1. Critical Thinking
Leading Innovation and Value Creation
Andrew L. Urich, J.D.
Puterbaugh Professor of
Ethics & Legal Studies
Spears School of Business
Oklahoma State University
aurich@okstate.edu
www.andrewurich.com

2. What Happened to GM?

3. Why is it So Hard to Face
Reality?

4. Why Don’t They Give Us an
Owner’s Manual For Our Brain?

5. Why is Charlie Sheen an
Actor?

6. Déjà vu All Over Again?

7. Critical Thinking
Don’t try this at home!
 I prefer being given the correct answers rather than
figuring them out myself.
 I don't like to think a lot about my decisions as I rely only
on gut feelings.
 I don't usually review the mistakes I have made.
 I don't like to be criticized.
 I don’t have the courage to move outside my self-imposed
limits.

8. The Secret to Happiness

9. Smart People Trying Hard

10. Applied Critical Thinking
Remove Boundaries
 Thinking has boundaries– bounds,
limits, borderline
 Beyond the boundary line is the
Frontier
Location of most advanced, newest
activity

11. GM History
 1950’s - Half of all cars in the US

12. GM History
 1980 - 853,000 to 284,000 worldwide

13. 1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”

14. 1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”

15. 1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”

16. 1st Q 2009
Passenger cars
 Toyota 19.4%
 GM 15%
 Honda 12.4%
 Nissan 10.2%
 Ford 10.0%
 Hyundai 6.2%
 Chrysler 5.2%
 Mazda 3.4%
 BMW 3.2%
 VW 3.2%
 Kia 2.6%
 Subaru 2.6%
 Volvo 0.8%
 Saab 0.2%

17. What is Critical Thinking?
Using your brain to create value for yourself and your
organization!
Making decisions and taking action based on reason,
evidence and analysis.
 Focus on what matters
 Identify drivers of value
 Embrace diversity
1.

Face reality

18. Focus on What Matters
JD Power Top 10 Reliability
2004 2007
 Buick 145 Porsche 110

 Lexus 145 Lincoln 114

 Cadillac 162 Buick 115

 Mercury
Mercury 168
168 Lexus
Lexus 115
115

 Honda
Honda 169
169 Mercury
Mercury 121
121
 Toyota 178 Toyota 128
 Toyota 178 Toyota 128
 BMW 182 Honda 132
 BMW 182 Honda 132
 Lincoln 182 Ford 141

 Lincoln
Subaru 182
192 Ford
Mercedes 141
142

 Subaru
Jaguar 192
197 Mercedes
Acura 142
143
 Jaguar 197

19. Focus on What Matters
 BMW “We don’t make automobiles [we
make] moving works of art that express
the drivers love of quality.”
 GM: Car guys and bean counters– no
marketing

20. Focus on What Matters

21. Focus on What Matters

22. Focus on What Matters

23. Focus on What Matters

24. Emphasis on Big Picture

25. Calipari
Focus on what matters
 Relentless marketing– Image
 Think differently
 Inspire dedicated fans
 Big picture (China)
 Look for big challenges

26. What Matters Most?
 Iraq and Afghanistan

27. What Matters Most?
 Iraq and Afghanistan
 Mine Resistant Ambush Protected

28. Value Focus
Loss of Trust & Respect
 Trust Issues
 Consumers
 Dealers
 Workers
 Beat up suppliers
 Banks, Public opinion
 Shareholders - Bondholders

29. Value Focus
Loss of Trust & Respect
 Loss of commitment
 Playing favorites
 Keep your head down and get along
 Stop working start having meetings
(Sr. VP of Nothing)
 Lack of Fun
 Innovation
 Creativity

30. Value Focus
Japan has robots we need robots

31. Embrace Diversity
 Group think
 Stability over conflict
 Continuity over disorder
 Status quo over change
 50 year old decision making structure
 Conformity over rebellion
 Same design centers
 Run off renegades
 De Lorean fired at GM -- Iacocca fired at Ford

32. Why is it So Hard to Face
Reality?

33. Why is it So Hard to
Face Reality?

34. Face Reality
 Market Value versus Cumulated Strategic
Investments at General Motors
 1980 GM = $13 Billion
 1980-1997 $167 Billion or $332 Billion
R&D and capital spending
 1997 GM = 40 Billion

35. Face Reality
Ross Perot on the Subject
 From 1980 to 1985 GM spent $45 billion in capital
investments but only increased worldwide market
share by 1%.......
 "For the same amount of money, we could buy
Toyota and Nissan outright, instantly increasing
market share to 40%.”
 Gorilla dust

36. Face Reality
Ask Rick Wagoner why GM isn’t more like Toyota. (69/70)
 “We’re playing our own game – taking
advantage of our own unique heritage
and strengths.”

