeness of creative thinking aids implementation of a new knowledge that supports good decision-making and eventually value creation. Creative thinking is central to the innovative drive – the determinant factor for sustainable organisational competitiveness.
Although critical thinking improves efficiency, effectiveness and the ability to compete for value creation within organisations, it is important for all business leaders to be cognisant of the broad value creation ecosystem, given its profound implications for the creation or destruction of enterprise value. The opportunities for organisations that understand and manage all their value levers in a responsive and coordinated way are mirrored by deep pitfalls for those that fail to do so.
Arguably, everyone in business – no matter what their position – makes many decisions every day; and each is an opportunity for a win or a mistake. Therefore, teaching the people to think more deeply, solve problems better, communicate, collaborate,and innovate more effectively makes companies run a lot better. Thus, the bottom-line result is the goal of critical thinking becoming a culture for the organisation.
Why is critical thinking essential in the workplace?
Critical thinking’s ultimate goal is ensuring one has the best answer to a problem with maximum buy-in from all parties involved; an outcome that ultimately saves business time, money and stress. Critical thinking in the workplace guarantees objective and efficient problem-solving; ultimately reducing costly errors and ensuring the organisation’s resources are used wisely. Team-members employing critical thinking usually connect ideas, spot errors and inconsistencies and make the best decisions.
Critical thinking skill is required to meet unforeseeable future challenges, and for planning business operations’ growth and survival. Acquiring these skills is a major challenge facing, entrepreneurs, business managers and leaders in today’s dynamic environment. When employees engage in critical thinking, they use an independent, reflective thought process to evaluate issues and solve problems based on knowledge and objective evidence – which make them gain an enhanced analytical competency, communication, emotional intelligence and general problem-solving skills for the organisation’s decisions and success.
That notwithstanding, critical thinking should become a second-nature skill for leaders and employees across every organisation to ensure objective and efficient problem-solving for enhanced value creation. Critical thinking should be an exercise, a habit, a manner of perception and reasoning that has principles of logic as its fulcrum, and dynamically involves various reasoning skills that ought to be human in approach to organisational issues and success
What are critical thinking skills?
Critical thinking is a soft skill that comprises multiple interpersonal and analytical abilities and attributes. With high-level observation, willingness to conduct analysis, clear interpretation of information, willingness and time to reflect, openness to evaluate beyond one’s own inferences, ability to be objective, active listening, comfort with using technology and understanding the importance of analytics, one is said to have critical thinking skills.
Observation: Employees with critical thinking can easily sense and identify an existing problem, and even predict potential issues based on their experience and sharp perception. They’re willing to embrace multiple points of view and look at the big picture.
Analytical thinking: Analytical thinkers collect data from multiple sources, reject bias and ask thoughtful questions. When approaching a problem they gather and double-check facts, assess independent research, and sift through information to determine what’s accurate and what can help resolve the problem.
Open-mindedness: Employees who demonstrate critical thinking are open-minded and not afraid to consider opinions and information that differ from their beliefs and assumptions. They listen to colleagues; they can let go of personal biases and recognise that a problem’s solution can come from unexpected sources.
Problem-solving attitude: Critical thinkers possess a positive attitude toward problem-solving and look for optimal solutions to issues they have identified and analysed. They are usually proactive and willing to offer suggestions based on all the information they receive.
Communication: When managers make a decision, they must share it with the rest of the team and other stakeholders. Critical thinkers demonstrate excellent communication skills and can provide supporting arguments and evidence that substantiate the decision to ensure the entire team is on the same page.
What is value Creation?
In today’s complex environment, enterprise value is becoming as much about what and how you deliver value to stakeholders as it is about the value you capture in return. What are the risks of failing to reimagine enterprise value? Like it or not, we are in an era of increasing stakeholder demands and pressures, growing societal disruptions and fractures, a shifting and volatile climate and rolling humanitarian crises. This requires balanced decision-making and a broader construct for how to create and assess value. We need a new way to think about value, a new enterprise value equation that is not solely about optimising shareholder value but the aggregate of economic, social, organisational and personal value created from delivering on the organisation’s products, services or mission.
Sustainable value creation rests on constant and consistent critical thinking as a business culture. A more continuous value creation process enables enterprise decision-makers to listen, assess, act, measure, adjust and evolve. Failing to do so risks lasting damage to the organization – not just in terms of short-term financial results, but also in the form of dissatisfied customers, disengaged employees and misguided investment choices.
