Thursday, March 30, 2006

Gaining a competitive edge

Gaining a competitive edge

Capture your market without destroying it.

To be successful, businesses must capture their market, but they must do so in a way that does not destroy them. For small companies, this means refraining from attacking a competitor had on. The most successful strategy is a more subtle, low-key approach that does not draw and response from competitors. For instance, rather than attacking a market by launching a price war, which draws us with this and most severe responses from competitors, a company would be better off focusing on segments of the market that are underserved or overlooked by larger, stronger rivals. Find an opening niche in the market that competitors are overlooking imposition your company there.

Avoid your competitor strengths and attack their weaknesses.

Attacking competitors at the points of strength is a recipe for failure in battle and in business. Direct attacks are costly to both parties because they lead to battles of attrition. A much more effective strategy involves attacking competitors at their points of weakness. Companies who strengths focus on a competitor's weaknesses can maximize their games while minimizing the use of their own resources. Although a small retail store cannot compete on price with giant retailers that buy in volume, it can compete successfully by offering unique product services, it optional knowledge, deeper product lines, and other extras that customers value.

Use foreknowledge and deception to maximize the power of business intelligence.

Before an entrepreneur can attack a competitor's weaknesses, he or she must be able to identify the competitor's weaknesses, and that requires information. It is vitally important for business owners to survey the "battlefield of business" by monitoring overall competitive and industry trends as well as key competitors individual news. Knowledge management is vital strategic activity as it is masking as much as possible about your own company strategic intent.

Use speed and preparation to swiftly overcome the competition.

The notion that large organizations are stronger than small ones is a myth. Small companies can use their size to their advantage; it enables them to use speed, flexibility, and focus to gain an edge over their larger rivals. In the market for small, relatively inexpensive corporate jets, Adam aircraft industries has emerged as the leader because of its ability to bring its A700 jet to the market two years faster and with a smaller investment than any of it competitors. The company uses rapid prototyping and as many off-the-shelf parts is possible to speed its double tail fin jet to market and gain an edge over its rivals.

Use alliances and strategic control points in the industry to shape your opponents and make them conform to your will.

This principle suggests changing the rules of the competitive game to make rivals play against your strengths, enabling you to take control of the battle. For instance, when Netflix first introduced the idea of using the Web as a mechanism for making video rentals easier and more convenient for customers, it rewrote the world book of competition in the industry in its favor. Although bigger and more established, Blockbuster had to develop its own online video rental process to remain competitive. Innovations and strategic alliances are important ways of reshaping an industry and staying ahead of competitors.

Develop your character as a leader to maximize the potential of your employees.

Leaders with character garner the respective followers and are able to get the greatest performance from them. Discipline is an important part of an organization because it establishes order.

Strategic management and the entrepreneur

Strategic planning, often ignored by small companies, is a crucial ingredient in business success. The planning process forces potential entrepreneurs to subject their ideas to an objective evaluation in the competitive market.

The strategic management process for small business should incorporate the following features:

  • use a relatively short planning horizon -- 2 years or less for most small companies
  • be informal and not overly structured; a short sleeve approach is ideal
  • encourage the participation of employees and outside parties to improve the reliability and creativity of the resulting plan
  • do not begin with setting objectives because doing so extensively early on may interfere with the creative process of strategic management
  • maintain flexibility; competitive conditions change to rapidly for any plan to be considered permanent
  • focus on strategic thinking, not just planning, by linking long-range goals to day-to-day operations

Perhaps the biggest change business owners face today is the shift in the world's economy from a base of financial to intellectual capital.


Intellectual capital is comprised of three components:

  1. Human capital -- the talent, skills, and abilities of the company's workforce
  2. structural capital -- the accumulated knowledge and experience the company possesses. They can take many forms including processes, software, patents, copyrights, and perhaps the most important, the knowledge and experience of the people in the company
  3. customer capital -- the established customer base, positive reputation, ongoing relationships, and good will a company builds up over time with its customers


Small businesses must create a competitive advantage in the market.

The goal of developing a strategic plan is to create a competitive advantage -- the aggregation of factors that sets the small business apart from its competitors and gives it a unique position in the market. Every small firm must establish a plan for creating a unique image in the mind of its potential customers.

Wednesday, March 29, 2006

Small Business Management - Ch.1 Summary

Role of the entrepreneur in the US economy.

