I hope you had a great weekend and you are keeping well.
As you know, I have been going through the A to Z of Success and looking at one letter each week.
Last week’s Thought for the Week was “I is for Inspiration” and I hope you found some inspiration from it! And I have been giving a lot of thought again to this week’s because it’s another interesting one for us business owners and leaders!
This week’s thought for the week is all about “J for JUDGEMENT” and to give you a heads-up, this is a BIG subject so I suggest you set aside around 15-20 minutes to read this week’s Thought for the Week.
The word ‘judgement’ means different things to different people doesn’t it”. Things like …
- How we are judged by others?
- How do we judge other people?
- How we view things, make decisions etc? ….
What does it mean to you?
And how is this affecting you in these times of uncertainty?
To me, ‘judgement’ means how we perceive things, how we decipher that information, how we frame it and the conclusions we reach, how we reach decisions and how we take action.
It can also mean that we may make a different judgement depending on our mood that day because we may perceive things differently from one day to the next!
Working as a Transformation Coach with Business Owners and Leaders, I keep a complete open mind on where people are at on their journey, without judging one way or another – and that is absolutely key!
I learned how important this is when I first had a coach myself, as many successful business owners and leaders do. I just appreciate so much that there is at least one safe space in my world where I can talk about anything and it is accepted! And how often do we feel that way in life!
How liberating to be able to talk openly and honestly and for it to be simply accepted without judgement! I certainly do.
So, let’s look at ‘Judgement” in the context as a Business Owner and / or Leader …
From Harvard Business review …
Judgment—the ability to combine personal qualities with relevant knowledge and experience to form opinions and make decisions—is “the core of exemplary leadership” according to Noel Tichy and Warren Bennis (the authors of Judgment: How Winning Leaders Make Great Calls).
It is what enables a sound choice in the absence of clear-cut, relevant data or an obvious path. To some degree we are all capable of forming views and interpreting evidence. What we need, of course, is good judgment.
A lot of ink has been spilled in the effort to understand what good judgment actually is.
Some experts define it as an acquired instinct or “gut feeling” that somehow combines deep experience with analytic skills at an unconscious level to produce an insight or recognise a pattern that others overlook.
At a high level, this definition makes intuitive sense; but it is hard to move from understanding what judgment is to knowing how to acquire or even to recognise it!
Looking at what people just like you are doing in their industries, here are some insights …
CEOs in a range of companies, from some of the world’s largest right down to start-ups and leaders in various professions as well; senior partners at law and accountancy firms, generals, doctors, scientists, priests, and diplomats …
When asked to share their observations of their own and other people’s exercise of judgment, these great insights help us to identify the skills and behaviours that collectively create the conditions for fresh ideas and enable decision makers to discern patterns that others miss.
And of course, leadership and psychology come into play here too.
In this study, leaders with good judgment tend to be …
- Good listeners and readers—able to hear what other people actually mean, and thus able to see patterns that others do not.
- They have a breadth of experiences and relationships that enable them to recognise parallels or analogies that others miss—and if they don’t know something, they’ll know someone who does and lean on that person’s judgment.
- They can recognise their own emotions and biases and take them out of the equation. They’re adept at expanding the array of choices under consideration.
- Finally, they remain grounded in the real world and in making a choice, they also consider its implementation.
Practices that leaders can adopt, skills they can cultivate, and relationships they can build will inform the judgments they make.
Six Basic Components of Good Judgment;
1.Learning; Listen Attentively, Read Critically
Good judgment requires that you turn knowledge into understanding. This sounds obvious, but as ever, the devil is in the detail—in this case your approach to learning. Many leaders rush to bad judgments because they unconsciously filter the information they receive or insufficiently question what they hear or read.
The truth, unfortunately, is that few of us really absorb the information we receive. We filter out what we don’t expect or want to hear, and this tendency doesn’t necessarily improve with age. (Research shows, for example, that children notice things that adults don’t.) As a result, leaders simply miss a great deal of the information that’s available – a weakness to which top performers are especially vulnerable because over-confidence so often comes with success.
Exceptions do exist, of course.
Leaders with good judgment tend to be good listeners and readers.
Many or the World’s greatest Entrepreneurs and Leaders are good listeners and adept at eliciting information that people might not otherwise volunteer. They ask questions that draw out interesting responses that help that person better understand themselves.
