Considering the myriad challenges facing the world economy, there is little expectation that a strong recovery is imminent. It could be years, even decades, away. There also is growing recognition that the old, pre-crisis way of doing business is never coming back. In its place is “the new normal”—a different kind of competitive landscape buffeted by geopolitics and global instability, rapid technological change, unique financial pressures, a rising tide of data and information to filter through, and the proliferation of new corporate business models.
While some classic strategies and skills will continue to be effective, leaders in this brave new world of business will need to lead differently. Most notably, the mind-set that made leaders successful in the past probably won’t ensure success in the future. In fact, several recent studies and surveys have identified critical thinking as the number one requirement for successful leadership in the 21st century.
Critical thinking enables leaders at every level to understand the impact of their decisions on the business as a whole and ensures both alignment with organizational goals and accountability for results.
Yet there is mounting evidence that many current and emerging leaders lack this quality. And it is this competency gap that is shaking up and reshaping leadership development as we have come to know it.
There’s going to be no room for old-school leadership development in the new normal.
Leadership in the New Normal
In the wake of the economic crisis, we all know what a failure of leadership looks like. Companies such as AIG and Lehman Brothers serve as stark examples of what happens when decisions are based upon erroneous, partially false or incomplete information and when management fails to think clearly and strategically about the full implications of its actions. The resulting fallouts put an end to business as usual and created a new normal that looks markedly different from anything anyone has seen before.
“We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order,” wrote Ian Davis in a March 2009 essay in the McKinsey Quarterly. As global economies emerge from the crisis and continue to shift during what promises to be a protracted recovery, business organizations must be prepared to do things differently if they expect different results. In this demanding, dynamic landscape, it is only natural that they also require a different mind-set from those in charge.
The equation works like this: Thinking drives behavior; behavior drives results. So enterprises that want to change the results—and, indeed, change the organization itself—can achieve the highest leverage by changing the thinking of leaders and managers throughout the organization.
But what kind of thinking—or rather rethinking—will be required of leaders if they want to succeed in the new normal?
Why Critical Thinking Is Critical
Identified by the Department of Labor as a foundational skill and the “raw material” that underlies fundamental workplace competencies, critical thinking appears to be exactly what is needed from leaders who are navigating the volatility of the new economy.
Diane Halpern, an award-winning professor of psychology at Claremont McKenna College and a widely read author on the subject, offers this definition in her seminal book, Thought and Knowledge:
“Critical thinking is the use of those cognitive skills or strategies that increase the probability of a desirable outcome. It is used to describe thinking that is purposeful, reasoned, and goal-directed—the kind of thinking involved in solving problems, formulating inferences, calculating likelihoods, and making decisions. . . . It’s the kind of thinking that makes desirable outcomes more likely.”
If ever there was a time for clear, discerning, solution-centric thinking, this is it.
In a recent study from The Conference Board, 150 companies and more than 80 thought leaders weighed in on what they saw as the characteristics of leadership necessary to face the future. The results pointed to “an environment of extreme cognitive complexity in many industries, requiring extraordinary strategic thinking skills and the ability to make high-quality decisions quickly in the face of competitive pressures and uncertainty.”
At the same time, in Are They Really Ready to Work?—a subsequent report from The Conference Board, in collaboration with Corporate Voices for Working Families, the Partnership for 21st Century Skills and the Society for Human Resource Management—critical thinking was singled out by 77.8 percent of employers as the number one skill of increasing importance over the next five years.
The irony, of course, is that other research indicates that many current and future leaders lack the kind of mind-set needed to lead in the 21st century.
For example, every two years since 1983, Executive Development Associates (EDA) has conducted an extensive survey on trends, growth and the evolution of executive development. The 2009/2010 EDA Trends in Executive Development: A Benchmark Report revealed trouble on the horizon for corporations seeking future business leaders.
To gauge the readiness of the next generation of leadership talent, EDA asked senior executive development professionals to share their views on the strengths and weaknesses of the incoming leadership group—the people who are most likely to fill executive-level positions in the next three to five years—and the subsequent impact on executive development.
The survey identified “hot topics” in executive development for the next two to three years. At the top of the list was leadership, followed by “business acumen, honing skills in strategy execution, leading/managing change, and talent management.”