Record numbers of people have launched companies over the past decade. The boom in entrepreneurship is not limited solely to the United States; many nations across the globe are seeing similar growth in the small-business sector. Various competitive, economic, demographic shifts have created a world in which small is beautiful.

Society depends on entrepreneurs to provide the drive and risk taking necessary for the business system to supply people with the goods and services they need.

The entrepreneurial profile.

Entrepreneurs have some common characteristics, including
a desire for responsibility
a preference for moderate risk
confidence in their ability to succeed
the desire for immediate feedback
a high energy level
a future orientation
skill at organizing
value of achievement over money
Benefits of owning a small business.

Driven by these personal characteristics, entrepreneurs establish and manage small businesses to gain control over their lives, to come self fulfilled, reap unlimited profits, contribute to society, and do what they enjoy doing most.

Drawbacks of owning a small business.

Small-business ownership has the potential drawbacks. There are no guarantees that the business will make a profit or even survive. The time and energy required to manage a new business may have dire effects on the owner and family members.

Driving forces behind the growth of entrepreneurship.

Several factors are driving the boom in entrepreneurship, including:

entrepreneurs portrayed as heroes
better entrepreneurial education's
economic and demographic factors
a shift to a service economy
technological advancements
independent lifestyles
international opportunities

Diversity and small-business and entrepreneurship.

Several groups are leading the nation's drive toward entrepreneurship --
women
minorities
immigrants
part-timers
home-based business owners
family based business owners
copreneurs
corporate castoffs
corporate dropouts

Contributions small businesses make to the US economy.

Small businesses make up 99% of all businesses
53% of the private sector workforce
create 75.8% of new jobs in the economy
produce 51% of the country's private gross domestic product (GDP)
account for 47% of business sales

Reasons small businesses fail.

The failure rate for small businesses is higher than for big businesses, and profits fluctuate with general economic conditions. SPA statistic showed that 60% of new businesses will have failed within six years. The primary cause of business failure is incompetent management.

Incompetent management
poor financial control
failure to plan
inappropriate location
lack of inventory control
improper managerial attitudes
inability to make the entrepreneurial transition

Business failure in proper perspective.

Because they are building businesses environment filled with uncertainty and shaped by rapid change, entrepreneurs recognize that failure is likely to be part of their lives; yet, they are not paralyzed by that fear. Successful entrepreneurs have the attitude that failures are simply stepping stones along the path to success.

Small-business owners can avoid the major pitfalls of running a business.

Know the business in depth
develop a solid business plan
manage financial resources effectively
understand financial statements
learn to manage people effectively
set the business apart from the competition
keep in tune with themselves

Small Business Management - Ch.1

Success Checklist

  1. Do your homework. -- initial research and preparation before opening business
  2. research zoning restrictions. -- request of variance from the local zoning commission if needed
  3. choose the most efficient location for your office and workspaces
  4. focus your home-based business idea. -- focus on particular customer group or specialty
  5. discuss your business rules with family. -- establish the rules upfront
  6. select an appropriate business name.
  7. Buy the right equipment. -- only what you need to start
  8. dress appropriately. -- avoid tendency to lounge around in bathroom all day
  9. learn to deal with distractions. -- budget time wisely, avoid leaving office except for prescheduled breaks
  10. realize that the phone can be your best friend or worst enemy. -- install a separate phone line for business if needed
  11. be firm with friends and neighbors. -- be sure to let all know just because you're at home does not mean you are not working, be friendly but firm
  12. take advantage of tax break. -- best to check with an accountant
  13. make sure you have adequate insurance coverage.
  14. Understand the special circumstances under which you can hire outside employees. -- check zoning laws carefully
  15. be prepared if your business requires clients to come to home. -- dressed appropriately, present professional image
  16. get a P.O. Box. -- it is safer than inviting crime to your home
  17. network. -- isolation is a problem for home-based entrepreneurs
  18. be proud

Project Management Ch.3

Proposed solutions

Bid or not to bid decisions

Competition.
Risk
conflict or consistency of mission
extension of capabilities
reputation
customer funds
availability of resources

Developing a winning proposal

A proposal is a selling document; it is not a technical report. And the proposal the contractor must convince a customer that the contractor;
understands what the customer needs
can carry out the proposed project
will provide the greatest bayou to the customer
is the best contractor to solve the problem
will capitalize on its successful experience with previous related projects
will do the work professionally
will achieve the intended results
will complete the project within budget and on schedule
will satisfy the customer

