Good judgment is a vital skill, often overlooked yet crucial in decision-making. It's a blend of experience, knowledge, and intuition. Let's delve into the elements that constitute good judgment, and how they can be cultivated for better decision-making.

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

  • The ability to detach, both intellectually and emotionally, is therefore a vital component of good judgment
  • It is precisely for their ability to resist cognitive biases and preserve detachment that we often see CFOs and lawyers rise to the CEO position

Trust: Seek Diversity, Not Validation

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.

To improve:

In assessing a proposal, make sure that the experience of the people recommending the investment closely matches its context

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

  • When reviewing projects, smart leaders think carefully about the risks of implementation and press for clarification from project’s advocates

Improve

Cultivate sources of trusted advice: people who will tell you what you need to know rather than what you want to hear

  • Don’t take outcomes as a proxy for good judgment
  • Make judgment an explicit factor in appraisals and promotion decisions
  • Someone who disagrees with you could provide the challenge you need

Success Is Not a Reliable Proxy for Judgment

If the experience is narrowly based, familiarity can be dangerous

  • 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

The Solution

Judgment-the ability to combine personal qualities with relevant knowledge and experience to form opinions and make decisions-is “the core of exemplary leadership”

  • Good judgment enables a sound choice in the absence of clear-cut, relevant data or an obvious path
  • 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 recognize parallels or analogies that others miss and lean on that person’s judgment

Conclusion

Leaders need many qualities, but underlying them all is good judgment

  • Sheer luck and factors beyond your control may determine your eventual success, but good judgment will stack the cards in your favor
  • Sir Andrew Likierman is a professor at London Business School and a director of Times Newspapers and the Beazley Group, both in London

To improve:

Active listening

  • Pick up on what’s not said and interpret body language
  • 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
  • Focus on the parts that discuss questions and issues rather than those that summarize the presentations

To improve:

Understand, clarify, and accept different viewpoints

  • Encourage people to engage in role-playing and simulations
  • People with good judgment should be aware of biases and have processes in place that keep them aware of them
  • Major decisions should require that biases be on the table before a discussion and that a devil’s advocate participate

Options: Question the Solution Set Offered

In making a decision, a leader is often expected to choose between at least two options, formulated and presented by their advocates

  • Smart leaders don’t accept that those choices are all there is
  • Other options exist
  • Delay a decision until more information is available, or conduct a time-limited trial or a pilot implementation

To improve:

Assess how well you draw on your own experience to make decisions

  • Record both the wrong and the right.
  • Recruit a friend or colleague who can be a neutral critic
  • Work to expand your experience
  • Get a post abroad or in a key corporate function

Experience: Make It Relevant but Not Narrow

Experience gives context and helps us identify potential solutions and anticipate challenges.

  • Mohamed Alabbar, the chairman of Dubai’s Emaar Properties, discusses how his first major property crisis in Singapore in 1991 taught him about the vulnerability that comes with being highly geared in a downturn.

When You Have to Move Fast

When you have to move fast, good judgment requires reflection before action

  • It’s not the CEO’s job to come up with all the options
  • They can ensure that the management team delivers the full range of possibilities by ensuring that the options can be debated

To improve:

Press for clarification on poorly presented information

  • Question their weighting of the variables on which their arguments depend
  • Factor in the risks associated with novel solutions-stress and overconfidence-and look for opportunities to mitigate them through piloting
  • Get clear about rules and ethical issues

Learning: Listen Attentively, Read Critically

Good judgment requires that you turn knowledge into understanding

  • Many leaders rush to bad judgments because they unconsciously filter the information they receive or are not sufficiently critical of what they hear or read
  • Information overload, particularly with written material, is another problem
  • Smart leaders demand quality rather than quantity in what gets to them

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