Judgment Paper. Game theory

Judgment is the essence of effective leadership. Consistently making judgments is the most critical thing for a leader to do within an organization. Without good leadership, poor judgment arises. Leaders who consistently show poor judgment mostly fail, even with high education or positive skills he or she may have. Noel Tichy and Warren Bennis shows his audiences the definition of judgment and the leadership judgment process and provide real examples of leaders using terrific and also unskillful judgment calls in various situations.

This book breaks into different categories in showing examples of how people make judgment calls through tough times. It is full of compelling stuff that is enriched by a subtle attention to even good decisions sometimes unpredictable aftermath and the need for redo loops. Judgment is a contextually informed decision-making process with three domains; people, strategy and crisis. Great leaders seek and gain self-knowledge, learn to teach their point of view and create those around them into their teachers.

Judgment entails not just wide experience and the right values, but also the ability to acknowledge and correct mistakes to put in place channels of communication that cut through and across hierarchies. A leader’s judgment can make or break the organization. Tichy and Bennis contended that judgment is a three-part process: preparing, making the call, and executing. You first frame the issue that will demand a judgment call so that your team members understand why the decision is important.

Then you make the call in making the decision and explain it thus carrying out your decision while learning and adjusting along the way. Each phase is crucial and each offers redo loops whereas opportunities to correct mistakes. The author makes a strong fact-based case and focuses in information and influences the audiences and teams with the stakeholders that surrounds a great leader during times requiring major judgment calls. A leader is a teacher in which they use their TPOV, teachable point of view, to make others around them become a teacher themselves.

For instance, Jack Welch, CEO of GE Company, is a master teacher that promoted a culture of continuous teaching by other executives in the company. It is important to have a storyline for successful judgments. Leaders need a clear context because any judgment call could lead to different outcomes. To develop a storyline that describes a company’s identity and direction, it consists of three elements: idea, values and energy. The leader plays a key role in developing the storyline for a team or organization and he or she needs to be ready if changes are needed to be made immediately.

Tichy and Bennis gives the most important message of the book that leaders must focus on creating a point of view and align their team and stakeholders around it well in advance of the immediate need for personal, strategic and crisis calls. At some point in our lives, we’ve had to make an important decision with uncertain outcomes and we fill the gaps with our personal judgment. After reading this influential judgment book, I’ve learned to make my decisions by taking different steps to approach the best outcome possible.

Both authors describe the concept of judgment as a contextually informed process of decision making that covers three distinct areas: people, strategy and crisis. Within these areas are preparation, the call and executing. Using this technique will help me apply my knowledge into executing better decision therefore producing good judgment call. Producing great decisions is a more ongoing process than a single action. The authors divided decision making into a three stage process: preparation, call and execution. In using this process, the leaders analyze freely or redo steps as needed.

The more important part is not getting everything right immediately, but moving continually and inexorably in the right direction. People, strategy and crisis are three of the main areas in which leaders need to consistently exercise judgment. These three areas make the most difference to the survival and well-being of any company and it can teach the whole organization to make the right call more often. With all three domains having the potential to be fatal, people is the one with the most capability in doing so. The first priority is having the right people on the team and set the strategy and be ready for an irresistible crisis.

If leaders do not make smart judgment calls about the people on their team or if managed poorly then they will not be able to handle the forthcoming crisis nor can they have strong management strategy team. For example, Merck hired Ray Gilmartin as CEO of the company in replacement of Roy Vagelos due to his retirement. Before Gilmartin was announced as CEO, Vagelos named Richard Markham as the Chief Operating Officer. Since Markham left for personal reasons and Vagelos had to retire, the board quickly found Gilmartin to take over and it was the worst judgment the board made.

Gilmartin was a CEO of Becton Dickinson for a medical technology business and Merck was a pharma company; vastly different industry than medical technology. He was not experienced in this industry nor was he prepared to lead a company of this size. Once Gilmartin stepped up, he was not able to create a team that was in high performance. Due to his inexperience in this industry, he was mostly depended on his workers and turned out he depended on the wrong people. He did not put together a team that gave him reliable information and exceptional guidance.

People calls are often more complex and difficult to get right than other types of calls. Many people have personal judgments between each other and are affected by their emotional or dislikes of leaders. Gilmartin might be a wise man, but because he was not respected as the company’s CEO due to his inexperience in this industry, his workers did not work together to achieve their goals. As a effective leader, he or she must manage his teams correctly and avoid any political forces in an organization. Strategy is the next domain that with bad judgment it could lead to a fatal outcome.

The role of the leader is to lead the organization to success and when the current strategic road is not leading toward success then it is the leader’s job to find a new path. There are two functions that show how well a leader can make strategic judgment calls; first is his or her own ability to look over the horizon and frame the right question and second the people with whom he or she chooses to interact with. For instance, Jack Welch is the CEO of General Electric and he ultimately created his famous “#1, #2, fix, close or sell strategy”.

Welch believed that the only way General Electric was going to succeed was to do business with only the number one or number two in their industries. With Welch watching the company for over twenty years, he was intentionally looking for their markets that were number one and number two that they have missed good opportunities. Since General Electric was too focused in one situation, Welch made all business head redefine their markets and in 1990 he redefined GE from a company and sold products to be a company that delivered services.