Proposal contents

Technical
Management
cost

Technical section

The objective of the technical section of the contractor proposal is to convince the customer that the contractor understands the need or problem and can provide the least risky and most beneficial solution. The technical section should contain the following elements;
understanding of the problem
proposed approach or solution
benefits to the customer

Management section

The objective of the Management section of the contractor proposal is to convince the customer that the contractor can be the proposed work and achieve the intended results. The Management section should contain the following elements;
description of work tasks
deliverables
Project schedule
Project Organization
related experience
equipment and facilities

Cost section

The objective of the cost section of the contractor proposal is to convince the customer that the contractor's price for the proposed project is realistic and reasonable. The cost section usually consists of tabulations of the contractors estimated costs of elements such as the following;
labor
materials
subcontractors and consultants
equipment and facilities rental
travel
documentation
ever had
escalation if needed
contingency
fee or profit

Pricing considerations

When contractors prepare proposal, they are generally competing with other contractors to a contract. The contractor must consider the following items on determining the price for the proposed project;
reliability of the cost estimates
risk
value of the project to the contractor
customers budget
competition

Customer a violation of proposals

Some of the criteria that might be used by customers in evaluating contractor proposals include the following;
compliance with the customer statement of work and requirements in the request for proposal
contractors understanding of the customer's problem or need
soundness and practicality of the contractor's proposed approach to solving the problem
contractors experience and success with similar projects
the experience of key individuals will be assigned to work on the project
management capability, including the contractor's ability to plan and control project to ensure that the workscope is completed within budget and on schedule
realism of the contractor schedule
Price

Types of contracts

Fixed-price contracts -- customer and contractor agree on a price for the proposed work
cost reimbursement contracts -- customer agrees to pay the contractor for all actual costs, regardless of amount, some agreed-upon profit

Contract provisions

The following are some miscellaneous provisions that may be included in project contracts;
misrepresentation of costs
notice of cost overruns or schedule delays
approval of subcontractors
customer furnished equipment or information
patents
disclosure of proprietary information
international considerations
termination conditions
terms of payment
though Ness/penalty payments
changes

Critical success factors

Pre-RFP/proposal efforts are crucial to establishing the foundations for eventually winning a contract from the customer.
Do not wait until formal RFP solicitations are announced by customers before starting to develop proposals. Rather, develop relationships with potential customers long before they prepare their RFPs.
Working closely with a potential customer puts a contractor and a better position to be selected as the winning contractor. Learn as much as possible about the customer's needs, problems, and decision-making process during the pre-RFP/proposal marketing.
Becoming familiar with the customer's needs, requirements, and expectations will help in preparing a more clearly focused proposal.
Be realistic about the ability to prepare a quality proposal and about the probability of winning the contract. It is not enough to just prepare proposal: rather, the proposal must be of sufficient quality to have a chance of winning.
A proposal is a selling document, not a technical report. It should be written in a simple, concise manner and should use terminology with which the customer is familiar.
In a proposal, it is important to highlight the unique factors that differentiate it from the competitor's proposals.
Proposals must be realistic. Proposals that promise too much or are overly optimistic maybe unbelievable to customers, and raise doubt about whether the contractor understands what needs to be done or how to do it.
When bidding on a fixed-price project, the contractor must develop accurate and complete cost estimates, and include sufficient contingency costs.

Summary

The development of proposed solutions by interested contractors or by the customer's internal project team is the second phase of the project lifecycle. This day starts when the RFP becomes available at the conclusion of the needs identification phase and ends when an agreement is reached with the person, organization, or contractor selected to implement the proposed solution.

Contractor should develop relationships with potential customers long before they prepare request for proposal. Contractor should maintain frequent contacts with past and current customers and initiate contacts with potential customers. During these contacts, contractor should help customers identify areas in which the customers might benefit from the implementation of projects that address needs, problems, or opportunities.These pre-RFP/proposal efforts are crucial to establishing the foundations for eventually winning a contract from the customer.

Because the development and preparation of a proposal takes time and money, contractors interested in submitting a proposal in response to on RFP must be realistic about the probability of being selected as the winning contractor. Evaluating whether to go forward with the preparation of a proposal is sometimes referred as the bid/no-bid decision. Some factors that a contractor might consider in making a bid/no-bid decision by the competition, the risk, its business mission, the ability to and its capabilities, its reputation with the customer, the availability of customer funds, and the availability of resources for the proposal in the project.

