Transcript Free Will? - Andrew L. Urich, JD

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
[email protected]
www.andrewurich.com
What Happened to GM?
GM History
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1950’s - Half of all cars in the US
GM History
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1980 - 853,000 to 284,000 worldwide
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
1999
“The most versatile vehicle on earth”
“Lifestyle support vehicle”
1st Q 2009
Passenger cars
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Toyota
GM
Honda
Nissan
Ford
Hyundai
Chrysler
Mazda
BMW
VW
Kia
Subaru
19.4%
15%
12.4%
10.2%
10.0%
6.2%
5.2%
3.4%
3.2%
3.2%
2.6%
2.6%
Volvo
Saab
0.8%
0.2%
Critical Thinking
Don’t try this at home!
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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.
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I don't usually review the mistakes I have made.
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I don't like to be criticized.
What is Critical Thinking?
1.
2.
3.
Making decisions and taking action based on
reason, evidence and analysis.
Detect and avoid thinking traps.
Reflect on the justification of one's own beliefs and
values.
4.
Understand the logical connections between ideas.
5.
Metacognition: thinking about thinking.
What is Critical Thinking?
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Using your brain to create value for
yourself and your organization!
Value
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Superior analysis and judgment
Intelligent decision making
Focus on what matters
Identify drivers of value
Face reality
Value Focus
JD Power Top 10 Reliability
2004
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Buick
Lexus
Cadillac
Mercury
Honda
Toyota
BMW
Lincoln
Subaru
Jaguar
145
145
162
168
169
178
182
182
192
197
2007
Porsche
Lincoln
Buick
Lexus
Mercury
Toyota
Honda
Ford
Mercedes
Acura
110
114
115
115
121
128
132
141
142
143
Value Focus
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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
Value Focus
Loss of Trust & Respect
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Trust Issues
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Consumers
Dealers
Workers
Beat up suppliers
Banks, Public opinion
Shareholders - Bondholders
Truth irrelevant when trust doesn’t exist
Value Focus
Loss of Trust & Respect
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Loss of commitment
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Playing favorites
Keep you head down and get along
Stop working start having meetings
(Sr. VP of Nothing)
Lack of Fun
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Innovation
Creativity
Lack of Diverse Opinion
(Face Reality)
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Group think
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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
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De Lorean fired at GM -- Iacocca fired at Ford
Market Value versus Cumulated Strategic
Investments at General Motors
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1980 GM = $13 Billion
1980-1997 $167 Billion or $332 Billion
R&D and capital spending
1997 GM = 40 Billion
Ross Perot on the Subject
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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
Optimistic Illusions
Ask Rick Wagoner why GM isn’t more like Toyota. (69/70)
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“We’re playing our own game – taking
advantage of our own unique heritage
and strengths.”
Distortion of Reality
Let’s ignore gas mileage
Distortion of Reality
No money in small cars
Who’s Reality
Bob Lutz
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Global warming “is a total crock of [expletive].”
“Hybrids like the Toyota Prius make no economic
sense.”
Strategic Thinking
The key to strategy is what you don’t do
Strategic Thinking
Japan has robots we need robots
Sequel: Fuel Cell
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9/2006 Due 2010
“Leapfrog the Japanese”
“A Game Changer”
Volt: Electric Car
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12/2006
“A game changer”
“Beat the Japanese at their own game”
Bureaucracy & the Status Quo
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Risk taker to Risk avoidance
Cash poor to Cash comfortable
Contribution to Playing favorites
Opportunities to Problems
Marketing & sales to Finance & bean-counting
Momentum to Inertia
Working to Meetings
END
Does Bureaucracy Materialize
Out of Nowhere?
Applications
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Have you clarified exactly how you create value for
Chesapeake?
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.
Applications
Management Issues
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Leader sets the tone
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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
Applications
Jack Welch
Bureaucracy Busting
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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
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END
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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
Critical Thinking
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“The world potential market for copying
machines is 5000.”
IBM turning down the eventual creators of Xerox
Critical Thinking
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“I think there is a world market of
about five computers.”
Founder of IBM in 1943
Critical Thinking
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“Who the hell wants to hear actors
talk?”
Warner of Warner Brothers arguing against the
need to add sound to silent movies
Critical Thinking
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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.
Critical Thinking
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“Sensible and responsible women do
not want to vote.”
President Grover Cleveland, 1905
Critical Thinking
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“We don’t like their music and guitar
music is on the way out anyway.”
Decca record executive turning down the Beatles, 1962
Critical Thinking
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“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
Critical Thinking
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“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
Why Don’t They Give Us an
Owner’s Manual For Our Brain?
The Brain’s Inner Workings
The Wiring
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100,000,000,000 neurons (brain cells)
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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.
The Brain’s Inner Workings
The Parts
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The brain is full of zero sum games
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Ever find yourself feeling conflicted?
Competing modules
MRI research on picturing yourself as old
 Stanford study
 No payments until 2010
 Disagree– brain off Agree-- pleasure
Parts of the brain
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Amygdale-fear responses
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Prefrontal cortex – recently evolved – controls voluntary actions
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Fleeing the stock market like you are fleeing a lion
Logical and analytical
Limbic system - oldest physical part of the brain
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The rat brain – Impulses gut reactions
Amygdale: Fear Responses
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Total US Stock Market
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NASDAQ
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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
9.6% Return 1973 – 2002
4.3% Actual average return to NASDAQ investor
Zweig, Jason, Money Magazine, December 2007, page 76
Your Strength
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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.
Your Strength
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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
The Strength of Great
Accountants
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Innate love of precision
Happiest moment is when the books
balance
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Gallup survey
Using Your Brain
Your Unique Strength + Critical Thinking =
Success
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Your value and ability to prosper and reach
your goals come from:
“sensing, judging, creating, and building
relationships.”
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Thomas Stewart, Intellectual Capital
We all have the same information – it’s what
you do with it that counts.
Punch-line
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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!
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Your brain is programmed
Applications
Using Your Brain
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Exploit your strength!
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Don’t correct weaknesses, work around them.
Skills and knowledge can be taught, Strength cannot.
Here’s what we can change!
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Core beliefs
New skills and knowledge
Your values
Self-awareness
Capacity for self-regulation
Hidden strengths
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“Our minds are like inmates, captive to
