This isn’t a post about increasing creativity or brainstorming or other such tools, but it is a post about how you should prepare your mind to be more creative by thinking about creative thinking.
I recently came across Charlie Munger’s 1995 speech, The Psychology of Human Misjudgment, which introduced me to an explanation of what I’d been doing all my business life – using the power of applying mental tools from a wide array of disciplines and applying these to the business questions I had.
Last week I introduced tools for modelling. Today’s mental tools or analogies, or models or heuristics are concepts about creativity that you can use to help try to explain things to find the answers to the critical questions in your business.
Lateral Thinking — “Solving problems through an indirect and creative approach, using reasoning that is not immediately obvious and involving ideas that may not be obtainable by using only traditional step-by-step logic.”
Using Lateral thinking enables new concepts to be created by looking at things in novel ways. Whereas the logical (‘vertical’) thinking carries a chosen idea forward, the sideways (‘lateral’) thinking provokes fresh ideas or changes the frame of reference. And, while vertical thinking tries to overcome problems by meeting them head-on, lateral thinking tries to bypass them through a radically different approach.
This was the first mental tool I recognised as such when I attended an Edward deBono seminar in 1978 (!).
Divergent Thinking vs Convergent Thinking — “Divergent thinking is a thought process or method used to generate creative ideas by exploring many possible solutions. It is often used in conjunction with its cognitive opposite, convergent thinking, which follows a particular set of logical steps to arrive at one solution, which in some cases is a ‘correct’ solution.”
On the divergent end, thinking seeks multiple perspectives and multiple possible answers to questions and problems. On the other end of the spectrum, convergent thinking assumes that a question has one right answer and that a problem has a single solution (Kneller 1971). Divergent thinking generally resists the accepted ways of doing things and seeks alternatives. Convergent thinking, the bias of which is to assume that there is a correct way to do things, is inherently conservative; it begins by assuming that the way things have been done is the right way. Divergent thinkers are better at finding additional ideas, whereas convergent thinkers have a more difficult time finding additional ideas. Convergent thinkers run out of ideas before divergent thinkers. However, convergent thinking strengthens the ability to bring closure and to conclude
Critical Mass — “The smallest amount of fissile material needed for a sustained nuclear chain reaction.” “In social dynamics, critical mass is a sufficient number of adopters of an innovation in a social system so that the rate of adoption becomes self-sustaining and creates further growth.” For business this represents the size a company needs to reach in order to efficiently and competitively participate in the market. This is also the size a company must attain in order to sustain growth and efficiency. For brands the penetration a brand needs to have (both in terms of consumer mindshare and trade shelf share) to enable success.
Catalyst — “A substance which increases the rate of a chemical reaction.”
An economic catalyst is an entrepreneur or company that creates a fundamental change in business or technology. An entity that has (a) two or more groups of customers; (b) who need each other in some way; but (c) can’t capture the value from their mutual attraction on their own; and (d) rely on the third person or place, the catalyst to facilitate value-exchange between them.
For example, the payment card industry illustrates the concept. Diners Club was the first modern payment card, introduced in 1950. To create this product Diners Club had to get two different groups of customers on board. Consumers who wanted to pay with a card and merchants who wanted to accept payment with this card. These two groups of customers each wanted the card to facilitate cash free, delayed payment transactions between them.
Leverage — “The ability to influence a system, or an environment, in a way that multiplies the outcome of one’s efforts without a corresponding increase in the consumption of resources. In other words, leverage is the advantageous condition of having a relatively small amount of cost yield a relatively high level of returns”. In finance, leverage (sometimes referred to as gearing in the United Kingdom and Australia) is any technique to multiply gains and losses. Most often it involves buying more of an asset by using borrowed funds, with the belief that the income from the asset or asset price appreciation will be more than the cost of borrowing. Almost always this involves the risk that borrowing costs will be larger than the income from the asset, or that the value of the asset will fall, leading to incurred losses.