37. Face Reality
 “I don't know anything about cars. A business is a
business, and I think I can learn about cars. I'm not
that old, and I think the business principles are the
same.” Ed Whiteacre

38. Face Reality
Let’s ignore gas mileage

39. Face Reality
No money in small cars

40. Face Reality

41. Who’s Reality
Bob Lutz
 Global warming “is a total crock of [expletive].”
 “Hybrids like the Toyota Prius make no economic
sense.”
 “Imminent GM bankruptcy was always fiction, created
by Wall Street and the media.”

42. Bureaucracy & the Status Quo
 Risk taker to Risk avoidance
 Cash poor to Cash comfortable
 Contribution to Playing favorites
 Opportunities to Problems
 Create value to Doing your job
 Marketing & sales to Finance & bean-counting
 Momentum to Inertia
 Working to Meetings
 END

43. Does Bureaucracy Materialize
Out of Nowhere?

44. Applications
 Have you clarified exactly how you create value for
your organization?
 Focus on value creation and avoid activities that are
not central to your strategy.
 Appreciate and seek diverse (and contrarian) points
of view
 A fun and exciting atmosphere fosters creativity and
productivity
 Rage against bureaucracy and the status quo.

45. Applications
Management Issues
 Leader sets the tone
 Processes often get in the way
 Bloomberg abolished titles
 Conflict breeds creativity
 Presentations– one-way communication
 Promote and reward risk taking and
attempts at innovation

46. Applications
Jack Welch
Bureaucracy Busting
 Be relentless and outrageous
 Celebrate impassioned boundaryless
people
 Love the people who hate meetings
 Encourage managers to swing for the
fences
 Create a culture of excitement
 END

47. Critical Thinking
 “There is no reason anyone would want a
computer in their home.”
President of world’s second largest computer company
(DEC) arguing against the PC in 1977

48. Critical Thinking
 “The world potential market for copying
machines is 5000.”
IBM turning down the eventual creators of Xerox

49. Critical Thinking
 “I think there is a world market of about
five computers.”
Founder of IBM in 1943

50. Critical Thinking
 “Who the hell wants to hear actors
talk?”
Warner of Warner Brothers arguing against the
need to add sound to silent movies

51. Critical Thinking
 Obama and McCain spent $1 Billion on
their 2008 campaigns – Absurd?
 Coca-Cola spent almost $2 billion
trying to get us to drink sugar water in
2008.

52. Critical Thinking
Professor Robert C. Merton, Harvard University, Cambridge, USA and
Professor Myron S. Scholes, Stanford University, Stanford, USA

53. Critical Thinking
 “Sensible and responsible women do
not want to vote.”
President Grover Cleveland, 1905

54. Critical Thinking
 “We don’t like their music and guitar
music is on the way out anyway.”
Decca record executive turning down the Beatles, 1962

55. Critical Thinking
 “Television won’t last because
eventually people will get tired of staring
at a plywood box every night.”
Daryl Zanuck, 20th Century Fox Movie Producer,
1946

56. Critical Thinking
 “Everything that can be invented has
been invented.”
Commissioner of US Patent Office arguing to
President McKinley to close down the Patent Office
in 1899

57. Why Don’t They Give Us an
Owner’s Manual For Our Brain?

58. The Brain’s Inner Workings
The Wiring
 100,000,000,000 neurons (brain cells)
 15,000 synaptic connections each
 By age 15 half are gone and the superhighways are
up and running.
 These mental pathways become the filter–producing
recurring patterns of thinking, feeling and behavior.
 Examples: Empathy–confrontation–authoritarian–
dogmatic–emotions–tolerance for uncertainty.

