Are you strong enough to honestly assess your idea and your ability to execute it? Find out how top entrepreneurs brutally assess themselves and their companies.
Critical thinking skills are essential to an entrepreneur’s success. You need them as you’re reforming, refining, and readjusting your idea to succeed. Becoming a successful entrepreneur isn’t luck. There are specific critical thinking skills you can hone to improve your chances of survival and reach the pinnacle of achievement. Even better, you can assess your strengths and weaknesses to see how finely tuned your critical thinking skills are. and how well they work with the rest of your entrepreneurial skillset.
What is Critical Thinking?
Critical thinking is the ability to analyze, distinguish and evaluate the consistency in the statements that society accepts as true, even when there is not enough evidence to deny them.
There’s a lot to unpack there. Basically, you question fundamental truths before there’s any reason to. Entrepreneurs have built entire companies around rebuilding basic assumptions. You can learn to identify those kinds of opportunities, plan the timing of your execution, and improve your idea as you build your business.
But what if you’re great at coming up with ideas, but terrible at translating them into products and businesses? What if you’re great at critiquing ideas, but struggle to come up with your own? You can learn to leverage your strengths and compensate for your weaknesses by learning from the best.
How Tesla Annihilated a Fundamental Truth
The next time you’re on your morning commute, count the number of gas stations you drive by. You probably take them for granted as a necessary and unchangeable part of your neighborhood. But one man disagreed. He looked at those gas stations and envisioned a sports car that didn’t need them. He had Entrepreneurial Alertness.
Entrepreneurial Alertness is the ability to see opportunities in the marketplace that normal people overlook. It’s looking at a block of gas stations and imagining a car that doesn’t need them. However, most entrepreneurs’ ideas come from what they don’t see. They’re naturally attuned to gaps in the marketplace and come up with something that could serve customers better than what’s being offered.
Tesla was born out of an absence of high-performance electric cars and increasing environmental concerns. There had been some hybrid vehicles at that point, but no fully electric cars that were ready for mass market. Tesla’s original goal was to create an electric sports car that could match gasoline engines for practicality and performance. It succeeded in 2008 with the release of the Roadster. However, it cost $109,000, making it inaccessible to most consumers. Tesla eventually built the Model 3, which only retailed at $35,000, and finally achieved the goal of making sports-performance electric vehicles available to wider swaths of the public.
Elon Musk had two levels of Entrepreneurial Alertness. First, he recognized the opportunity in a practical, high-performance electric vehicle all the way back in 2004. But even when he rolled out a successful product, his critical thinking skills didn’t shut down. He continued analyzing his own company to find gaps in his offering. Even the next iteration of the product needed improvement. Once he’d invested in the next step, he searched for what was still missing. His never-ending analysis and continual synthesis of information led from a luxury sports car to a widely available sedan with similar performance.
You can do that, too. Recognizing shortcomings in potential business ideas is straightforward. If you’ve ever complained about the service at a restaurant or car dealership, then you’ve found a gap in its offering. Think about a problem that irritates you and try to think of a business idea that would solve it. Then continue refining that idea until you can solve a pain point better than anything else on the market. Train yourself to find improvements begging to happen, even when you think you’ve made some. Entrepreneurial alertness is only the first step in critical thinking. Once you’ve recognized an opportunity, you must critically analyze that idea and synthesize the information into a better product. Do that continuously, and you can reach Elon Musk levels of success.
How Toyota Beat Tesla to Energy-Efficiency
Tesla’s first mass-produced car came out in 2008, but the Toyota Prius led the way with its global introduction in 2001. Toyota had identified the same need as Tesla and came up with a similar solution. However, the Tesla Roadster ran exclusively on electricity while the Toyota Prius could run on gasoline or an electric charge. Why the difference? The Toyota Prius had a major obstacle to overcome: Timing.
In 1997, seven years before Tesla began work on its fully electric sports car, Toyota launched the first Prius in Japan. Its hybrid engine was revolutionary. It improved gas mileage, lowered emissions rates, and debuted at an affordable price. It was an attractive green consumer vehicle in its Tokyo release, and its sales have been growing since its worldwide debut.