our biology, unless we manage a
cunning escape.”
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Nassim Taleb
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The Black Swan
Why is Charlie Sheen an Actor?
Why Do We Do What We Do?
Albert Einstein
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“Fear or stupidity has always been the
basis of most human action.”
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Worst paper ever….
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“People have two legs, animals have
four, except fish which have none.”
Basis of Human Action and
Decision Making?
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Beliefs
Desires
Instinct
Act out your beliefs
Pursue your desires
Succumb to instinct
Beliefs
You act out what you believe?
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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___.
Beliefs
Filters and Reinforcements
Desires
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Cialdini knows where our desires come
from
Are we honest about our desires?
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Mark Cuban and flattery
Desire to feel good
Desire to feel safe
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I have to scare you first.
First I create the disease – then I create the
cure.
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
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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
Basis of Human Action and Decision
Making? Beliefs, Desires & Instinct
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You
You
You
You
do
do
do
do
what
what
what
what
you feel obligated to do.
is the easiest.
makes you feel safe.
you’ve always done.
You Might Be Thinking
Critically If…..
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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.
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What if I like what I do?
Do We Always Think the Same Way?
Did GM Think About This?
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Global Product Development
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Tom Stephens, who runs the company's power-train unit
Carl-Peter Forster London, Germany and Greece BMW, Opel
Requirements of Critical Thinking
1.
2.
3.
4.
Awareness of choices and real
consequences
Self-awareness
Value focused proactive mindset
Avoid thinking pitfalls
1. Awareness of Choices and
Real Consequences
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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
Junkfinger Test
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Tattoos
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Traffic tickets
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Brushes with the law
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Being sick
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Promptness
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Pets
If You Don’t Want to Fall in the
Grand Canyon--Don’t Go to Arizona
What I do
today affects
what happens
tomorrow.
Junkfinger Test
In the Business World
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Inconsistency
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Excuses
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Making enemies at work
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Always talking, never listening
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Accept things as they are
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Acting uninterested – not engaged
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Lose credibility
Goldfinger
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Behavior and attitude that put you in
a position for good things to happen:
1.
2.
3.
4.
5.
?
?
?
?
?
Most people end up where their
behavior indicates they want to be.
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
3. Value Focused Proactive Mindset
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Life philosophies down 50%
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Man may be wired for meaning
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“Consider first the end.”
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Leonardo da Vinci
What Do You Really Want?
Be proactive (3 kinds of people)
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Do most people suppress their
personalities and their dreams?
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Picture your 70th birthday
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Reeboks says “Life’s short– Play hard.”
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I say “Life’s long– Do something.”
Value Creation
Goals and Goal Setting
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What do I really want?
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How do I set effective goals?
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How do I increase the likelihood of
good things happening and reduce the
likelihood of bad things happening?
The Trick to Setting
Effective Goals
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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.
End based goal:
Impress the boss/Get promoted
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Act with enthusiasm, show your passion and demonstrate selfconfidence
Don’t just do what you’re told– Develop the habit of doing
things impressively
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Identify the prototype employee and emulate that person
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Professional Image Program
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PRO-ACTIVITY HOUR: Spend one hour a week planning and
reflecting on how success is measured and why certain people
are favored
Ends based goal:
Be a millionaire/Retire early
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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
Ends based goal:
Vice president by age 35
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Arrange four networking lunches per month
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Volunteer for high profile/difficult projects
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Find a mentor and stay connected
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Try and make every co-worker/client into a friend
and supporter
End based goal:
Find a good spouse
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Put yourself in places where “good spouses” hang out
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Don’t date losers while you’re waiting for a winner
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Project the image that attracts “good spouses”
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Be proactive not passive
Priorities of Management
Andy Roddick
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Work Hard
Have fun
Be a good teammate
Learn from mistakes
Win
4. Thinking Pitfalls
Critical Thinking vs. Traditional Thinking
Cannot Predict the Future
vs.
Spreadsheets and Models Predict Future
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Late 70s
Energy Crisis
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Early 80s
Latin American Bank Defaults
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Mid 80s
Junk Bonds, Michael Milken
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Late 80s
S&L Crisis
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Mid 90s
Derivatives crisis
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Late 90s
Dot-Com Collapse
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2000
Long-Term Capital Management
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2008
Sub-prime Mortgage Debacle
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Before 2015
Unexpected disaster
Cannot Predict Probability
vs.
Theory Predicts Probability
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“Most negatives in housing are behind
us.”
Alan Greenspan, October 2006
Cannot Predict Probability
vs.
Theory Predicts Probability
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“I don’t see (sub-prime mortgages)
imposing a serious problem.”
Treasury Secretary Henry Paulson, April 2007
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
Cannot Predict Probability
vs.
Theory Predicts Probability
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“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.
Focus on Unknown Unknowns
vs.
Focus on the Known
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Risk Management - Mirage Hotel in Vegas
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Hundreds of Millions on
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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
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)
Observation to Theory
vs.
Theory to Practice
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Coin flips heads 50 times in a row--what are
the odds tails comes up next?
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Ideology = Tails is due
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Scientific probability theory = 50/50
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Critical Thinking = Crooked coin
Embrace Uncertainty and Ambiguity
vs.
Must Have an Answer or Explanation
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Underestimate the role of luck in life
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Overestimate it in games of chance
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Think we can measure it in decision-making
Thinking
vs.
Computing