But when asked “What competencies are your leaders lacking?” their responses indicated little confidence that leaders had what it takes to execute in these critical areas successfully. Here’s what they said was missing:
Strategic thinking
Leading change
Ability to create a vision and engage others around it
Ability to inspire
Understanding the total enterprise and how the parts work together
In a March 3, 2010, article by Mary Welch posted on Womenetics.com, a female-oriented business media platform and one of Forbes’ Top 100 Websites for Women, EDA CEO Bonnie Hagemann succinctly described this disconnect.
“What a leader needs the most, the next leaders lack,” said Hagemann. “They can’t think critically. They can’t think at a high level and a low level at the same time.”
Anecdotal evidence from the ranks of corporate executives supports the concern that current and emerging leaders lack the critical-thinking skills they need to lead going forward. In Leadership Matters, a 2009 paper published by Heidrick & Struggles International (H&S), one of the world’s leading executive search and leadership advisory firms for more than 50 years, CEO Kevin Kelly and Leo T. Csorba, an H&S partner, wrote:
“Countless CEOs have confided in us that what keeps them up at night is whether their leaders are sufficiently developed to head off the next crisis. They worry about whether their leaders are able to make the tough decisions and take the necessary actions to not only drive earnings and revenue growth, but [also] to mitigate risk and ward off ethical lapses.
“Boards and executive teams must ensure that their future leaders are not only the smartest, most innovative guys and gals in the room, but also the wisest; not only the most confident, but also the most authentic; and not only the most driven, but also the most ambitious for the enterprise as a whole.”
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What Critical Thinking Looks Like
Having established the need for a mind-set shift to more critical thinking, we need to be clear on what that means in the workplace.
In general, critical thinking is the ability to deal with the contradictions and problems of a tumultuous environment in a reasoned, purposeful, productive way. Decisions are made using an approach that is fair, objective, accurate and based on information that is relevant to the situation.
Critical thinking is also reflective and focused, constantly evaluating the thinking process itself. It is thinking with a purpose.
At its core, according to Kathy Pearson, Ph.D., an adjunct associate professor in the Operations and Information Management Department at The Wharton School of the University of Pennsylvania, is “intellectual curiosity and a willingness to ask questions.” It requires a healthy dose of skepticism and an equal measure of good judgment.
For decades, companies have relied on the Watson-Glaser Critical Thinking Appraisal, a widely used assessment tool for evaluating the cognitive ability of current and future leaders. Developed in 1925, the model identifies factors that are key to critical thinking and decision making and predicts judgment, problem solving, creativity, openness to experience and other leadership behaviors.
Five subtests measure critical thinking as a composite of attitudes, knowledge and skills:
Inference
Recognition of assumptions
Deduction
Interpretation
Evaluation of arguments
Professionals with high scores in these subtests are able to identify and examine the assumptions, influences and biases that might sway them. They stand back from the fray and strategically assess the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. They make business decisions that answer the right questions, solve the right problems, mitigate risk and improve productivity. They also lead from a position of strength, being able to motivate and move people both inspirationally and intellectually by providing solid reasons for actions.
Whether they lead teams, departments or entire enterprises, leaders who apply the skills of critical thinking to their roles perform at a higher level and offer their organizations a distinct competitive advantage.
Critical thinkers think differently about their impact on the organization—understanding how their decisions and actions influence business both inside and outside their narrow functional silos. These leaders are able to balance department or team issues with broader company issues and embrace a larger responsibility for the success of the organization. This keen sense of accountability is what enables them to execute for results now while fulfilling their obligations to positively impact the future.
Leaders who engage in critical thinking also understand the total organization and how the individual parts work together. Context is key. Now more than ever, business acumen is foundational to effective leadership. It is impossible to apply critical thinking skills to the business of making money without an understanding of the business drivers that connect day-to-day decisions and actions to key financial and strategic performance goals of the organization. It is one thing to understand one’s role as a leader. It is altogether another thing to understand how to set direction and directly affect the outcomes.