It is important to remember that the proposal process competitive and that the proposal is a selling document that should be written in a simple, concise manner. And the proposal the contract must highlight the unique factors that differentiate it from competitive in contractors. The contractor proposal must also emphasize the benefits to the customer if the customer selects the contractor to perform the project. The customer will select the contractor that it expects will provide the best value.

Proposals are often organized into three sections: technical, management, and cost. The objective of the technical section of the contractor proposal is to convince the customer that the contractor understands the need or problem and can provide the least risk he and most beneficial solution. The technical section should show an understanding of the problem, a proposed approach or solution, and the benefits to the customer. The objective of the management section of the contractor proposal is to convince the customer that the contractor can do the proposed work and achieve the intended results. The management section should contain a description of work past, a list of deliverables, a project schedule, a description of the organization of the project, a synopsis of related experience, and a list of any special equipment and facilities the contractor has. The objective of the cost section of the contractor proposal is to convince the customer that the contractor's price for the proposed project is realistic and reasonable. The call action usually consists of tabulations of the contractors estimated costs of such elements as labor, materials, subcontractors and consultants, equipment and facility rentals, travel, documentation, overhead, escalation, contingency, and a fee or profit.

When contractors prepare proposals, they are generally competing with other contractors to win a contract. Therefore, they must consider the reliability of the cost estimates, the risk, the value of the project to the contractor, the customer's budget, and the competition when determining the price for the proposed project.

Customers evaluate contractor's proposals in many different ways. Sometimes the technical and management proposals are evaluated first, without consideration of cost. This proposals with the highest point on the technical and management review are then evaluated for their costs. The customer weighs the technical and management merit against the cost to determine which proposal offers the best value. Some of the criteria that might be used by customers and to buy you a contractor proposals include compliance with the customer statement of work, the contractor's understanding of the customer's problem or need, the soundness and practicality of the contractor's proposed solution of the project, the contractor's experience and success or projects, the experience of key individuals to be assigned to work on the project, the contractor's ability to plan and control the project, the realism of the contractor schedule, and the price.

What's the customer has selected the winning contractor, the contractor is informed that it is the winner, subject to successful negotiation of a contract. A contract is an agreement between the contractor, who agrees to provide a product or service, and the customer, who agrees to pay the contractor a certain amount in return.

They're basically two types of contracts: fixed-price and cost reimbursement. In a fixed-price contract, the customer and the contractor agree on a price for the proposed work. The price remains fixed unless the customer and contractor agree on changes. This type of contract provides low risk for the customer at high risk for the contractor. In a cost reimbursement contract, the customer agrees to pay the contractor for all actual costs, regardless of amount, plus some agreed-upon profit. The type of content provides high risk for the customer, because contractor costs can overrun the proposed price, and low risk to the contractor.

A contract may include miscellaneous provisions covering misapplication of costs, notice of cost overruns or schedule delays, approvals for any subcontractors, customer furnished equipment or information, patent ownership, disclosure of proprietary information, international considerations, termination, terms of payment, notices or penalties, and procedures for making changes.

Project Management Ch.2

Project selection

The steps and project selection are:

Develop a set of criteria against which the opportunity will be evaluated. These criteria will probably include the quantitative and qualitative factors.
List assumptions that will be used as the basis for each opportunity.
Gather data and information for each opportunity to help ensure an intelligent decision regarding project selection.
Evaluate each opportunity against the criteria. Once all the data and information has been collected, analyze, and summarized for each opportunity, it should be given to all the individuals who are responsible for performing the evaluation.

