Summary: "With good judgment, little else matters. Without it, nothing else matters.” Judgment, page 5 In 1999, Jack Welch was named “manager of the century” by Fortune magazine. Through his leadership during his 20 year tenure as CEO, GE “had dramatically outperformed the economy, creating close to $400 billion of new market value”. When he took over in 1981, it was worth $13 billion. In 1997, AT&T was a $130 billion company when Michael Armstrong became CEO. Unlike Welch though, Armstrong wasn’t able to drive the same change and growth at AT&T. By 2005, it was “nearly dead-broke”. How was Jack Welch able to transform GE by such a great magnitude? And why wasn’t Michael Armstrong able to do even the fraction of that at AT&T? Well, as leadership experts, and professors, Noel M. Tichy and Warren Bennis explain in Judgment: How Winning Leaders Make Great Calls, it all comes down to each leader’s judgment calls. “Whether we’re talking about United States presidents, CEOs, Major League coaches, or wartime generals, leaders are remembered for their best and worst judgment calls. In the face of ambiguity, uncertainty, and conflicting demands, the quality of a leader’s judgment determines the fate of the entire organization. That’s why judgment is the essence of leadership.” Noel and Warren have “watched hundreds of leaders making thousands of judgment calls”. They’ve witnessed the ability of great leaders like Jack Welch to articulate and share their storyline and vision for the organization with the rest of the company, as they use it to ultimately guide each decision they make. But perhaps more importantly, through these experiences with leaders such as Jack Welch, they also came up with the Framework for Leadership Judgment; a framework that leaders can use to make better judgment calls. Golden Egg Understand The Framework for Leadership Judgment "Good judgment calls are a process, not an event.” Judgment, page 17 Making judgment calls is an art, not a science. Each judgment call you make sets the stage for the next one you make as a leader, and ultimately the success of your organization. “Despite the implications of the word call, the judgment calls that leaders make cannot be viewed as single, point-in-time events. Like umpires and referees, leaders do, at some moment, make a call. They make a determination about how things should proceed. But unlike umpires and referees, they cannot – without risking total failure – quickly forget them and move ahead to the next play. Rather, for a leader, the moment of making a call comes in the middle of a process.” The following two GEMs highlight the two key elements of The Framework for Leadership Judgment. GEM #1 Be Aware of The Three Judgment Domains "These are the three domains that make the most difference to the survival and well-being of any institution. If they are unattended to or if bad calls are made in these domains, it can be fatal to an organization.” Judgment, page 22 No matter what industry you’re in, you need to be aware of three crucial domains where you will be making judgment calls: 1) People Judgment Calls The way you not only manage, but also hire the people on your team, will have the biggest impact on your success as an organization; especially when it comes to your leadership team. You have to keep your organizations goals and vision in mind, and not let emotions complicate your judgment. Your number one priority is getting the right people on board. “While misjudgments in any of the three domains have the potential to be fatal, the one with the most potential is people.” 2) Strategy Judgment Calls As the leader of your organization and team, it is your responsibility to direct the strategic direction. Like the saying goes, “You are the captain of your ship.” “The role of a leader is to lead the organization to success, so when the current strategic road isn’t leading toward success,