For example; if deciding whether to accept a directorship, they would ask questions such as;
“Where would you place this company on a spectrum of white to grey?” “At first this sounds like a classic piece of ‘management-ness’ that is clever but meaningless. And yet it is sufficiently open-ended to draw out replies on a wide range of subjects and sufficiently pointed to produce a meaningful response.
This brings “Shades of Grey” into a whole new spectrum!
Information overload, particularly with written material, is another problem. It’s not surprising that CEOs with huge demands on their time and attention struggle to get through the volume of emails and briefing papers they receive.
You may get up to a million words to read ahead of a big meeting! Being confronted with such a deluge, it’s tempting to skim and to remember only the material that confirms our beliefs.
That’s why smart leaders demand quality rather than quantity in what gets to them. Three hundred pages for the next big meeting? It’s six pages maximum for agenda items at Amazon and the Bank of England!
Overload is not the only challenge when it comes to reading. A more subtle risk is taking the written word at face value.
When we are with people and listen to them speak, we look (consciously or unconsciously) for nonverbal clues about the quality of what we’re hearing.
While reading, we lack that context and can face this “Wall of Words”. And in an era when the term “fake news” is common, decision makers need to pay extra attention to the quality of the information they see and hear, especially material filtered by colleagues or obtained through search engines and social media exchanges.
Are you really as careful in assessing and filtering as you should be, knowing how variable the quality is?
If you believe that you never unconsciously screen out information, consider whether you choose a newspaper that agrees with what you already think?
People with good judgment are sceptical of information that doesn’t make sense.
Active listening, including picking up on what’s not said and interpreting body language, is a valuable skill to be honed, and plenty of advice exists.
- Beware of your own filters and of defensiveness or aggression that may discourage alternative arguments.
- If you get bored and impatient when listening, ask questions and check conclusions.
- If you’re overwhelmed by written briefing material, focus on the parts that discuss questions and issues rather than those that summarise the presentations you’ll hear at the meeting. (Far too many board packs are stuffed with advance copies of presentations.)
- Look for gaps or discrepancies in what’s being said or written.
- Think carefully about where the underlying data is coming from and the likely interests of the people supplying it.
- If you can, get input and data from people on more than one side of an argument—especially people you don’t usually agree with.
- Finally, make sure the yardsticks and proxies for data you rely on are sound; look for discrepancies in the metrics and try to understand them.
2.Trust: Seek Diversity, Not Validation
Leadership shouldn’t be a solitary endeavour. Leaders can draw on the skills and experiences of others as well as their own when they approach a decision. Who these advisers are and how much trust the leader places in them are critical to the quality of that leader’s judgment.
Unfortunately, many CEOs and entrepreneurs bring people on board who simply echo and validate them.
The historian Doris Kearns Goodwin, in her book Team of Rivals, noted that Abraham Lincoln assembled a cabinet of experts he respected but who didn’t always agree with one another.
McKinsey has long included the obligation (not a suggestion) to dissent as a central part of the way it does business. Amazon’s Leadership Principles specify that leaders should “seek diverse perspectives and work to disconfirm their beliefs.”
Cultivate sources of trusted advice: people who will tell you what you need to know, rather than what you want to hear.
- When you are recruiting people on whose advice you will rely, don’t take outcomes as a proxy for their good judgment. Don’t be put off by assessments that a candidate is “different.” Someone who disagrees with you could provide the challenge you need.
- Make judgment an explicit factor in appraisals and promotion decisions.
- Look for what is not being said: Do people fail to mention any “real” difficulties or setbacks or failures in their careers to date?
3.Experience: Make It Relevant but Not Narrow
Beyond the data and evidence pertinent to a decision, leaders bring their experience to bear when making judgment calls.
Experience gives context and helps us identify potential solutions and anticipate challenges. If they have previously encountered something like a current challenge, leaders can scope out areas on which to focus their energy and resources.
Example; Mohamed Alabbar, the chairman of Dubai’s Emaar Properties and one of the Middle East’s most successful entrepreneurs – his first major property crisis in Singapore in 1991, had taught him about the vulnerability that comes with being highly geared in a downturn. And in real estate, only those who learn the lessons of over-gearing in their first crash survive in the long term.
Alabbar has since navigated Dubai’s often dramatic economic cycles and today owns a portfolio that includes the Burj Khalifa, the world’s tallest building, and the Dubai Mall, one of the world’s largest shopping malls.
