Applied Analytics in an Organizational Context

Module 2

September 13, 2022

Applied Analytics Program

Agenda

Critical Thinking
Learning Objectives

Craft an argument in which the premise for the conclusion is strongly supported
by facts and reason.

Judge the arguments of others based on the strength of the facts and reason
supporting their conclusion.
In the News…
Psychological inoculation of internet users against lies and conspiracy
theories by pre-emptively showing them videos about the tactics
behind misinformation on social media

Seven experiments with ~ 30,000 participants

• Researchers bought YouTube ad space to show users 90-second
animated videos aiming to teach them about propaganda tropes
and manipulation techniques. A million adults watched one of the
ads for 30 seconds or longer.
• Users were taught about tactics such as scapegoating and
deliberate incoherence, or the use of conflicting explanations to
assert that something is true, so that they could spot lies.
• Researchers tested some participants within 24 hours of seeing a
pre-bunk video and found a 5 percent increase in their ability to
recognize misinformation techniques.

[Link]
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System 1 and 2 Thinking

Tversky, A., and Kahneman, D. (1983). Psychol. Rev. 90, 4

Cognitive ease and the illusion of truth

Things that make association easy will bias beliefs

Kahneman, D. (2011). Thinking, fast and slow. Farrar, Straus and Giroux.
Critical Thinking

The art of analyzing and evaluating thinking with a view to improving it.

A critical thinker:
Raises vital questions and problems, formulating them clearly and precisely
Gathers and assesses relevant information, using abstract ideas to interpret it
effectively
Comes to well-reasoned conclusions and solutions, testing them against relevant
criteria and standards
Thinks open-mindedly within alternative systems of thought, recognizing and assessing
assumptions, implications, and practical consequences
Communicates effectively with others in creating solutions to complex problems.

[Link]
Critical Thinking Habits

Question Assumptions
What do I know vs what do I think I know?

Use logical reasoning

Are arguments supported by evidence?

Broaden perspective
Collaborate to gain diversity of thought

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Types of Intelligence
Three types of intelligence:
1. Practical - ability to successfully interact with
the everyday world; contextual intelligence
2. Creative - ability to use existing knowledge to
handle new problems or cope in new
situations; strategic intelligence
3. Analytical - the ability to evaluate information
and solve problems; academic intelligence

[Link]
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Contextual Intelligence – Best Practices
Human Centered Design

Natural extension of Incorporating regular Extension of existing

customer-oriented input from customers practices of engaging
culture in which seen as contrary to the community and
customers are more good engineering personal networks to get
involved in the practice impeding input in the
development process. adoption. development process.

Some practices transfer, many require adaptation. Without adaptation, practices can
be rejected or adapted only ceremonially, thus not achieving the desired benefits.
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Critical
Thinking
OODA Loop
Observation

The first step in the critical thinking process is to identify the situation or problem. Once you
have a clear picture of that, and the factors that may influence it, you can begin to dive deeper
into it and its potential solutions.

Observation - The ability to use all five of your senses to recognize, analyze and recall your
surroundings.

Observation skills in professional setting:

Be present - focus fully on the moment
– Taking notes is one way to ensure that you remain engaged
Ask for feedback – ensure that you are communicating effectively and address any
misunderstandings before they become bigger issues
Relate details to the bigger picture - allows you to better understand issues so that you can
develop solutions.
Factfulness
Facts vs Opinions – Small Group Exercise

Go to [Link]
Take the quiz and record your results
Discuss your overall results in your breakout
How well did your opinions align with the facts?
What did you learn about critical thinking?
Exercise
You have been assigned the task of conducting a tour for aliens who are visiting
the earth and observing human life. You're riding along in a blimp, viewing the
landscape below, and you float over a professional baseball stadium. One of the
aliens looks down and is very confused by what he sees. You explain that there
is a game going on and he asks several questions:
What is a game?
Why are there no female players?
Why do people get so excited about watching other people play games?
What is a team?
Why can't the people in the seats go down on the field and join in?

Work in your breakout group to address the alien’s questions

`[Link]
Six thinking hats
Strategy to evaluate the optimization of a product or idea. In a group, an individual or small
team "wears" one of the hats. When reviewing the idea in question, each "hat" maintains its
assigned perspective:
characteristic typical action
Black hat Gloomy & logical-negative, but truthful; Point out what might not work. Examine assumptions & implications. Identify
negative assessment (but not an patterns, risks, possible failures. Yes that works, but . . .
argument, & not negative emotions –
those are red hat)
Yellow hat Sunny & positive, optimistic, hopeful Look at the benefits; explore possibilities. Make something better. Offer suggestions.
(but not unrealistic, not just “good Generate proposals.
feelings”; positive assessment

White hat Neutral, objective, concerned with facts Give or ask for information, facts, figures – without making an argument about them.
& figures Decide if things (information) are completely true, sometimes true, never true, etc.