Critical thinking is big-picture thinking too. As Hagemann describes it, “Leaders need to be able to comfortably climb to the 30,000-foot view and analyze a dynamic system, while simultaneously and adeptly analyzing information to quickly make decisions across levels.” Critical thinkers operate from a broad perspective in order to make sure the correct problems are addressed and they are taking acceptable risk. They recognize the difference between short-term gains and sustainable, long-term results and lead accordingly.
The advantages of this kind of leadership behavior are readily apparent. Critical thinking enables leaders at every level to understand the impact of their decisions on the business as a whole and ensures both alignment with organizational goals and accountability for results. It’s exactly the type of leadership behavior demanded by the new normal and exactly what’s missing. And this disconnect is likely to intensify over the next few years as economies rebound and new business models emerge.
Given the critical-thinking competency gap exposed by the EDA survey and other research, the obvious assumption is that the traditional development process that businesses have relied upon in the past to prepare leaders simply hasn’t kept up. So, what’s the solution? To accelerate the development of high-potential individuals and raise leadership accountability to a whole new level of awareness and action, there needs to be a new emphasis on critical thinking in the leadership curriculum.
Learning to Think Like a Leader
The good news is critical thinking is a skill that can be taught. According to Halpern, “There is a large body of evidence showing that people can learn to think better. Of course, education makes us all more intelligent, but critical thinking is more focused. Everyone can learn to recognize and use the skills of critical thinking, and we can always get better.”
And it’s not just academics that take this view. In a 2009 interview with USA TODAY corporate management reporter Del Jones, 3M CEO George Buckley said, “There are things you are born with. You can’t develop intelligence. You can’t develop morals by law. I learned my value system on the bottom of my grandmother’s shoe before the age of seven. I didn’t learn them from a statute book. There are things that we can develop. Strategic thinking, for example. There is a difference between a leader and a manager…In the end, maybe you can’t plant leadership in a person, but you certainly can enhance it in a person.”
New competencies, however, may require a deeper, more analytical approach to training.
The challenge today is not to discard what has been learned in the past but to build upon traditional competencies with a whole new and more complex set of skills, tools and sensitivities.
The new generation of leaders needs to learn how to be discerning, how to think clearly and wisely, and how to be accountable for their impact on the business. The trick is reinvigorating the leadership curriculum with development experiences that transfer critical thinking skills to current and emerging leaders who have not previously been taught—or even encouraged—to think critically.
Not surprisingly, when it comes to teaching critical thinking skills, traditional management training often falls short. Emphasizing the “tactical” skills of managing—setting goals, communicating expectations, providing feedback—doesn’t adequately prepare managers to use the “strategic” skills of critical thinking, motivating, energizing and providing vision. While this type of skills training clearly has a role in management development, it cannot accomplish the desired transformation to critical thinking or provide opportunities to develop true leadership. These demanding requirements call for new learning methodologies.
Despite the urgency of the situation, however, it is hard for many firms to move away from their reliance on traditional leadership development models and consider new approaches. Their training isn’t necessarily broken. But it may well be incomplete.
The vast majority of today’s emerging leaders—middle or junior managers—have little or no exposure to the types of learning experiences that would nurture transformative leadership. They need learning initiatives that focus on deeper competency development by modeling complex, real-world contexts in which learners can experiment, reflect and take new courses of action based on increasingly deeper awareness.
How will you reinvigorate your leadership—and your leadership development curriculum—with the new knowledge and skills your emerging leaders need to succeed in the years ahead?
Discovery Learning: An approach for developing critical thinking skills
Critical thinking can be taught. However, the process can be more challenging than improving a behavioral skill, because you can’t easily measure it. Success is demonstrated in results.
As with any skill, intellectual or otherwise, the key to building critical thinking—and achieving successful results—is practice. Research has demonstrated that people learn best when they are actively involved in the learning process and engaging in the behaviors they want to learn. But what’s vital in developing critical thinking skills in current and future leaders is framing the concept of practice within a relevant, job-related context.
For business leaders, acquiring critical thinking skills requires participating in transformative learning experiences that force them to consider new ways of thinking about and acting within complex situations that are directly related to the work they do. These activities should afford them the opportunity to respond to issues, reflect on and reframe their experiences, demonstrate new thinking, and, in turn, engage in new behaviors and actions that are relevant to their positions and objectives.