But – and it’s a big but – if the experience is narrowly based, familiarity can be dangerous.
For instance, if your company is planning to enter the Indian market, you might not trust the judgment of a person whose only product launches have been in the UK. You would probably be less worried about someone who had also launched new products in, say, China and South Africa, because such a person would be less likely to ignore important signals.
In addition, leaders with deep experience in a particular domain may fall into a rut, making judgments out of habit, complacency, or overconfidence.
It usually takes an external crisis to expose this failure and the 2008 financial crisis was the moment of truth for many apparently unassailable titans.
The equivalent today are those leaders who have underestimated the speed with which environmental issues would move centre stage and require a tangible response and those who have not succeeded in pivoting and adapting their businesses in the pandemic.
- First, assess how well you draw on your own experience to make decisions. Start by going through your important judgment calls to identify what went well and what went badly, including whether you drew on the right experience and whether the analogies you made were appropriate.
Record both the wrong and the right. This is tough, and it’s tempting to rewrite history, which is why it can be helpful to share your conclusions with a coach or colleagues, who might take a different view of the same experience. Try also to recruit a smart friend who can be a neutral critic.
Leaders with deep experience in a particular domain may fall into a rut.
- Second, especially if you’re a young leader, work to expand your experience. Try to get postings abroad or in key corporate functions such as finance, sales, and manufacturing.
Get yourself on an acquisition team for a major deal. And as a CEO, a crucial support you can give high-potential managers is more-varied exposure, so get involved in career planning. That will not just do the young managers a favour; it will help the company and very possibly you, because it will broaden the experience into which you can tap.
4. Detachment: Identify, and Then Challenge, Biases
As you process information and draw on the diversity of your own and other people’s knowledge, it’s critical that you understand and address your own biases. Although passion about objectives and values is a wonderful leadership quality that can inspire followers to greater efforts, it can also affect how you process information, learn from experience, and select advisers.
The ability to detach, both intellectually and emotionally, is therefore a vital component of good judgment. But it’s a difficult skill to master.
As research in behavioural economics, psychology, and decision sciences has shown in recent years, cognitive biases such as anchoring, confirmation, and risk aversion or excessive risk appetite are pervasive influences in the choices people make.
- Understand, clarify, and accept different viewpoints.
- Encourage people to engage in role-playing and simulations, which forces them to consider agendas other than their own and can provide a safe space for dissent. If employees are encouraged to play the role of a competitor, for example, they can experiment with an idea that they might be reluctant to suggest to the boss.
- Leadership development programmes are a great forum in which to challenge assumptions by exposing people to colleagues from different cultures and geographies, who come to the discussion with different views.
- Finally, people with good judgment make sure they have processes in place that keep them aware of biases.
Major decisions now require that biases be on the table before a discussion and, when necessary, that a devil’s advocate participate. Acknowledge that mistakes will occur—and doubt the judgment of anyone who assumes they won’t.
5. Options: Question the Solution Set Offered
In making a decision, an entrepreneur or leader is often expected to choose between at least two options, formulated and presented by their advocates. But smart leaders don’t accept that those choices are all there is.
During the 2008–2009 financial crisis, President Obama pressed Treasury Secretary Timothy Geithner to explain why he wasn’t considering nationalising the banks. Geithner recalls, “We had one of those really tough conversations. Are you confident this is going to work? Can you reassure me? Why are you confident? What are our choices? I told him that my judgment at the time was that we had no option but to play out the thing we’d set in motion.”
Obama was doing what all good leaders should do when told “We have no other option” or “We have two options and one is really bad” or “We have three options but only one is acceptable.”
Other options almost always exist, such as …
- doing nothing,
- delaying a decision until more information is available, or
- conducting a time-limited trial or a pilot implementation.
Tim Breedon, formerly the CEO of the UK financial services company Legal & General, described it as; “not being boxed in by the way things are presented.”
In hindsight, many bad judgment calls were inevitable simply because important options—and the risk of unintended consequences—were never even considered. This happens for a variety of reasons, including risk aversion on the part of people supplying potential answers.
That’s why thoroughly exploring the solution set is key to a leader’s exercise of judgment.
It’s not the CEO’s job to come up with all of the options. But he or she can ensure that the management team delivers the full range of possibilities, counteracting fears and biases that cause the team to self-edit. When all the options can be debated, the judgment is more likely to be right.
