Critical Thinking and Managerial Decision Making



Week 3 - Lecture

Recap of concepts introduced in week 2

Conceptual foundation--what is scientific knowledge: Kuhn versus Popper

Conceptual foundation--Understand formal logical structures

Logical reasoning—Deductive

The first step of critical thinking/managerial decision making—Clarity, and ten points for achieving it.


Outline of this week

Logical reasoning—Inductive

Appreciating the underlying premise

5 Components of the premise

The process of coming to a conclusion

Influencing and persuading



Deductive logic In deductive arguments, the truth of the argument is assured by the truth of the premises…



Formal logic


All A are B

All C are A

Therefore, All C are B


If A, then B

A, therefore, B


Either A or B,

Not A (B), hence, B (A)

Inductive logic

However, some arguments don't follow these structures, i.e., the truth of the premises does not guarantee the truth of the conclusion, e.g.,:

Most CQUniversity students are from India.

Pattini is a CQUniversity student,

Therefore, Pattini is from India.

Valid? Not according to deductive logic, Pattini could be from Nepal, China, Korea…

However, the argument is still logical, this is where Inductive logic comes in.


Inductive logic


An inductive argument claims that the truth of the premises show that the conclusion is likely to be true.


Even if all the premises are true, the conclusion to an inductive argument might still be false. Thus, this kind of reasoning relies on showing the probability of an argument being true.


Susan came to school yesterday.

Susan came to school every day before yesterday.

Hence, Susan will come to school tomorrow.

The Sun rose up yesterday.

The Sun rose up every day before yesterday.

Hence, the Sun will rise up tomorrow

Inductive thinking and premises

We mostly engage in inductive thinking

The stronger the premise, the more probable the event.

The outcome is not guaranteed

Almost all of our thinking is inductive, and we come to 1000s of conclusions each day

The stronger the premise, the more probable the outcome



Inductive arguments are inferior than deductive arguments?

NO! They are different.


Deductive versus Inductive Arguments


Deductive Inductive
Valid or Invalid Strong or Weak
All or Nothing Degrees, to what extent
Indefeasible * Not open to objection Defeasible * Open to objection, annulment
Movement from general statements to specific conclusions. Top down. Reasoning that moves from specific observations to general conclusions (there are other types too).

we use deductive reasoning when we do not want our ideas to

 be questioned or when we're presenting a fact or a definition of something.

 In academic arguments, you need to be careful when you're using deductive logic,

 because they can leave your arguments open to attack.

Inductive arguments on the other hand are for when you want to convince people

 using probabilities or likelihood of something being the case.



Different types of inductive reasoning

1. Inference to the best explanation (Abductive reasoning)

E.g., broken plates on the kitchen floor, your son is in school, your wife is on a business trip, hence, it is probably your cat who broke it.

2. Analogy

E.g., This year’s CQU students are very similar to last year’s (similar nationality, age and level of hard work). Last year, 10% students failed this unit, hence, this year, 10% will fail.

3. Generalizing from samples

E.g., the first student I called upon is from India, 2nd…, 3rd..4th…35th

Most of the students in this class are from India.

4. Applying generalizations

E.g., Google reviews, 80% of the customers did not have a pleasant experience in that restaurant, hence, I am not going.


Defeasibility of Inductive Reasoning

I knew it was him because I saw his face when he was fleeing the scene.

Did you know the perpetrator has a twin brother?

 Not so sure, could be his twin brother or him?

Inductive arguments could become weaker (defeasible) in light of new knowledge/information/context


Section III: Conclusions

Section IV: Conclusions & Innovation

Section V: Decisions

Section II: Clarity

Critical thinking framework: The textbook





Discovery information and ideas


The end goal of clarity is to solve problems

You need ideas, solutions and things to do

Must look at situations creatively and make decisions

Critical thinking is about coming to conclusions thoughtfully

Looking at ideas, potential solutions and actions from a variety of perspectives, including taking account of one’s own limitations



We have talked about Deductive thinking last week and inductive reasoning this week.

Conclusions are all about the premise

Drawing conclusions from premises Involves both deductive and inductive thinking



Using inductive reasoning to come to conclusions involve 5 components coming together:













1. Facts

Are absolute truths, not debateable

But saying something is the truth does not necessarily mean it is factual

Disciplines such as mathematics are based on truth

Other disciplines have grey areas, truths are not 100%


It is raining outside. (If you are standing outside and it is raining on you then it is true so it is a fact.)

“It currently takes us an average of about 2 hours to complete this task.” (If the data are correct, this would be fact.)

“If we get this contract, we will need to hire 5 people.” (This is not fact, because it is something that is taking place in the future. There are contingencies that have not been explored, such as finding an employee who can do the work of 2 people.)


2. Observations

Involves what we read and what we hear, what we sense

Observations are not facts


You read a review of a restaurant on TripAdvisor. (You are observing what others have thought of the restaurant.)

A weather forecaster says “it is going to rain.” (You are learning about a probable event.)

