By definition, business is a simple term as it implies a transaction between two parties. In practice, however, business is one of the most complex concepts to understand, let alone master. Especially as things are today in this highly digitised economy, business is by no means a simple concept.
Prevalent theories established norms, and traditionalism can no longer be taken as gospel in business, which is why critical thinking is so important. Before we discuss more on the topic of how and why critical thinking is so important in business today, let’s get introduced to the concept of critical thinking in brief first.
What is Critical Thinking Exactly?
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Perhaps the most common examples of critical thinking which we are all familiar with are those of the film and political critics. However, the scope of critical thinking is far wider than that. Contrary to popular belief, critical thinking is not only the process of consuming, understanding and then criticising the information in question. Critical thinking is also a precursor to creative thinking, which builds upon the facts laid out by the criticism.
At its core, critical thinking should be able to use the available information for laying out the following:
- What was done well (pros)
- What wasn’t done well (cons)
- What could have been better (possibilities)
This creates a natural platform for creative thinking to commence, which seeks to answer the follow up question: what can be done to improve the negatively criticised aspects?
Critical Thinking in Business
Critical thinking and creative thinking are two consecutive and constant processes which every successful business leader implements on a regular basis. In fact, it’s not just the business leaders who implement them while working within a corporate structure; in varying degrees, all leadership figures from data analytics managers to marketing managers must use these two key skills to identify and solve problems in their respective fields of work.
However, critical thinking in real business scenarios involves several intermittent steps as well, and it would be impossible to understand and implement them without formal education and training in business management. For example, the Aston University MSc Innovation & Management degree course is designed to equip experienced professionals with the knowledge and training they need in order to think critically, solve problems innovatively, and lead effectively.
Intermittent Steps: A Brief Overview
As explained already, it is not possible to learn about implementing your ability to think critically in real-life business scenarios without the necessary education and training. However, we can take a quick look through some of the most important steps involved in critical thinking and innovative problem solving. It should provide us with a decent roadmap of what to expect from such a course:
- Risk assessment, analysis, and prediction
- Resource determination and allocation
- Analysis of the present market
- Identification of market opportunities and competitors
- Analysis of all opportunities and competitors to create a ranking system for both
- Critically evaluating the performance of present business, marketing, and customer care policies
On a broader scale, it can be said that the two key skills/processes of critical thinking and innovative/creative thinking are used for two of the most important tasks in business as a whole. These would be risk assessment (critical thinking) and problem solving (innovation).
Risk Assessment
Whether it’s an unexpected global pandemic, or a severe economic depression, there is always a chance that something may go wrong. Even if we were to set aside such catastrophic scenarios, there are also more regular risks to deal with in any field of work. Risk assessment is the process of:
- Identifying all probable risks
- Identifying improbable, but possible risks
- Predicting the most probable risks
The term risk may mean different things depending on the particular scenario being discussed. In business, the term risk can be equated to the chances of incurring a loss of asset, investment, credibility, reputation, sales, revenue, profit, political favour, business connections, security, cybersecurity, and client among others. With comprehensive risk assessment, those chances can be lowered, solutions could be found, and contingency plans might be put into place for emergencies.
There are two primary methods used in risk assessment, namely:
- Qualitative Analysis: Theoretical model of risk assessment created on the perceptions, experiences, and decisions of the management
- Quantitative Analysis: Mathematical and digital model of risk assessment, created on the basis of data interpretations and possible outcome simulations
Problem Solving
Problem solving is exactly what it sounds like, irrespective of the scenario; it is the process of solving any given problem in any given situation. Problem solving is as much a personal skill as it is a business process. While smaller problems may be solved by the intellect and experience of one person, it becomes more of a gradual, multi-faceted and multi-stepped process for bigger ones. The skill/process does have a set of shared rules though, which are:
- Problem identification
- Identifying all primary solutions and alternatives
- Evaluating each primary solution and alternative using a quantitative method
- Eliminating solutions and alternatives with low scores (achieved via the chosen quantitative method)
- Creating a hierarchical list of the solutions and alternative solutions left
- Introducing two or more solutions with the highest scores on a smaller scale to see how well each works
- Analysing the results from the pilot introductions
- Choosing the best performing pilot solution out of the bunch for general implementation
- Gathering data for analysing, criticising, and improving the present solution
In business, problem solving is usually a continuous process, since new factors must be factored in regularly, and the solutions must also be modified accordingly.
By now, it should be clear that critical thinking is such a natural and constant process in business that it is often not realised as such. The same can be said about the consequent process, which is creative thinking. Without critical analysis, risk assessment would be impossible, and without the ability and skills necessary for innovative thinking, the identified risks and present problems cannot be solved. In other words, leadership without criticization and innovation is doomed to fail.