Understanding the current value challenge
It’s important to measure what drives value. Until management understands what’s driving those fundamental elements, the team can’t fully grasp how KPIs should be defined and in which order they should be prioritised to increase value. It’s common for KPIs to become outdated and not focus on the primary objective. While internally focused evaluations are frequently conducted, the perspective of an outside expert can be invaluable. They can analyse your company from an unbiased stance and help you ramp-up your efforts by focusing on value-creation areas that will have the greatest impact.
Companies setting out to create and grow enterprise value in today’s value creation ecosystem first need to fully understand its topography and the trade-offs, tensions and balancing acts that are inherent within it. The ecosystem consists of three interrelated components:
Financial productivity: Companies drive growth while also improving efficiency to make that growth more profitable. This in effect has made companies always have to carefully balance spending money and saving money with the added consideration that investing for growth is a long-term enabler in building resilient assets. Organisations respond to and focus on financial outcomes by becoming very good at measuring and communicating their financial productivity, and focusing much on that as an imperative for business performance and impacts.
Resilience: A truly resilient organisation can both respond and adjust effectively to external shocks. That is, it has defensive adaptability and can flex and stretch to seize new opportunities. COVID-19 has amplified the value of being resilient in areas of business such as supply chain and digital platforms. By this, the increased need for resilience in these areas have captured the attention of many organisations, in turn creating new imperatives for leaders seeking to build enterprise value.
While every organisation is different, some common macro-level areas of focus include those which are measurable and enhance profitability through revenue and cost intelligence, reductions in organisational risk through capital management, and the increase of profitable growth.
Critical thinking as a key business tool
Many workplaces operate at a frantic tempo that reinforces hasty thinking and rushed business decisions, resulting in costly mistakes and blunders. When employees are trained in critical thinking, they learn to slow the pace and gather crucial information before making decisions. When critical-thinking is actively implemented in an organisation, mistakes are minimised and operations run more seamlessly. Along with reducing costly errors, critical thinking in the workplace brings the following benefits:
Critical thinking improves communication: When employees think more clearly and aren’t swayed by emotion, they communicate better. “If one can think more clearly and better articulate his positions, he can better engage in discussions and make much more meaningful contributions.
Critical thinking boosts emotional intelligence: It might seem counterintuitive to associate analytical rationality with emotional intelligence. However, team members who possess critical thinking skills are less prone to rash, emotion-driven decisions. Instead, they take time to analyse situations and make the most informed decision while being mindful and respectful of the emotional and ethical implications.
Critical thinking encourages creativity: Critical thinkers are open to new ideas and perspectives, and accumulate a significant amount of information when facing decisions. Because of this, they’re more likely to come up with creative solutions. They are also curious and don’t shy away from asking open-ended questions.
Critical thinking saves time and money: By encouraging critical thinking in the workplace, the organisation minimises the need for supervision, catches potential problems early, promotes independence and initiative and frees managers to focus on other duties. This helps the organisation to save valuable time and resources. Critical thinking skills are essential for dealing with difficult customers, because they help teams make informed decisions while managing stressful situations.
With training, time and patience, critical thinking can become a second-nature skill for employees at all levels of experience and seniority. The money, time and conflict the organisation saves in the long run are worth the extra effort of implementing critical thinking in your workplace.
The need for critical thinking in value creation
Socrates made a discovery – that by a method of systematic and probing questioning, people could not rationally justify their confident claims to knowledge. In our efforts to dispense knowledge in the critical sense, we are often imprisoned by our own egos… incessantly misconstruing appearances as reality. Our attempts to profess knowledge are curtailed by a perpetual intellectual limbo occasioned by a mental laxity that banishes our curiosity to unawakening dogmatic slumber.
Again, Jen Lawrence also added to this train of thought – saying that critical thinking is “the ability to solve problems effectively by systematically gathering information about an issue, generating further ideas involving a variety of perspectives, evaluating the information using logic, and making sure everyone involved is onboard”. This can in effect impact positively on the business’ fortunes.
Critical thinking in an organisation looks like the commitment and compelling ingredient for an organisation’s survival and growth. The increased significance of this value creation factor implies a growing need to better understand the trade-offs between investment in the human capital today in respect to critical thinking capabilities, so to consolidate the creation and sustainability of enterprise value.
Discovery….Thinking solutions, shaping visions.
Frank is the CEO and Strategic Partner of AQUABEV Investment and Discovery Consulting Group, and is an Executive Director and Lead Coach in Leadership Development and best Business Management practices for Discovery Leadership Masterclass
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