59. The Brain’s Inner Workings
The Parts
 The brain is full of zero sum games
 Ever find yourself feeling conflicted?
 Competing modules
 MRI research on picturing yourself as old
 Stanford study
 No payments until next year
 Disagree– brain off Agree-- pleasure
 Parts of the brain
 Amygdale-fear responses
 Fleeing the stock market like you are fleeing a lion
 Prefrontal cortex – recently evolved – controls voluntary actions

Logical and analytical
 Limbic system - oldest physical part of the brain
 The rat brain – Impulses gut reactions

60. Amygdale: Fear Responses
 Total US Stock Market

1982 value = $1.2 Trillion

Return 1982 to 2007 13.3%

Theoretical 2007 value $28.2 Trillion

Actual value $18.7 Trillion

Lost to market timing $9.5 Trillion
 NASDAQ

9.6% Return 1973 – 2002

4.3% Actual average return to NASDAQ investor
 Zweig, Jason, Money Magazine, December 2007, page 76

61. Your Strength
 Strength is a recurring pattern of
thought, feeling, or behavior that can be
productively applied.
 Strength is more important than
experience, brainpower, and willpower.
 You cannot teach strength.

62. Your Strength
 What to notice, what to ignore
 What to love, what to hate
 Your motivations, ego, altruism
 How you think - practical or strategic
 Your attitude - optimistic or cynical
 Your filter is your Strength

63. The Strength of Great
Accountants
 Innate love of precision
 Happiest moment is when the books
balance
 Gallup survey

64. Using Your Brain
Your Unique Strength + Critical Thinking =
Success
 Your value and ability to prosper and reach
your goals come from:
“sensing, judging, creating, and building
relationships.”
 Thomas Stewart, Intellectual Capital
 We all have the same information – it’s what
you do with it that counts.

65. Applications
Using Your Brain
 Exploit your strength!
 Don’t correct weaknesses, work around them.
 Skills and knowledge can be taught, Strength cannot.
 Here’s what we can change!

Core beliefs

New skills and knowledge

Your values

Self-awareness

Capacity for self-regulation

Hidden strengths

66.  “Our minds are like inmates, captive to
our biology, unless we manage a
cunning escape.”
 Nassim Taleb
 The Black Swan

67. Why is Charlie Sheen an
Actor?

68. Why Do We Do What We Do?
Albert Einstein
 “Fear or stupidity has always been the
basis of most human action.”
 Worst paper ever….
 “People have two legs, animals have
four, except fish which have none.”

69. Basis of Human Action and
Decision Making?

Beliefs Act out your beliefs
 Desires Pursue your desires
 Instinct Succumb to instinct

70. Beliefs
You act out what you believe?
 I believe the world is a dangerous
place.
 I believe people should______.
 I am skeptical of all claims.
 An “ideal” manager does ______.
 The best investment philosophy is___.

71. Beliefs
Filters and Reinforcements

72. Desires
 Cialdini knows where our desires come
from
 Are we honest about our desires?
 Mark Cuban and flattery
 Desire to feel good
 Desire to feel safe
 I have to scare you first.
 First I create the disease – then I create the
cure.

73. Living by Instinct
“Nature, Mr. Allnut, is what we are put in this world to rise above”
Rose Thayer (Katherine Hepburn) The African Queen
Human Animals – Instinct…...................Human Beings – Critical Thinking
 Wealth/Greed................................... Altruism and charity
 Seek security at all cost....................Get out of your comfort zone
 Preserve status quo..........................Change
 Meeting society’s expectations...........Be authentic to yourself
(following the herd).......................... (think for yourself)
 Traditional gender roles.................... Equality of the sexes
 Tribalism (nationalism)..................... Multi-culturalism
 Praise authority................................ Question authority
 Praise and follow the leader.............. I don’t need a leader
 Consistency is safe............................Strive for improvement
 Guided by personal experience...........Critical thinking
 Freewill???........................................Free Will!!!!!
 Surviving........................................Living

74. Basis of Human Action and Decision
Making? Beliefs, Desires & Instinct
 You do what you feel obligated to do.
 You do what is the easiest.
 You do what makes you feel safe.
 You do what you’ve always done.

75. You Might Be Thinking
Critically If…..
 You change a core belief.
 You get outside your comfort zone.
 You admit you were wrong about
something important.
 You increase your self-awareness.
 You do something you wouldn’t do.
 What if I like what I do?

