Inside Smart Decisions

The authors talk about their conclusions

The most critical attribute of any leader is the ability to make sound judgments. But just what does that involve? A desire to make the process less obscure prompted Noel M. Tichy, of the University of Michigan, and Warren G. Bennis, of the University of Southern California, to write Judgment: How Winning Leaders Make Great Calls. "We wanted to put some clarity in what is probably one of the most commonly used and barely understood words in the field of leadership," says Bennis. Executive Editor John A. Byrne recently interviewed the two authors on their findings.

John Byrne: What have you learned that can help others make successful judgments?

Noel Tichy:

The more time we spent in the field, the more we saw the necessity of a preparation phase, in which you have to sense and identify the need for a decision. For instance, Michael Dell (DELL ) failed to take note of a coming change in the marketplace. And so he wasn't able to go to the second stage, where he could properly frame and name the issue. The third part is mobilizing and aligning the right stakeholders around a decision. Then, you don't walk away from a call: There is an execution phase where you make it happen and continue to make adjustments as you go along.

J.B.: Describe some other insights.

Warren Bennis:

The source of many fatal judgments is the information pipeline. How do leaders get information that is relevant, has meaning, and is timely? Four forms of intelligence are key: self-intelligence, or awareness of your personal values and aspirations; social-network intelligence, such as getting valid data from your direct reports; organizational knowledge, or knowing how the people in your company will respond, adapt, and execute; and finally, what we refer to in the book as contextual intelligence, or knowing the territory.

J.B.: Give me a good example.

W.B.:

Carly Fiorina is a brilliant example of lacking contextual knowledge—of not really getting the HP (HPQ ) culture. That was what really led to her difficult problems with her board. She leaned too heavily on change and failed to celebrate the tradition of HP.

J.B.: So tell us about a judgment call that went well, that shows how to make a better choice.

N.T.:

When A.G. Lafley took over Procter & Gamble (PG ), he discovered a leadership problem in the company's baby-care business, about an $8 billion part of the company. But then he made a mistake: He and one other executive decided that 38-year-old Deb Henretta should come in and run that operation. It was a business dominated by engineers, and she was a marketing, consumer-oriented person.

He almost had a revolution on his hands. His vice-chairmen were in his office, couldn't believe he'd made that judgment without their involvement. He met with them the next day and ended up saying: "Very thoughtful input, thank you, but here is why we're going to go ahead with Deb." This is what we call a redo loop—you can make mistakes and loop back. Then, on the execution side, he backed her every step of the way and changed most of the team.

J.B.: Are there simple things that one can do to increase the odds of making the right calls?

N.T.

When you make the call, make it very clear—and explain the rationale.

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