“I own a home.” (If you think about it, if you have a mortgage then the bank owns a proportion of your home.)

Involve the possibility of being true or untrue



Difficult to sometimes distinguish fact from observation

What do you think, fact or observation?

You are reading this sentence now.

On the Earth, if you drop something, it will fall to the ground.

As a manager, I’m responsible for evaluating the performance of my direct reports



You are reading this sentence now.

FACT, unless someone is reading it to you, then it would be an observation.

On the Earth, if you drop something, it will fall to the ground.

OBSERVATION, because if you dropped a helium balloon it will rise.

As a manager, I’m responsible for evaluating the performance of my direct reports

FACT. If it is in your job description, then it is a fact.


3. Experiences

Come from the past

Sometimes difficult to distinguish from observation

They are your first-hand encounters

Where you have actually been or what you have done or tried or witnessed

You can recollect inaccurately, and so have a distorted view of your experience

Strong experiences lead to more confidence in your premises


Someone says to you, “its raining outside.” (Observation)

You were in the rain and you say, “it’s raining outside.” (Experience)


4. Beliefs

Moderate facts, observations and experiences and ultimately assumptions


You’re walking down the road and you notice a wallet. You pick it up. There’s about $200 in it and no identification. Should you keep it or turn it over to the police? Your choice depends on what your values are.

You print out a 100-page report and then notice a minor error. The typos will have little or no effect and would probably not be noticed. Do you fix the error and print out again or just hand out as it is?

These values are your beliefs, which consist of your merits and flaws, including prejudices


Beliefs and others

Beliefs are generally formed when we are young and are influenced by our environment and experiences

People can have very different beliefs

If beliefs and values clash it is important to negotiate:

Acknowledge the differences in beliefs

Weigh up the pros and cons of each person’s underlying belief

Identify what is a reasonable/optimal outcome under the circumstances

Understanding our beliefs does not remove emotion but helps us understand how they influence our conclusions


5. Assumptions

An assumption is a thought you have and presume to be correct

In automatic mode, you take it for granted your assumptions are correct.

In critical thinking mode, you ask, “How do I know my assumption is a good one?”

Assumptions are formed from facts, observations and experiences


The store will have milk.

The car’s petrol gauge is correct.

If the facts, observations and experiences are valid and relevant, then the assumption is strong



If you have a strong premise, then the conclusion you come to is more likely to lead to good results.

Need to constantly ask if the premise was based on facts, observations and experiences that are sound

Easy to jump to conclusions when in automatic mode

Different personalities will apply different premises


The whole family goes to buy a car. You all hear about the safety features, its running costs and its music system.

One person wants to buy the car because of its safety record, another because it is cheap to run, another does not want to buy the car because the music system is not very good.

Need to negotiate with each other about the conclusion by understanding each person’s assumptions


Strong conclusion?


Credibility of the premise

Feasible and realistic

Consistent with your knowledge

Received from a reliable source



Consistency of the premise components

Are all observations consistent with each other?

Are observations and facts consistent with your experience?

Are you making assumptions consistent with the premise components?


You see prices on Ebay for an item - $45, $50, $52, then $10.

You have always enjoyed flying with Qantas and then read one bad review about Qantas.

You are sensing that something is bothering your wife, she tells you that everything is fine, but you see her spend longer than usual time in the bathroom, and also stop to dress up. Is everything really still fine?


Triangular thinking/triangulating

Identify high confidence estimates of the probable future

You use multiple perspectives or indirect measures

If the answer is mostly the same then you have high confidence in your estimate


You want to know how long a project will take.

1. You calculate the different steps in hour terms, for instance, step 1 should take 2 hours.

2. You recollect your team’s track record for completing similar projects.

3. You compare to other projects of similar scale and complexity


Further examples?

Conduct a research on consumer purchasing behaviour of apples, conclusion: royal gala>granny smith

1. interview data on consumer’s preferences (e.g., Royal gala, granny smith)

2. sales volume

3. observation


Critical thinking at work

Could you think of examples at your workplace in which your conclusion is strengthened with triangular thinking?



People resist change or are uncomfortable with it because they have less experience

When they think about the components of the premise, they find experience is weak

If you strengthen the premise with observations then change is easier to accept


You introduce a new computer system and everyone says they hate it

You bring in a trainer who not only trains staff but shows them how the new system is an improvement

People begin to have experiences related to the change


Influencing and persuading

Influencing is changing others’ conclusions.

It is more subtle than persuasion

Persuasion is directly causing someone to adopt or concur with your conclusion, which may at times be very different from their initial thinking


Influence someone to adopt different facts, observations and experiences.

For instance, describe interesting facts about the car’s fuel consumption, what reviewers have said and how much you enjoyed driving the car.

Persuade someone by weakening their premise.

For instance, someone who thinks you do not have to invest money in satisfied customers is told “research has shown that even highly satisfied customers defect.”


Other purposes of arguments?



Can you provide examples from your workplaces?


Thank you