In the world of business, being precise and careful is highly recommended. However, how often do you respond too rashly to a scenario? How often have you made a decision that you had to correct later on because you did not think it all the way through?
Poor decision making is a problem that even hits the most successful of workers and business owners and it’s undoubtedly costly. By applying critical thinking skills in business, however, you put yourself and your business in a position that is advantageous in more ways than one.
Why Critical Thinking Is a Rarity in Business Nowadays
Before anything else, it’s important to address why critical thinking is not heavily practiced in business nowadays. One major reason could be the hectic pace of work. With a lot of deadlines to be met, everyone in the workplace is always placed at the so-called crunch time, depriving them of the chance to think things through carefully.
Another major factor is the workplace culture itself. Either willingly or unwillingly, business owners have shown preference over one’s ability to follow protocols and procedure over their ability to think critically. As such, workers are forced to make decisions reliant on approval than ones that are designed for the sake of efficiency.
Lastly, there is the fact that men, by nature, are emotional thinkers. The ability to use logic when making crucial decisions is a skill that has to be taught and honed.
Applying Critical Thinking
It is important to understand that all of the reasons why critical thinking is rarely applied in business as mentioned above are all valid and, more often than not, unavoidable. However, that does not mean one cannot apply it despite the presence of these factors.
Fortunately, using critical thinking in making business decisions can be simple and straightforward. Using the Kepner-Tregoe Decision Analysis process, you can implement better decision making skills in business through a number of steps.
- Stating the Decision and Developing Objectives
First, you have to write a clear and simple statement of the decision that needs resolving. This will also include the results that the decision could produce, and the benefits the business achieves if it were to make such.
- Classifying Objectives
The objectives stated in your decision must then be classified into a set of wants and musts. Making a distinction between the two is a must as both carry different implications for the business.
A “Must” is an objective that is essential to achieving a successful outcome. A “Want”, on the other hand, gives you and your staff an idea as to what other alternative courses of action your business can take, and how they are plausible in relation to the objective.
- Weighing the Alternatives
For the wants, you have to arrange them in order of plausibility. To do this, you must assign a number between 1 to 10 (or the maximum count of your wants) based on their importance to the objective.
Once assigned, you will then cut down your alternatives by half. The bottom half will be disregarded as they are the least relevant. As for the upper half, you will then further arrange based on how they satisfy your main objectives the most.
- Identifying Downsides
This is a highly critical part of your decision making. Aside from knowing the best possible outcomes, you also have to be aware as to where and how everything can go wrong if this course is to be taken.
As such, you and your team must identify each potential downside for each alternative course of action. From minor problems to game-changing ones, every possible problem that arises out of that alternative course must be discovered.
- Making the Best Possible Choice
With all risks and benefits clearly defined for each alternative route, you can now properly weigh in on which of these paths allows you to achieve your objectives efficiently. Once that decision is made, all that is left to do is to commit to properly executing your plans.
The key to success with the Kepner-Tregoe strategy is meticulousness. The more complicated and difficult that decision is going to be, the more important it is for you to carefully go through each step of the decision making process.
Risks Management
Risk is an ever-present factor when running a business. Every decision you will ever make comes with a myriad of potential problems.
When assessing the possible risks and rewards of your decision, you have to be as methodical as possible. To do this, there are several aspects that you need to look into when gauging the risks of your decisions.
- Absorption Capability – If that downside comes at you in full force, how can you recover from it while bearing the brunt of its effects? For instance, if a deal that you are about to make has the probability of making you lose thousands to millions of dollars, do you have the means to continue spending on your operations if such thing were to happen?
- Controllability – If a negative outcome were to happen, how can you control things on your side to mitigate its effects? For instance, if a new product or service of yours will not be received warmly by the public, does the route you will take allow for contingencies?
- Reversibility – Lastly, if that negative outcome is to happen, do you have the means to turn things to your favor? Managing to secure a win for your business even if the odds turn against you is a crucial skill that any owner/manager should master.
The key to successful risk management in making decisions boils down to one word: pre-emption. An owner or manager must have a vision far enough to predict what is most likely to occur and prepare accordingly.
Do you avoid that course entirely or do you push through? Depending on the potential rewards and risks you will encounter, the choice is up to you. After all, success is achieved not by removing risks altogether but mitigating the worse effects that they could bring.
