The Value of Critical Thinking in becoming
Agile and Resilient
Teams that think critically can manage risk and opportunity whilst generating new insights and strategies. Embedding this capability across the enterprise builds agility and resilience.
Now more than ever, organisations are operating in increasingly volatile conditions and leaders are confronting, in rapid succession, a convergence of challenges many have not previously encountered.
Leaders are navigating turbulent times
Many leaders are navigating uncharted waters, challenged by an unprecedented range of threats including increased cyber threats, ongoing impacts from COVID, volatile global markets, rising interest rates and costs to business, increased scrutiny from the regulator, changes in customer needs, staff wellbeing and attracting and retaining the right talent.
For many, the turbulent conditions are highlighting a critical skills gap to successfully manage the volume of change and uncertainty.
What are Critical Thinking skills?
Critical Thinking skills underpin high quality decision-making. Individuals with critical thinking skills have a highly adaptive capacity to respond to change as they can grasp context quickly by separating facts and assumptions which enables them to see the situation in perspective.
Critical thinkers gain perspective by focusing on the facts, both positive and negative, and removing emotional bias within a situation. This allows them to assess a situation in a rational way by considering the potential downside and potential upside of the situation.
With this enhanced perspective, critical thinkers can generate possibilities in a disciplined and concrete way and work towards positive outcomes. They can control their response to changing circumstances by avoiding reflective thinking and engaging in active thinking. Active thinking allows leaders to reframe the situation from a potentially negative viewpoint to a positive outlook; an approach which has been demonstrated to lead to breakthrough insights.i
Focusing on both risks and opportunities using a disciplined thinking process allows for a deliberate rather than a reactive response to the situation and helps crystalise a positive, workable path forward, whilst also managing risk.
Uncovering and untangling assumptions through open and rigorous discussions and a methodical approach to critical thinking creates perspective and accelerates leaders’ ability to generate solutions they may not have previously considered.
Although many senior leaders have honed this skill, the challenge and opportunity is to embed this capability more broadly across the organisation. Whilst many organisations want agile and resilient teams that can make high-quality decisions, few possess an enterprise-wide framework that enables this to occur daily.
During times of turbulence, teams need the skills to successfully navigate complexity and ambiguity and identify both risk and opportunity. They need the skills to generate new ideas, realistic solutions and to prioritise activities that are aligned to strategy.
How Critical Thinking skills build organisational agility
Many large and complex organisations are applying agile ways of working to drive transformation and increase customer value. Agile promises to enhance ‘speed to market’ by moving away from overly complex and bureaucratic decision-making.
According to a recent McKinsey Quarterly survey report of 2,500 business leaders, three-quarters of respondents say organisational agility is a first or second priority, and nearly 40 percent are currently conducting an organisational-agility transformation.[ii]
Highly successful agile transformations typically delivered around 30 percent gains in efficiency, customer satisfaction, employee engagement, and operational performance and yet overall, only 11% of organisations have achieved these outcomes so far.
With such compelling benefits to ‘become agile’ and only a small percentage achieving those gains, there is a clear opportunity to optimise the advantages of agile in many organisations.
Successful innovation requires an Agile Mindset
Agile methodologies are designed to enable high-quality and high-speed decision-making and the ability to respond effectively to unique circumstances, in an ever-evolving business environment. Yes sustained success requires an Agile Mindset.
An Agile Mindset is a thought process that involves understanding, collaborating, learning and remaining flexible to achieve high performance results. Transparency, inspection and adaptation are key elements as well as a willingness to change, to seek and accept new inputs, to apply the new information to the current known situation and re-prioritise activities and time to ensure they’re aligned to strategy utilising the most up to date information.
An Agile Mindset is evidenced by behaviours and skills which include:
- The adaptive capacity to thrive in a new environment with changing business conditions.
- Exceptional critical thinking skills including enquiring, analysing, clarifying, and verifying to challenge assumptions and uncover blind spots.