76. Punch-line
 Early in life we get theories of the world – the
theories make sense – but making sense is
not the same as being correct.
 Beware of your Brain’s wiring!
 Your brain is programmed

77. Do We Always Think the Same Way?
Did GM Think About This?
 Global Product Development
 Tom Stephens, who runs the company's power-train unit
 Carl-Peter Forster London, Germany and Greece BMW, Opel

78. Finally!
Mary T. Barra

79. Requirements of Critical Thinking
1. Awareness of choices and real
consequences
2. Self-awareness
3. Value focused proactive mindset
4. Avoid thinking pitfalls

80. 1. Awareness of Choices and
Real Consequences
 If you choose one of 10 known options
when there are, in fact, more than 100
options, have you really exercised
critical thinking?
 Cognitive bias: Ignoring alternatives

81. Junkfinger Test
 Tattoos
 Traffic tickets
 Brushes with the law
 Being sick
 Promptness
 Pets

82. If You Don’t Want to Fall in the
Grand Canyon--Don’t Go to Arizona
What I do today
affects what
happens
tomorrow.

83. Junkfinger Test
In the Business World
 Inconsistency
 Excuses
 Making enemies at work
 Always talking, never listening
 Accept things as they are
 Acting uninterested – not engaged
 Lose credibility

84. Goldfinger
 Behavior and attitude that put you in a
position for good things to happen:
1. ?
2. ?
3. ?
4. ?
5. ?

85. Most people end up where their
behavior indicates they want to be.

86. 2. Self-awareness
Metacognition
“The truth will set you free……….
but first it will piss you off.”
Werner Erhard, founder, est Training
“The greatest of all faults, I should say, is to be
conscious of none.”
Thomas Carlyle (1795 – 1881) Scottish writer

87. 3. Be proactive (3 kinds of people)
What Do You Really Want? (Personal
Philosophy)
Do most people suppress their
personalities and their dreams?
 Picture your 70th birthday
 Reeboks says “Life’s short– Play hard.”
 I say “Life’s long– Do something.”

88. Value Creation
Goals and Goal Setting
 What do I really want?
 How do I set effective goals?
 How do I increase the likelihood of good
things happening and reduce the
likelihood of bad things happening?

89. The Trick to Setting
Effective Goals
 Worry about the means not the end.
 In other words, set goals that are within
your control that can lead to good
things– as opposed to outcome based
goals.

90. End based goal:
Impress the boss/Get promoted
 Act with enthusiasm, show your passion and demonstrate self-
confidence
 Don’t just do what you’re told– Develop the habit of doing things
impressively
 Identify the prototype employee and emulate that person
 Professional Image Program
 PRO-ACTIVITY HOUR: Spend one hour a week planning and
reflecting on how success is measured and why certain people
are favored

91. Ends based goal:
Be a millionaire/Retire early
 Study investing and business opportunities for three
hours a week
 Draft a budget and stick to it
 Figure out what “matters” and do the those things first
 Get two jobs

92. Ends based goal:
Vice president by age 35
 Arrange four networking lunches per month
 Volunteer for high profile/difficult projects
 Find a mentor and stay connected
 Try and make every co-worker/client into a friend and
supporter

93. End based goal:
Find a good spouse
 Put yourself in places where “good spouses” hang out
 Don’t date losers while you’re waiting for a winner
 Project the image that attracts “good spouses”
 Be proactive not passive

94. Priorities of Management
Andy Roddick
 Work Hard
 Have fun
 Be a good teammate
 Learn from mistakes
 Win

95. 4. Thinking Pitfalls
Critical Thinking vs. Traditional Thinking

96. Cannot Predict the Future
vs.
Spreadsheets and Models Predict Future
 Late 70s Energy Crisis
 Early 80s Latin American Bank Defaults
 Mid 80s Junk Bonds, Michael Milken
 Late 80s S&L Crisis
 Mid 90s Derivatives crisis
 Late 90s Dot-Com Collapse
 2000 Long-Term Capital Management
 2008 Sub-prime Mortgage Debacle
 Before 2015 Unexpected disaster

97. Cannot Predict Probability
vs.
Theory Predicts Probability
 “Most negatives in housing are behind
us.”
Alan Greenspan, October 2006

98. Cannot Predict Probability
vs.
Theory Predicts Probability
 “I don’t see (sub-prime mortgages)
imposing a serious problem.”
Treasury Secretary Henry Paulson, April 2007

99. Cannot Predict Probability
vs.
Theory Predicts Probability
 “We see no serious broader spillover to
banks from the sub-prime market.”
Fed Chairman Ben Bernanke, October 2007

100. Cannot Predict Probability
vs.
Theory Predicts Probability
 “The effective management of risk is
one of the core strengths that has made
Lehman Brothers so successful.”
Still found on Lehman Brothers website one month
after collapse.