- Press for clarification on poorly presented information, and challenge your people if you think important facts are missing.
- Question their weighting of the variables on which their arguments depend.
- If timing appears to be a key consideration, determine that it’s legitimate.
- Factor in the risks associated with novel solutions—stress and overconfidence—and look for opportunities to mitigate them through piloting.
- Use modelling, triangulation, and the opportunities afforded by artificial intelligence.
- Dig out people’s stakes in the final decision. A tell-tale sign is being oversold on a particular outcome. What are the personal consequences to them (and to you) if their solution works or fails?
- Consult those you trust. If there isn’t anyone, or enough time, try to imagine what someone you trust would do.
- Get clear about rules and ethical issues, because they will help you filter your choices.
- Finally, don’t be afraid to consider radical options. Discussing them could make you and others aware of some that are less radical but well worth considering and may encourage other people to speak up.
6. Delivery: Factor in the Feasibility of Execution
You can make all the right strategic choices but still end up losing out if you don’t exercise judgment in how and by whom those choices will be executed.
In 1880 the French diplomat and entrepreneur Ferdinand de Lesseps persuaded investors to support digging a canal in Panama to link the Atlantic and Pacific Oceans.
Because de Lesseps had just completed the Suez Canal, investors and politicians—failing to understand that building a canal through sand does not qualify you to build one through jungle—did not give his plans the scrutiny they deserved. His approach proved disastrously unsuitable, and it was left to the U.S. government to complete the canal by taking a very different approach.
When reviewing projects, smart leaders think carefully about the risks of implementation and press for clarification from a project’s advocates. This is as important for small decisions as it is for big ones.
A leader with good judgment anticipates risks after a course has been determined and knows by whom those risks are best managed.
That may not be the person who came up with the idea—particularly if the proposer is wedded to a particular vision, as was the case with de Lesseps. More generally, flair, creativity, and imagination aren’t always accompanied by a capability to deliver—which is why small tech firms often struggle to capitalise on their inspiration and are bought out by less-inventive but better-organised giants.
- In assessing a proposal, make sure that the experience of the people recommending the investment closely matches its context. If they point to their prior work, ask them to explain why that work is relevant to the current situation.
- Get the advocates to question their assumptions by engaging in “premortem” discussions, in which participants try to surface what might cause a proposal to fail.
- Consider doing this as part of your project-evaluation process.
Leaders need many qualities, but underlying them all is good judgment.
- Those with ambition but no judgment run out of money.
- Those with charisma but no judgment can lead their followers in the wrong direction.
- Those with passion but no judgment can hurl themselves down the wrong paths.
- Those with drive but no judgment can get up very early to do the wrong things.
Sheer luck and factors beyond your control may determine your eventual success, but good judgment will stack the cards in your favour.
All this aside, what’s really important here is that each and every one of us becomes more aware of HOW we reach judgements and decisions!
How does “uncertainty” come into play here too?
“Judgement” is often described as decision-making under uncertainty that cannot be modelled as a set of formal decision rules and we often call it ‘intuition’, ‘gut instinct’, or understanding.
In a world of uncertainty, we still have to bear the responsibility of owning, controlling, deploying, and redeploying our resources according to our market and what our customers want.
That, I believe, is very much the role of the entrepreneur and the leader whose job is to combine and recombine capital resources in pursuit of profit (and the avoidance of loss).
And, when we exercise good judgment— we earn an economic profit.
However, when our judgments are poor, we suffer an economic loss. And competition among entrepreneurs (and those who provide financial capital to entrepreneurs) tends to steer ownership and control of productive resources toward those with better judgment).
The judgment-based approach plays a distinct role in the current conversation and controversy about the nature of business research.
Taking action is seen as beginning with …
- our interpretation of current (objective) conditions,
- our beliefs about possible future states of the world (e.g., a profitable product or venture), and
- our expectations and confidence in our own ability to bring about that possible future.
We then act (or don’t act), with success or failure.
Question: Do entrepreneurs and leaders take action, or opportunities?
An action-theoretic perspective helps us (and our clients) to remember that action always takes place under conditions of uncertainty (even for mundane activities in established industries!)
Now, there’s quite a bit of food for thought this week!
I hope this has been useful and thank you for reading to the end!
If you would like my help with this then I invite you to book your FREE CLARITY SESSION with me HERE.
Have a great week!
With very best wishes for your success.