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Judgment is a vast subject. How do you and Noel Tichy demystify it?
The first thing we ask is: What are the domains where critical judgments are apt to be made? There are three: judgments about people, strategy judgments, and judgments made during crises. That doesn't include everything, but gets close to including the key factors. People choices are critical. For example, of the executive heirs to Jack Welch, Jim McNerney seems to be doing very well at Boeing and Jeff Immelt seems to be doing fairly well at GE. Then we have Bob Nardelli who came out of the same background, yet was ousted this year from Home Depot. Raymond Gilmartin was chosen to succeed Roy Vagelos at Merck, but as far as we could all tell, he was kicked out. And what about Carly Fiorina at Hewlett-Packard? How come those choices were made? The cost of these critical people mistakes in finding a CEO and replacing them is of a magnitude that I can't fully imagine.
Let's take strategy choices. When the Japanese were gaining ground in 1984, Andy Grove was No. 2 to Intel chairman Gordon Moore. Grove knocked on Moore's door and said, "If we got kicked out and the board brought in a new CEO, what do you think he would do?" And Moore responded, "He'd probably get us out of memories." Grove said, "Well, why shouldn't you and I walk out the door and come back and do it ourselves?" Now, imagine the strategic shift that took place at Intel.
And third, crisis judgments. We always think back to Jim Burke, when he was head of Johnson & Johnson and immediately removed Tylenol from the shelves [after the painkiller was laced with cyanide, resulting in seven deaths]. Compare that with the Exxon Valdez [oil spill] crisis where the captain and Exxon's executive team didn't react at all, or compare it to the Coca-Cola crisis in Belgium several years ago [in which the soft drink was blamed for the illness of more than 100 children], where the CEO and chairman acted pigheaded and tone-deaf, and delayed far too long.
But how do leaders with good judgment determine what to do when faced with choices or crises?
We've outlined a leadership judgment process. It goes from preparation to making the call--the execution phrase--and then learning from what you did.
The preparation phase includes a sensing and identifying of what has to be done. All those inflection points out there that Clay Christensen writes about, how do you know what the right ones are? How do you know what the significant ones are? Do we have a chief relevance officer? There's a marvelous German word, fingerspitzengefÃ¼hl. Finger means finger; spitzen means touch; gefÃ¼hl means feeling. Many good leaders have this sense of touch. I'm not talking about "blink," the blinding, epiphanic insight that Malcolm Gladwell writes about. No, most sensing and identifying comes from long experience in going through situations that resemble the one you're now going through. That's part one of the preparation phase.
The second part is framing and naming what it is you're actually going to do. And the third is making sure you align and mobilize the troops before issuing the order to advance. I'll give you an example from Hollywood. I was interviewing director Bob Zemeckis about why he loved making Forrest Gump, and why it was so successful critically as well at the box office. He looked at me rather blankly and replied, "We were all making the same movie." I asked him what he meant. He said, "Well, the actors, the cinematographers, assistant directors, the writers, the gaffers, the dolly grips, the best man--all of us were working together to make that movie."
So many decisions fail because people are not making the same movie. They're doing different things that are not coordinated or aligned. Dirk Jager did a very good job throughout his Procter & Gamble career until he became CEO and chairman. He served for only about a year and a half before being ousted. It was very clear that while his ideas were in many ways terrific, he never engaged the troops and got them aligned, whereas his successor, A. G. Lafley, seemed to have fingerspitzengefÃ¼hl.