Preparing a request for proposal

A request for proposal (RFP) must provide a statement of work (SOW). An SOW deals with the scope of the project, outlining the tassels or work elements the customer wants the contractor or project team to perform.
The RFP must include the customer requirements, which defined specifications and attributes. Requirements cover size, quantity, color, wait, speed, and other physical or operational parameters the contractor's proposed solution must satisfy.
"The RFP should state what deliverables the customer expects the contractor or project team to provide. Deliverables are the tangible items that the contractor is to supply.
The RFP should list any customer supplied items.
The RFP might state the approvals required by the customer.
Some RFP's mention the type of contract the customer intends to use. It could be fixed price, in which case the customer will pay the contractor a fixed amount regardless of how much work actually cost the contractor. Or the contract might be for time and materials.
On RFP might state the payment terms the customer intends to use.
The RFP should state the required schedule for completion of the project.
The RFP should provide instructions for the format and content of the contractor proposals. If the customer is going to compare in a value a proposals from several contractors, it is important that they be consistent and format and content so that a fairy evaluation can be made.
The RFP should indicate the due date by which the customer expects potential contractors to submit proposals.
On RFP may include the evaluation criteria. These other criteria that the customer were used for valuing proposals from competing contractors in order to select the one to perform the project.
Criteria may include:
contractors experience with similar projects
quality of previously completed projects
technical approach proposed by the contractor
what equipment will be used
does the schedule sound reasonable
to the costs sound reasonable
have any items been left out
in rare cases on RFP will indicate the funds the customer has available to spend on the project. Usually, the customer expects contractors to submit a proposal that meets the requirements in the RFP at the most reasonable cost. In some situations, however, it may be helpful for the customer to indicate a ballpark amount to be spent.

Critical success factors

The need must be clearly defined before preparing a request for proposal (RFP)
when selecting a project from among several needs or opportunities, the decision should be based on which project will provide the greatest overall benefits compared to its costs and possible consequences
having a well understood in evaluation and selection process and a well-rounded committee will increase the chances of making the best project selection decision
a good RFP allows contractors or a project team to understand what the customer expects so they can prepare a thorough proposal that is responsive to the customer's needs and requirements
a request for proposal should include a statement of work, customer requirements, expected deliverables, and the criteria by which the customer will evaluate proposals.
On RFP should provide instructions for the format and content of contractor proposals so the customer will be able to make a consistent and fair comparison in evaluation of all the proposals.
Customers must be careful not to provide information to only some of the contractors because it would give these contractors an unfair come tentative advantage in preparing their proposals

Summary

Needs identification is the initial phase of the project lifecycle. The customer identifies a need, a problem, or an opportunity for a better way of doing something. The need and associated requirements are usually written down by the customer in a document called a request for proposal (RFP).

Before a request for proposals prepared, the customer clearly defines a problem or need. This may mean gathering data about the magnitude of the problem. It is important at the customer try to quantify the problem so as to determine whether the expected benefits from implementing a solution outweigh the costs are consequences of conducting the project.

There will be situations where several needs or opportunities have been identified but there are limited funds or resource available to pursue all of them. Project selection involves evaluating and selecting very needs and opportunities, and then deciding which of these should move forward as a project to be implemented. The steps of project selection are: developing a set of criteria against which the opportunity will be of value weighted; listing assumptions about each opportunity; gathering data and information about each opportunity; and evaluating each opportunity against the criteria. Having a well understood evaluation process at a well-rounded evaluation and selection committee will increase the chances of making the best decision that will result in the greatest overall benefit.

The purpose of preparing a request for proposal is to say, comprehensively and in detail, what is required, from the customer's point of view, to address identified need. A good RFP allows contractors or he project team to understand what the customer expect said that they can prepare a thorough proposal that will satisfy the customer's requirement and a realistic price.

RFPs may contain a statement of work; customer requirements for physical or operational parameters, such as size, quantity, color, wait, and speed; deliverables and customer expects the contractor to provide; a list of any customer supplied items; any approvals required by the customer; the type of contract the customer intends to use; the payment terms; the required schedule for completion of the project; instructions for the format and content of the contractor proposals; the Day date by which the customer expects potential contractors to submit proposals; and criteria by which the proposals will be evaluated.

Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available. Business customers and contractors consider the RFP/proposal process to be a competitive situation. Customers should be careful not to provide one or more contractors with information that is not provided to all interested contractors.

Not all project lifecycles include the preparation of a written request for proposal and subsequent proposals from contractors. Some endeavors move right from defining the need into the project phase of the lifecycle.