101. Focus on Unknown Unknowns
vs.
Focus on the Known
 Risk Management - Mirage Hotel in Vegas
 Hundreds of Millions on
 Cheating Detection
 Employee Monitoring
 Probability and Diversification
 Theft Protection
 Four biggest losses:
 Tiger attacks Siegfried or Roy
 Contractor wires hotel with dynamite
 Forms not turned in to IRS
 Owner’s child kidnapped

102. Focus on Unknown Unknowns
vs.
Focus on the Known
Source: 2006 Report to the Nation on Occupational and Fraud Abuse by the Association of Certified
Fraud Examiners (ACFE)

103. Observation to Theory
vs.
Theory to Practice
 Coin flips heads 50 times in a row--what are
the odds tails comes up next?
 Ideology = Tails is due
 Scientific probability theory = 50/50
 Critical Thinking = Crooked coin

104. Embrace Uncertainty and Ambiguity
vs.
Must Have an Answer or Explanation
 Underestimate the role of luck in life
 Overestimate it in games of chance
 Think we can measure it in decision-making

105. Thinking
vs.
Computing
 The energy conferences
 Dot-com’s new world

106. Critical Thinking
Applications
 Awareness keeps your brain on track
 Question your beliefs and assumptions
 Be honest about your desires
 Struggle to think critically
 Lifelong learning
 Put yourself in positions for good things to happen
 Set goals and make things happen
 Doubt and wonder

107. The Secret to Happiness

108. The Secret to Happiness
 Self-delusion
 Hypocrisy
 Ignorance

109. The Secret to Happiness
Ignorance is Bliss
“People who do things badly
are supremely confident in
their abilities—more confident,
in fact, than people who do
things well. Not only do they
reach erroneous conclusions
and make unfortunate
choices, but their
incompetence robs them of
the ability to realize it.”
Dunning, David Journal of Personality and Social
Psychology December 1999.

110. The Secret to Happiness
Why?
Researchers believe
that the same skills
required for
competency are the
same to recognize
incompetence.

111. The Secret to Success
 Focus on what matters
 Identify drivers of value

Embrace diversity

Face reality
 Wonder, worry and doubt!

112. Critical Thinking
Imagine
 “Imagination is more important than
knowledge.”
Einstein
 “The reasonable man (woman) adapts himself to
the world. The unreasonable one persists in trying
to adapt the world to himself. Therefore, all
progress depends on unreasonable men (women).”
George Bernard Shaw

113. Thank You
I appreciate your
time and attention.
aurich@okstate.edu
www.andrewurich.com

114. References
 Ailes, Roger. You Are the Message. New York. Doubleday, 1988.
 Bazerman, Max H. Smart Money Decisions, Wiley & Sons, 1999
 Buckingham, Marcus, First, Break All the Rules, Simon & Schuster, 1999.
 Cialdini, Robert B. Influence: Science and Practice. 3rd Ed. New York: Harper
Collins, 1993.
 Ghemawat, Pankaj, Strategy the Business Landscape, Addison Wesley, NY 1999.
 Golman, Daniel, Emotional Intelligence, Bantam Books, New York, 1995.
 Hirshberg, Jerry, (Founder Nissan Design International) The Creative Priority,
Harper Business, NY, 1999
 Koch, Charles G., The Science of Success, Wiley & Sons, 2007.
 Lakoff, George, Moral Politics,
 Paul, Richard. Critical Thinking. Santa Rosa, CA: Foundation for Critical Thinking,
1993.
 Pink, Daniel H. The Whole New Mind, Riverhead Books, NY, 2006.
 Schramm, Carl J. The Entrepreneurial Imperative (HarperCollins) 2006.