The energy conferences
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Dot-com’s new world
Harmful Mental Shortcuts
Heuristics
“Everything in life should be made as simple
as possible, but not simpler.”
Albert Einstein
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Simplifying information processing–simple
explanations are the easiest.
As the world gets more complex, we seek
refuge in simplicity.
Harmful Mental Shortcuts
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Things that are scarce are good.
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You can rely on authority figures.
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Confident people know what they are doing.
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The more similarities a person has to me the
more I can rely on them.
Harmful Mental Shortcuts
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Experts know what they are talking about.
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Price = Value.
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Items on special are a good deal.
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The person in charge is responsible for the
outcome.
If everyone’s doing it, it must be good or right.
Applications
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Recognize and appreciate randomness, uncertainty and
ambiguity.
Develop a more realistic understanding of the inability to
quantify and measure risk.
Think! Don’t compute.
Recognize the risk of thinking you know…what you don’t know.
Pursue ventures with limited risk/cost and tremendous upside
potential.
Look out for pitfalls and cognitive biases
Critical Thinking
Applications

Awareness keeps your brain on track
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Question your beliefs and assumptions
Be honest about your desires
Struggle to think critically
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Lifelong learning
Put yourself in positions for good things to happen
Set goals and make things happen
Doubt and wonder
The Secret to Happiness
The Secret to Happiness
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Self-delusion

Hypocrisy

Ignorance
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.
The Secret to Happiness
Why?
Researchers believe
that the same skills
required for
competency are the
same to recognize
incompetence.
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
Thank You
I appreciate your
time and attention.
[email protected]
www.andrewurich.com
References
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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.