Red hat Emotional, opposite of neutral, maybe Give your gut feeling, speak your hunches; no need to justify your reaction; you don’t
angry have to be consistent while wearing your red hat.

Green hat Creative, abundant, growing (think Cut across patterns (new thinking). Replace “judgment” with “movement”; try to
“grass”) think forward instead of backward. Provoke new ideas. Offer alternatives.

Blue hat Cool: controlled, organized; big picture Ask questions; define problems; set tasks. Choreograph the other hats. Observe,
comment, summarize, conclude.

DeBono, E. (1999) Six Thinking Hats: An Essential Approach to Business Management, Boston, MA: Little, Brown and Company.
Exercise
Meet in groups of 6. One student will be assigned the blue, management hat,
and will assign hats to the other 5 students.

The blue hat has to ensure that all perspectives (hats) are considered and
discussed in the creation of a solution.

Take 20 minutes to address the following:

A coffee house is getting an increasing number of complaints from
customers that they have to wait too long for their coffee. How can they
solve this problem?

The blue hat reports the solution to the class.

[Link]
 CRISP-DM – Data Science Process* Requires
critical
thinking

The most common methodology for data mining,

analytics, and data science projects
1. Business understanding
• What does the business need?
2. Data understanding
• What data do we have / need? Is it clean?
3. Data preparation
• How do we organize the data for modeling?
4. Modeling
• What modeling techniques should we apply?
5. Evaluation
• Which model best meets the business objectives?
6. Deployment
• How do stakeholders access the results?

*CRoss Industry Standard Process for Data Mining

[Link]
Analytical Thinking - Questions
SMART questions “What features do first-time homebuyers look
Specific: a question that addresses the problem for in houses?”
and has context • Specific: What extra features would make
Measurable: a question that gives answers you you more likely to buy a house?
can measure • Measurable: On a scale of 1–10 (10 being
Action-oriented: a question that results in an the highest), how important is having a big
actionable plan front yard?
Relevant: a question about a sub-set • Action-oriented: What are 3 additional
(symptom) problem of the main problem features you’d like to see in model homes?
Time-bound: a question with a specific • Time-bound: In the last decade, what is
timeframe to study the average rate that homebuyers choose
crown molding?

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 “The basis of Toyota’s scientific approach
Root Cause Analysis – 5 Whys is to ask why five times whenever we
find a problem … By repeating why five
times, the nature of the problem as well
as its solution becomes clear.“
Form a cross-functional team Taiichi Ohno

Help you collect enough information to make an informed decision

Discuss the problem

Define the scope of the issue you are going to investigate

Ask Why
Identify root cause

Take action

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5 whys example
I got a
Issue traffic ticket

Why I ran a red

light

Why I was late

for work

Why
I overslept

Why The alarm

didn’t ring

Why I forgot to
set it Root Cause
5 whys exercise

Work in your breakout group to identify the root cause of the

following hypothetical issue:

“I am having difficulty starting my course assignment that is due in 1

week”

Share your analysis with the class

Arguments

The identification and analysis of arguments are at the core of critical thinking.
An argument is comprised of:
A claim being asserted that you want other people to believe is true –
conclusion of the argument
Reasons offered in support of this claim; i.e. to try to convince other people
that this claim is true – premises in support of the conclusion

An argument can have any number of premises set out as:

Premise 1:
Premise 2:
Conclusion:
Example

Anything that intensifies racial discrimination should be outlawed. Capital

punishment intensifies racial discrimination. Therefore capital punishment
should be outlawed.

Premise 1: Anything that intensifies racial discrimination should be outlawed.

Premise 2: Capital punishment intensifies racial discrimination.
Conclusion: Therefore capital punishment should be outlawed.
 Problem Solving

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·[Link]
Flow of Information
Analysis

Presentation

[Link]
Next Class
Components of financial statements
Financial metrics that drive the business

Readings:
Fields, E. (2002). Essentials of Finance and Accounting for Nonfinancial
Managers.
• Chapter 1: The Balance Sheet (pp. 15-37)
• Chapter 2: The Income Statement (pp. 38-42)

Recommended Resources:
LinkedIn Learning: Understanding Financial Statements - Kay Stice and Jim Stice
• Sign in using your Columbia email address
Things to think about

Analytics are critical for informing decisions across a variety of

strategic and operational functions within an organization.

Why are we starting our analytics journey with accounting and a

discussion about balance sheets and income statements?