Over the years, discovery learning has proven to be a powerful way to change perspectives and build critical thinking skills and insights. Learners are guided and motivated to explore information and concepts in order to construct new ideas, identify new relationships, and create new models of thinking and behavior. The methodology is highly experiential and interactive, incorporating game techniques, visuals, simulations, small-team exercises and other participant-centered elements to enhance learning, accelerate knowledge and skill acquisition, and ensure long-term retention.
In discovery learning programs, participants contend with real business obstacles, make decisions (and mistakes) and discover the impact of their actions. They get to practice in a compressed, safe environment without risk or real-world consequences.
After such hands-on practice, learners are better equipped to transfer the experiences and insights they’ve gained to real workplace issues. They are able to make connections between what happened in the leadership development activity and what happens in the business. And they can successfully bridge to follow-up action on the job.
What Learning Leaders Can Do
Because old-school leadership development no longer answers the call, it’s time to investigate alternatives. Here are some ideas for reevaluating, reinvigorating and reengineering your current leadership development efforts:
1. Take a fresh, objective look at your curriculum offerings. Are they clearly aligned with the organization’s strategies? Will leaders understand how the knowledge and skills being developed fit into the overall context of organizational success?
2. Enhance your leadership development content by getting learners actively involved in thinking and discovering. Are there ample opportunities to engage in real-world application exercises? Are learners led to discover relevant insights that connect to their responsibilities? Is there time for reflection and thinking?
3. Redesign your offerings, incorporating small-team activities, challenge scenarios, game techniques, post-session action projects and other discovery learning exercises. Are your offerings engaging learners? Are learners actively participating in their learning experience or passively receiving it? Do you have a robust mechanism for transfer of learning to the job?
4 Expand the use of simulations that place learners in situations where they have to employ critical thinking to make decisions and analyze consequences. Are the simulations closely aligned with real-world issues? Can learners see a clear connection between their decisions and actions and the success of both themselves and their organization?
5. Incorporate business acumen development into your curriculum to ensure your leaders understand the business—both its financial drivers and its strategic objectives. Are leaders able to tie their actions and decisions to the company’s success? Is their knowledge of the business strong enough to drive behavior and to engage teams and employees?
By assessing your current leadership development initiatives through the lens of what’s required of the next generation of leaders—and addressing the gaps—you put your organization and its leaders in a much stronger position to succeed in the new normal.
Paradigm Learning: Developing the Critical Thinking Skills of Leaders
Paradigm Learning offers two dynamic training solutions that help leaders develop critical thinking skills. One focuses on building business acumen and the other zeros in on leadership accountability. The knowledge and skills developed in these programs drive real business results—providing leaders with a robust understanding of the company’s financial and strategic performance drivers and a keen sense of accountability for achieving those goals.
Zodiak®: The Game of Business Finance and Strategy
Zodiak is a one-day, classroom-based discovery learning experience that enhances the business acumen of executives, managers and team leaders. This high-energy business simulation—disguised as a fast-paced game—engages participants as the new owners of a struggling company. Over the course of three simulated years, they handle chance events and make critical decisions around strategic issues such as capital investments, staffing, pricing, new products and more. Then they analyze their results and answer to investors.
Very quickly, learners develop new insights—not just about how the numbers work, but also about the bottom-line consequences of business decisions and actions. And they leave the session with a significantly enhanced appreciation for the financial and strategic drivers of their own organizations.
Impact5®: The Business of Leadership Game
Impact5 is a business simulation designed to develop the strong sense of accountability that leaders need to drive business results. Unlike traditional development that addresses leadership from a “what you need to do, what skills you need to have” perspective, Impact5 answers the question “What does your organization need from you as a leader to positively impact success?”
Using a challenging “slice of reality” business simulation, this one-day training experience builds a new mind-set about leadership and helps managers and leaders link their competencies to results in three areas: customer, organizational and financial. During the simulation, learners work with team members to discuss complex issues, make decisions and analyze results. They leave with a “big picture” perspective about their roles, prepared to focus on the behaviors and actions that will have the highest impact on their own—and their company’s—success.