Project Management Ch.1

The project management process

Clearly define the project objective. The definition must be agreed upon by the customer and individual or organization who will perform the project.
Divide and subdivide the project scope into major pieces or work packages. A work breakdown structure (WBS) is a hierarchical tree of work elements or items accomplished or produced by the project team during the project. The work breakdown structure usually identifies the organization or individual's responsible for each work package.
Define the specific activities that need to be performed for each work package in order to accomplish the project objective.
Graphically portray the activities in the form of a network diagram. This diagram shows the necessary sequence and interdependencies of activities to achieve the project objective.
Make a time estimate for how long will take to complete each activity. It is also necessary to determine which types of resources and how many of each resource are needed for each activity to be completed within the estimated duration.
Make a cost estimate for each activity. The cost is based on the types and quantities of resources required for each activity.
Calculate a project schedule and budget to determine whether the project can be completed within the required time, with the allotted funds, and with the available resources. If not, adjustments must be made to the project scope, activity time estimates, or resource assignments until an achievable, realistic baseline play and can be established.

Critical success factors

Planning and communication are critical to successful project management. They prevent problems from occurring or minimize their impact on the achievement of the project objectives when they do occur.
Taking the time to develop a well thought out plan before the start of the project is critical to the successful accomplishment of any project.
A project must have a well defined objective -- unexpected result or product, defined in terms of scope, schedule, and cost, and agreed upon by the customer.
Involve the customer as a partner and the successful outcome of the project through active participation during the project.
Achieving customer satisfaction requires ongoing communication with the customer to keep the customer informed and to determine whether expectations have changed.
The key to effective project control is measuring actual progress and comparing it to planned progress on a timely and regular basis and taking corrective action immediately, if necessary.
After the conclusion of a project, the project performance should be evaluated to learn what could be improved if a similar project were to be done in the future. Feedback should be obtained from the customer and the project team.

Chapter 1 summary

A project is an endeavor to accomplish a specific objective through a unique set of interrelated tasks and the effective utilization of resources. It has a clearly defined objective stated in terms of scope, schedule, and cost. The responsibility of the project manager is to make sure that the project objective is accomplished and that the work scope is completed in a quality manner, within budget, and on time, to the customer satisfaction.

The first phase of the project life cycle involves the identification of a need, problem, or opportunity that can result in the customer's requesting proposals from individuals, a project team, or contractors to address and identified need or solve a problem. The second phase of the project lifecycle is the development of a proposed solution to the need or problem. This phase results and the submission of a proposal to the customer by one or more individuals or contractors or the project team. The third phase of the project lifecycle is the implementation of the proposed solution. This phase, which is referred to as performing the project, results in accomplishment of the project objective, leaving the customer satisfied that the work scope was completed in a quality manner, within budget, and on time. The final phase of the project lifecycle is terminating the project, which includes evaluating the execution of the project in order to enhance work on future projects.

Project management involves a process of first establishing a plan and then implementing that planned to accomplish the project objective. This planning effort includes clearly defined objectives, dividing and subdividing the project scope into major pieces called work packages, defining the specific activities that need to be performed for each work package, graphically portraying the activities in the form of network diagrams, estimating how long each activity will take to complete, the finding the types of resources and how many of each resource are needed for each activity, estimating the cost of each activity, and calculating a project schedule and budget.

Taking the time to develop a well thought out plan is critical to the successful or compost of any project. Once the project starts, project management involves monitoring the progress to ensure that everything is going according to plan. The key to effective project control is measuring actual progress and comparing it to planned progress on a timely and regular basis and taking corrective action immediately when necessary.

The ultimate benefit of implementing project management techniques is having a satisfied customer -- whether you are the customer of your own project or a business being paid by a customer to perform the project. Completing the full project scope in a quality manner, on time, and within budget provides a great feeling of satisfaction to everyone involved in the project.

Sunday, March 05, 2006

Phychology - Chapter 9 - summary

Thought: using what we know

Thinking is the mental manipulation of information. Our mental representations simplify and summarize information from the environment.

A concept is a mental category that groups objects, relations, activities, abstractions, or qualities that share certain properties. Basic concepts have a moderate number of instances and are easier to acquire than concepts with few or many instances. Prototypical instances of a concept are more representative than others. The language we use to express concepts may influence how we perceive and think about the world -- a notion first proposed years ago by Benjamin Lee Whorf that is now getting renewed attention.

Propositions are made up of concepts and express a unitary idea. They may be linked together to form cognitive schemas, which serve as mental models of aspects of the world. Mental images also play a role in thinking.