- Creative thinking skills including strategising, imagining and forecasting to generate new perspectives and unique insights.
- Collaboration skills to identify risk and participate in deeper levels of thinking on complex problems.
- Pragmatic, action-oriented, able to synthesise and prioritise with a focus on value creation.
Agile environments require effective, distributed decision-making
Within agile environments, effective decision-making is no longer the exclusive domain of the Executive Leadership Team. Shifting from a hierarchical, bureaucratic-style leadership to distributed decision-making puts pressure on the quality of day-to-day decisions that occur across the organisation and on-going uncertainty means that many decisions must be made with incomplete information. Many executive leaders have honed their decision-making skills over time whereas for those not previously responsible for decision-making, this is a developing skill.
The essence of an agile transformation is reshaping the organisation as a network of high-performing teams and successful transformations require transparency, accountability, and distributed decision-making to enable self-organising teams to deliver exceptional customer value.
How Critical Thinking skills build Organisational Resilience
While agility enables teams and individuals to respond effectively to change, resilience is the ability to adapt to difficult situations. Many organisations are seeking better ways to proactively build their resilience, alleviate the impact of external factors and ensure they can respond effectively to a range of potential disruptions.
Resilience is a broad concept and can mean different things to an organisation including:
- The ability to ‘bounce back’ from a particular event.
- Maintaining the effectiveness of teams during periods of intense economic pressure or uncertainty.
- Aspiring to ‘shape the environment’ in which an organisation operates.
There will always be many varied philosophical and ideological views of resilience, but for the purposes of identifying measurable indicators, resilience has been defined as:
A resilient organisation has the ability to intelligently anticipate and manage change swiftly; the capacity to learn from challenges; and seeks out opportunities to enhance its capability to adapt and bounce back faster, smarter and stronger.
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A resilience framework ensures rapid and effective responses to risk
An organisation with a mature resilience capability can demonstrate the following:
- An enterprise-wide Risk Management framework that encompasses ALL risks including strategic, operational, financial, political, environmental, reputational and cyber security.
- High levels of confidence and capability to identify and respond to emerging threats.
- Demonstrated critical thinking capabilities at all levels across the enterprise.
- Assurance to the Board and all key stakeholders.
Organisations may have a clear strategy, exhaustive risk management processes, detailed plans and highly skilled individuals but if teams come together—under pressure, crisis or significant change—and are unable to demonstrate ‘critical thinking’, they may not be effective in managing the situation or seeing the opportunities.
A resilient organisation relies on resilient people and one of the key predictors of personal and organisational resilience capability is evidence of critical thinking skills.
Critical Thinking skills can help individuals and teams understand context, gain perspective and see opportunity. Sustained critical thinking helps build the mental agility to pivot towards best case outcomes and direct energy and focus to those activities, while acknowledging the current situation and associated risks.
Embedding critical thinking across the enterprise
There key steps to embedding high-quality decision-making across the enterprise which are detailed below:
- Business Critical. Elevate ‘high-quality decision-making’ to business critical and commit at the executive and board level to embedding a standardised, best practice approach to decision-making across the organisation. Ensure there is clarity on organisational purpose, values, and risk appetite in using the framework.
- Decision-Making Framework. Identify a Decision-Making Framework from within your business or externally that enables critical thinking that can be used at all levels of the organisation to build capability. The framework needs to be used individually for rapid decision-making as well as by teams at all levels, for more complex problem-solving and decision-making. The framework should be a unified, simple and intuitive way to make decisions that balances both risk and opportunity, considers impacts and drives outcomes.
- Capability Assessment: Identify key personnel within the business who exhibit high-quality decision-making who can role model and champion the desired skills and behaviours. Ensure their intuitive skills are applied against the framework to provide transparency and visibility of how the decision-making thinking is occurring and to create social learning opportunities for others. Identify the high priority teams who are managing the greatest number of complex decisions where their skills are still developing and include them in a pilot program.