You might think Toyota had a huge advantage being first in the hybrid car industry. It beat Tesla to the U.S. market by almost a decade. But being first doesn’t affect the car industry so much. Switching to a different brand isn’t expensive. If you don’t like your Toyota, you can go buy a similar Honda at a comparable price. Competitors can also learn from early shortcomings and skip the mistakes that the first firm makes. But timing isn’t just about when companies jump into a new industry. It’s also about what customers are ready for.
After a lifetime of filling up at gas stations and driving gasoline-powered cars, switching to a fully-electric vehicle would’ve been an uncomfortable leap of faith. Consumers are afraid to invest in a different kind of product without a track record. It’s a challenge Tesla still faces today. But the Prius’ hybrid engine minimized the behavioral change that Prius drivers faced. Prius drivers could fill up at a gas station and still use the charge the electric car battery for emissions-free driving. The Prius minimized the conflict between ingrained habits and innovation and paved the way for Tesla’s fully-electric vehicles and its network of charging stations.
You can apply the same questions to your company. Moving in first could be a powerful move, but if imitating your idea will be cheap, it will be done by your future competitors. Critically thinking about whether you should follow an industry pioneer or strike first is a vital strategic thought exercise.
You also have to think about whether customers will use your idea and balance innovative change against ingrained customer habits. You have to “cross the chasm” to reach beyond the few customers who will jump at the newest product. Think of ways to make your product similar to something your customers are familiar with, so they can see themselves using it. Imagine ways to make your customers feel in control, even if your product is radically different from what’s available and trusted today.
The Most Important Ongoing Critical Thinking Skill
So you’ve got an idea that you think is competitive, refined, and ready for customers. But you may get six months into your idea and realize that only part of your idea is working. Pivoting your business idea doesn’t mean you’ve failed. It means you’ve figured out what works, and are flexible enough to implement change. It means you’ve left subjective feelings behind and embraced the objective reality facing you. It’s how a podcast company you’ve never heard of became a company you know very well: Twitter.
Before Twitter became the social media powerhouse we know today, it was a side project inside a company called Odeo. Odeo was a one stop shop for finding and streaming podcasts. It was a great idea until Apple began selling podcasts on iTunes. Unable to compete with Apple, Odeo had to pivot, focusing on an engineer named Jack Dorsey. He was working on a service that could send SMS’s out to a public following. That service became Twitter.
However, Twitter had to make money, which required another pivot. It wasn’t like Facebook where banner ads fit on the page. Twitter didn’t have room to display the banner ads that generated Facebook’s profit. In response, Jack Dorsey created promotional tweets that were promoted within the Twitter feed and visible in the search engine results pages. That shift marked the final major pivot that made Twitter into the profitable social media giant it is today.
Separate the pieces of your company that work from the pieces that don’t. Build your company around the working pieces and shear the broken ones away. The most difficult critical thinking skill is setting your attachment to your idea aside so you can tweak it. That requires an honest assessment of your idea and a strong ability to regulate your emotions. Not everyone is good at setting their emotions aside for their business, but failing to pivot can mean a death sentence for your business.
What are Your Strengths?
Critical thinking skills allow you to detach yourself from your idea and honestly assess it. Successful entrepreneurs and critical thinkers are highly self-aware. They detach from their emotions and consciously acknowledge their ambitions, their shortcomings, and their emotions, That detachment allows them to challenge basic assumptions and create innovative new products that haven’t been imagined yet. The companies we’ve showcased here today have taught you:
- How to remain alert to entrepreneurial opportunities around you.
- How to time your business with your competition and your customers’ habits.
- How to pivot when only part of your business gains traction.
You may be looking at these lessons and feel worried. You may be great at coming up with great ideas, but not so great at grasping timing. Maybe you know how to pivot a working idea but aren’t so good at coming up with them. You can assess those skills to empower yourself to meet the challenges that entrepreneurship demands. Use these skills to solve problems we don’t know we have, be mindful of your competitors, and be flexible enough to improve.