Not all mental processing is conscious. Subconscious processes lie outside of awareness but can be brought into consciousness when necessary. They allow us to perform two or more actions at once, although when one of more these actions is complex, multitasking is inefficient, can introduce errors, and can even be dangerous. Non-conscious processes remain outside of awareness but nonetheless affect behavior; they are involved in what we call intuition and insight, and in implicit learning. Conscious processing may be carried out in a mindless fashion if we overlook changes in context that call for a change in behavior.

Reasoning rationally

Reasoning is purposeful mental activity that involves drawing inferences and conclusions from observations, facts, or assumptions (premises).

Formal reasoning problems can often be solved by applying an algorithm, a set of procedures guaranteed to produce a solution, or by using logical processes, such as deductive and inductive reasoning.

Informal reasoning problems often have no clearly correct solution. This agreement may exist about basic premises, information may be incomplete, and many viewpoints may compete. Such problems may call for the application of heuristics, rules of thumb that suggest a course of action without guaranteeing an optimal solution. They may also require dialectical thinking about opposing points of view.

Studies of reflective judgment should many people have trouble thinking dialectically. People in the prereflective stages do not distinguish between knowledge and belief, or between belief and evidence. Those in the quasi-reflective stages think that because knowledge is sometimes on certain, any judgment about the evidence is purely subjective. Those who think reflective Lee understand that although some things cannot be known with certainty, some judgments are more valid than others, depending on their coherence, fit with the evidence, and so on. Higher education moves people gradually closer to reflective judgment.

Barriers to reasoning rationally

The ability to reason clearly and rationally is affected by many cognitive biases. People tend to exaggerate the likelihood of improbable events, in part because of the availability heuristic sober: to be swayed and they are twice as by the desire to avoid loss; to overestimate their ability to have made accurate predictions (hindsight bias); to which had mostly to evidence that confirms what they want to believe (the confirmation bias); and to be mentally frigid, forming mental sets and seeing patterns where none exists.

The theory of cognitive dissonance holds that people are motivated to reduce the tension that exists when two cognitions, or a cognition in a behavior, conflict -- by rejecting or changing a belief, changing their behavior, or rationalizing. People are especially likely to do so with the need to justify decision (i.e. reduce postdision dissonance), when their actions violate their concepts of themselves as honest and kind, and when they have put hard work into the activity (the justification of effort).

Measuring intelligence: the psychometric approach

Intelligence is hard to define. Most theorists believe that a general ability (a g factor) underlies the many specific abilities tapped by intelligence test, whereas others do not.

The traditional approach to intelligence, the psychometric approach, focuses on how well people perform on standardized aptitude test. The intelligence quotient, or IQ, represents how a person has done on an intelligence test, compared to other people. Alfred Binet designed the first widely used intelligence test for the purpose of identifying children who could benefit from remedial work. But in the United States, people assume that intelligence tests revealed "natural ability," and they used the tests to categorize people in school and in the armed services.

IQ tests have been criticized for being biased in favor of white, middle-class people. However, efforts to construct tests that are free of cultural influence have been disappointing. Culture affects nearly everything to do with taking a test, from attitudes to problem-solving strategies. Negative stereotypes about a person's ethnicity, gender, or age may cause a person to suffer stereotype threat, a burden of doubt about his or her own abilities, which can lead to anxiety or "disidentification" with the test.

Dissecting intelligence: the cognitive approach

In contrast to the psychometric approach, caught at approaches to intelligence emphasized several kinds of intelligence and the strategies people used to solve problems rather than merely whether they get the right answers.

Sternberg's triarchic theory of intelligence proposes three aspects of intelligence:
  • componential (including metacognition)
  • experiential or creative
  • contextual or practical.

Contextual intelligence allows you to acquire tacit knowledge, practical strategies that are important for success but are not explicitly taught.

Intelligence in one domain does not necessarily implied intelligence and another. Howard Gardner proposes that there are actually several "intelligences" besides that is usually considered, including musical and kinesthetic intelligence, and the capacity to understand the natural world, yourself, or others. The latter two intelligences overlap with psychologists call emotional intelligence, which is associated with personal, academic, and occupational success.

Intellectual achievement also depends on motivation and attitudes. Cross-cultural work shows that beliefs about the origins of mental abilities, parental standards, and attitudes toward education can help account for differences in academic performance.

Animal minds

Some researchers, especially those in cognitive ethology, argue that nonhuman animals have greater cognitive abilities than is usually thought. Some animals can use objects as rudimentary tools. Chimpanzees has showed evidence of a rudimentary understanding of number. Some researchers believe that the great apes, and possibly other animals, have some aspects of theory of mind, but understanding of how their own minds in the minds of others work, although not all researchers agree.