- Deliver a High Priority Pilot. Deliver a pilot program for priority teams to target efforts into the highest value areas. Use Master Facilitators and scenario-based activities, based on current challenges and emerging threats, to resolve immediate issues and accelerate the capability uplift.
- Enterprise Program. Undertake a broader capability assessment and design an enterprise uplift program that draws upon the key learnings from the pilot program. Include social learning opportunities, scenario-based planning, and access to experts who have critical thinking skills to deliver an uplift program for all levels of the organisation.
- Embed Capability. Embed the capability through an Accreditation Program that includes access to tools, templates, eLearning and aide memoires to consolidate and maintain high-quality decision-making.
Many large and complex organisations are undertaking agile transformations to navigate turbulent and uncertain business conditions and deliver superior value to customers. Studies show successful agile transformations typically deliver around 30 percent gains in efficiency, customer satisfaction, employee engagement and operational performance. Yet 89% of organisations are failing to transform successfully. One reason for this is that agility requires a shift from a bureaucratic-style of decision-making to distributed decision-making within agile teams. Many teams and individuals in agile environments are still developing these skills.
When individuals and teams possess Critical Thinking skills, organisations can optimise agile transformation and develop immense customer value at speed and scale. Critical Thinking skills enable individuals and teams—not just the Executive Leadership Team—to successfully navigate and adapt to new environments; deduce facts and evaluate information without bias; demonstrate both agile and robust decision-making; gain new insights on risks and opportunities; challenge assumptions and uncover blind spots; develop realistic solutions for complex problems and drive outcomes that provide immediate and enduring value.
Developing and harnessing the power of critical thinking also builds organisational and personal resilience. Teams that can think critically generate new insights and strategies, and manage risk and opportunity, build organisational agility and resilience. A resilient organisation anticipates, adapts and responds to change rapidly. It embeds the capacity to learn from challenges and bounce back faster, smarter and stronger, despite turbulent and uncertain conditions.
Embedding an enterprise-wide culture of exceptional critical thinking will allow large and complex organisations to reap the rewards of true agile transformation.
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Janellis is an enterprise management consulting firm, helping organisations execute strategy and build resilience. We have niche expertise in working with executive leaders to navigate their most complex challenges, threats, and opportunities.
Our Resilience Framework has been embedded into organisations in industries including aviation, banking and finance, construction, education, emergency services, government, insurance, hydro, manufacturing, power, technology, transport, telecommunications, and utilities.
Our Critical Thinking Framework is used by teams to enable agile and robust team-based decision making. The framework helps cross-functional teams find ‘common ground’ when looking at both risk and opportunity. It is used at all levels of the organisation including executive leadership teams, risk teams and other teams responsible for complex decision-making such as transformation and project teams.
Janellis runs ‘open’ critical thinking labs to share information on the tools and processes we use, for organisations looking to be both agile and resilient. Our Critical Thinking Master Facilitators enable experiential learning in real-time through ‘learning by doing’ activities based on current challenges and scenarios. Our International Benchmarking on Organisation Resilience Framework has been submitted to Harvard Business Review.
Why is it important?
“Team-based critical thinking allows us to be both agile and robust in our decision making, drawing upon the brains trust of the organisation”
“By developing our critical thinking capabilities our teams can manage difficult situations well and also see the opportunities to execute strategy more efficiently”
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[i] Margolis, J.D. and Stoltz, P.G. (2018). How to Bounce Back from Adversity. In: HBR’s 10 Must Reads: On Mental Toughness. United States of America: Harvard Business School Publishing Corporation, p.81.
[ii] McKinsey & Company. 2022. The impact of agility: How to shape your organization to compete | McKinsey. [ONLINE] Available at: https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/the-impact-of-agility-how-to-shape-your-organization-to-compete. [Accessed 31 August 2022].