The Elements of Good Judgment

Leaders often rush into bad judgments because they are not sufficiently critical of what they hear and read. They filter out what they don't expect or want to hear.

Leaders with good judgment:

• They give their undivided attention to everyone. They pick up on what's not said and interpret body language.
• They elicit information that people might not otherwise volunteer.
• They demand quality information they see and hear to prevent information overload. If they feel overwhelmed, they focus on the parts that discuss questions and issues.

When leaders approach a decision, they should draw on the skills and experiences of others as well as their own.

• CEOs and entrepreneurs should refrain from only bringing people on board who only echo and validate them.
• Instead, leaders should pursue diverse perspectives and work to disconfirm their beliefs.
• They should look for advisers with organisational and personal qualities and experiences to fill a void in themselves.

Leaders use their experience when making judgment calls. If they have previous experience, leaders can scope out areas to focus their energy and resources. However, if the experience is narrowly based, the familiarity can be dangerous. Leaders may fall into a rut, make judgments out of habit, or be overconfident.

To improve, assess how well you draw on your own experience to make decisions. Go through important judgment calls to identify what went well and what didn't, then share your conclusions with a coach or colleagues who might have a different perspective of the same experience.

It's vital to understand and address your own biases. Research shows that leaders often make cognitive biases such as anchoring, confirmation, risk aversion or excessive risk appetite. People with good judgment ensure they have processes in place to keep them aware of biases.

To improve, encourage, understand, clarify, and accept different viewpoints, engage in role-playing and simulations, which force employees to consider different agendas and can provide a safe space for dissent.

In making a decision, a leader is often expected to choose between at least two options. Smart leaders look beyond only two options. Other options almost always exist, such as doing nothing, delaying a decision until more information is available, or conducting a time-limited trial.

To improve:

• Press for clarification on poorly presented information, and challenge people if you think important facts are missing.
• Question the variables on which their arguments depend.
• Use modelling, triangulation, and artificial intelligence.
• Don’t be afraid to consider radical options. 

You can make all the right strategic choices but lose out if you don’t exercise judgment in how and by whom those choices will be executed. A leader with good judgment anticipates risks after a course has been determined and knows by whom those risks are best managed.

When assessing a proposal:

• ensure that the experience of the people recommending the investment closely matches its context.
• Engage in “premortem” discussions, where participants try to surface what might cause a proposal to fail.