The three types of judgement calls that ensure the survival and well being of a firm include:

  1. People Judgment Calls. People are at the heart of the organization. When leaders make smart judgment calls about who they select on their teams, and when they manage them well, leaders are better enabled to set a sound direction and strategy for the enterprise, and enabled to more effectively deal with crises when they inevitably arise.
  2. Strategy Judgment Calls. The role of the leader is to lead the organization to success, so when the current strategic road isn’t leading toward success, it is his or her job to find a new path. How well a leader makes strategic judgment calls is a function of both (1) his or her own ability to
    look over the horizon and frame the right question and (2) the people with whom he or she chooses to interact.
  3. Crisis Judgment Calls. Crisis calls require that a leader have clear values and know his or her ultimate goal. When handled well, and where good judgment calls are made, crises can be navigated without leading to the demise of the institution.

The quality of someone’s judgment depends to a large degree on his or her ability to gather resources and to interact well with those who are engaged in the decision. Most of the time these two constraints (resources and people) overlap. A good leader can use four types of knowledge to help during this process:

  1. Self-Knowledge. Leaders who exercise good judgment calls have the skills to listen, reframe their thinking, and to be willing to forego old paradigms. GE’s CEO Jeff Immelt said, “It is an intense journey into yourself.”
  2. Social Network Knowledge. Leadership is a team sport. It is critical to achieve alignment within the leader’s team, the organization, and critical stakeholders. This helps create the ongoing capacity for good judgment calls. The leader must deliberately make time to create opportunities for teamwork. They do this by drawing on the best resources of each individual, empowering and delegating to them to enable others to make better judgments in their own areas of responsibility.
  3. Organizational Knowledge. Good leaders work hard to continuously upskill the team, and to increase organizational and stakeholder capacity for making judgment calls by training for them ahead of time.
  4. Stakeholder Knowledge. Good leaders engage customers, suppliers, the community and boards in generating knowledge to support better judgments. The most optimal outcomes are created outside of the proverbial vacuum.

People judgment calls help enable business strategy and crisis judgment calls.

A retired four-star general said that “most of my bad judgment calls were generally about people. There have been times when I knew I had to take people out of a position. I knew they weren’t going to change, and they weren’t going to do what had to be done. But it’s traumatic when you do that. The higher up you go, the more traumatic it is for the organization to remove people, and you don’t like to do that, but in the final analysis you have to.”

The ultimate goal is to produce a successful outcome. Leaders who have good judgment track records are vigilant. They check to make sure that conditions are as favorable as possible to support the opportunity in front of them. If you need to take time and expand the decision making process, do it. If you do not have a team of trusted leaders, politics will undermine what is good for the enterprise and will inhibit your strategy judgment.

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