In several projects using visual symbol systems or American sign language (ASL), primates have acquired linguistic skills. Some animals (even some nonprimates) seem able to use simple grammatical ordering rules to convey or comprehend meaning. However, scientists are still divided about how to interpret these findings and the research on animal cognition, with some worrying about anthropomorphism and others worrying about anthropodenial.

Phychology - Chapter 9 - terms

Thinking and intelligence

concept -- a mental category that groups objects, relations, activities, abstractions, or qualities having common properties
basic concepts -- concepts that have a moderate number of instances and are easier to acquire than those having few or many instances
prototype -- an especially representative example of a concept
proposition -- a unit of measuring that is made up of concepts and expresses a single idea
cognitive schema -- an integrated mental network of knowledge, beliefs, and expectations concerning a particular topic or aspect of the world
mental image -- a mental representation that mirrors or resembles the figure represents; mental images occur in many and perhaps all sensory modalities
subconscious processes -- mental processes occurring outside of conscious awareness but accessible to consciousness when necessary
non-conscious processes -- mental processes occurring outside of and not available to conscious awareness
implicit learning -- learning that occurs when you acquire knowledge about something without being aware of how you did so in without being able to state exactly what it is you have learned
reasoning -- the trawling of conclusions or inferences from observations, facts, or assumptions
algorithm -- a problem-solving strategy guarantee to produce a solution even if the user does not know how it works
deductive reasoning -- a form of reasoning in which a conclusion follows necessarily from certain premises; if the premises are true, the conclusion must be true
inductive reasoning -- a form of reasoning in which the premises provide support for conclusion, but it is still possible for the conclusion to be false
heuristic -- a rule of thumb that suggests a course of action or guides problem-solving but does not guarantee an optimal solution
dialectical reasoning -- a process in which opposing facts or ideas are weighed and compared, with a view to determine the best solution or resolve differences
availability heuristic -- the tendency to judge the probability of a type of event by how easy it is to think of examples or instances
hindsight bias -- the tendency to overestimate one's ability to have predicted an event once the outcome is known; the "I knew it all along" phenomenon
confirmation bias -- the tendency to look for or pay attention only to information that confirms one's own belief
mental set -- a tendency to solve problems using procedures that worked before on similar problems
cognitive dissonance -- a state of tension that occurs when a person holds to cognitions that are psychologically inconsistent, or when a person's belief is incongruent with his or her behavior

Postdecision dissonance -- and the theory of cognitive dissonance, tension that occurs when you believe you may have made a bad decision
justification of effort -- the tendency of individuals to increase their liking for something that they have worked hard or suffered to attain; a common form of dissonance reduction
intelligence -- an inferred characteristic of an individual, usually defined as the ability to profit from experience, acquire knowledge, think abstractly, act purposefully, or adapt to changes in the environment
factor analysis -- a statistical method for analyzing the intercorrelations among various measures or test scores; clusters of measures or scores that are highly correlated are assumed to measure the same underlying trait, ability, or aptitude (factor)
g factor -- a general intellectual ability assumed by many theorists to underlie specific mental abilities and talents
psychometrics -- the measurement of mental abilities, trait, and processes
mental age (MA) -- a measure of mental development expressed in terms of the average mental ability at a given age
intelligence quotient (IQ) -- a measure of intelligence originally computed by dividing a person's mental age by his or her chronological age and multiplying by 100; it is not derived from norms provided for standardized intelligence tests
stereotype threat -- a burden of doubt a person feels about his or her performance, due to negative stereotypes about his or her group's abilities
triarchic theory of intelligence -- a theory of intelligence that emphasizes information processing strategies, the ability to creatively transfer skills to new situation, and the practical application of intelligence
metacognition -- the knowledge or awareness of ones own cognitive processes
taict knowledge -- strategies for success that are not explicitly taught but that instead must be inferred
emotional intelligence -- the ability to identify your own and other people's emotions accurately, express your emotions clearly, and regulate emotions in yourself and others
cognitive ethology -- the study of cognitive processes in nonhuman animals
theory of mind -- a system of beliefs about the way ones own mind and the minds of others work, and of how individuals are affected by their beliefs and feelings