Jeff Immelt, Chairman of GE, made judgment calls about the strategy of GE and decided to transform the company into a technology growth company. By executing this strategy, the company was better than ever before. This example shows how Jack Welch’s strategy was a downfall and Jeff Immelt realized by executing his own strategy it could benefit the company and perform growth through the organization. It is a leaders job to find a new path if the current path is not leading towards achievement and success.

It’s obviously important for leaders to make good judgment calls in crisis situations because crises are by definition winning or losing situations. However, making mistakes at these times aren’t actually any more likely to be critical than errors in judgment regarding people and strategy. The big difference is that crisis situations are time pressured and, as a result, any unfortunate consequences brought on by bad calls at these moments often come very quickly. It is helpful to look at crisis call because they compress and highlight so many of the important elements of making judgment calls.

There are three fundamental elements for making good judgment calls under any circumstances in a crises situation. First, there must be open and effective communication among members of the senior team and throughout the ranks. In addition, there must be a good process for gathering and analyzing data. Finally, there must be effective execution. The best case scenario for a situation with good crisis judgment call would be in the case of Johnson & Johnson and their poisoned Tylenol cases. This organizational case of crisis is most taught to business students in universities.

The situation involved poison found in Tylenol cases on store shelves. The CEO at the time, Jin Burke, did a masterful job of pulling the product, assuring all employees and consumers that they were taking quick action to deal with the crisis, and ultimately won the customers back to the product. They were guided by the J&J credo that puts the customer first. If a crisis is not handled well, and good judgment calls are not made, then it can lead to the demise of an institution. In any case, a leader should always be prepared for a crises situation, and be prepared to make the right judgment calls based on the situation.

If a leader is not ready and prepared, then it can lead to disastrous consequences such as shutting down a corporation. Every day we make decisions. Some are important, some are not so important. Our lives are paved by the decisions that we make. I think one of the most important scenarios in making a decision in my life is my future career. During my high school career I was always oblivious to which career path I should take. My career decisions were always influenced by how much money one profession can make over a period of time. At times I would want to be a criminal lawyer, doctor, or even a professional drug dealer.

However, my mind would change constantly and I had no commitment to one occupation. Then one day a friend of mine suddenly suggested the greatest idea I have ever heard. She said to me: “Hey, you are fluent in Chinese and English, why don’t you pursue a profession where you can exercise both of the languages that you speak? ” At that point I suddenly realized how I can put my advantages on my side and use my bi-lingual speaking gift in my future profession. Since my friend’s suggestion, I have looked into several career fields that require speaking English and Chinese.

I was surprised how much the industry or market is in high demand of people who have this bi-lingual speaking ability. I am currently studying Business Administration with about a year left until I graduate. Upon graduation I plan on seeking a job overseas in China or Hong Kong. Since I spent the first half of my child hood in China and the second half in America, I have a very good understanding of both cultures and customs. Along with my bi-lingual speaking ability, I think I am a very good candidate for a job that requires constant trading between China and America.

I want to be the link between the two countries, I would like to connect people from both countries and be a middle man for all sales and transactions that land in my hands. This is my ultimate goal as a career. A Teachable Point of View is an array of the ideas that will help your organization be successful, producing the best results, and how you will encourage and rejuvenate people along the way. Ideas, values, and emotional energy will become your guideposts for making judgments. A leader’s Teachable Point of View and his or her storyline are always connected.

It is easy to think of a leader’s storylines to be an animation of their Teachable Points of View, but in reality the action goes both ways. Sometimes leaders have TPOVs that they develop into storylines, and sometimes they have stories from which they draw foundational TPOVs. My ideas about how to make the organization successful in the marketplace would be to have a strong character based company, who is all about keeping the clients satisfied. I have many ideas for my future organization. Some of the values that I would go by are to never lose sight of your culture.

I want to emphasize on the current Asian American culture in America. This culture is so much different than the traditional Asian culture. Mixed with modern western slickness, this current culture is bound to succeed in the future. We have the traditional discipline and customs, mixing the western slickness, together we will dominate. All my employees should follow a set of values, which is to have leadership, integrity, quality, customer satisfaction, a diverse and involved team, good corporate citizenship, and enhancing shareholder value.

The emotional energy that I would project in order to keep my employees motivated is to never give up and keep a friendly but professional working environment. I would hire people based on their motivation to work, not because they were forced to do it but because they want to do it. I think it is important for people to enjoy their work because people will like doing what they enjoy doing, but not doing what they are forced to do. I do not want my employees to feel miserable when working. I want them to be happy working at my place. Judgment is made up of experience and knowledge.

Not at all times that leaders make great calls, every leader do make some bad judgments; however, great leaders learn from these and don’t repeat them. They manage the judgment process so that outcomes are successful while people are involved and developed along the way. Doing this requires the leader to have knowledge that spans beyond a “just the facts” analytical capability. It requires deeper knowledge in the areas of self, social network, organizational, and contextual. Self-knowledge is the awareness of one’s personal values, goals, and aspirations.

It also includes the ability to create a mental storyline for how judgments will play out and the results they lead to. Jeff Immelt explains self-knowledge as an intense journey into yourself and that you are always looking for ways of doing it better, willing to break it and make it better. Self-knowledge resulting from reflection is a vital ingredient in good judgment. However, we all have a limited ability to perceive ourselves. While only the individual can know his or her innermost thoughts and secrets, the mind is also capable of deluding conscious self-perception.

We create images of ourselves as we would like to be, not as others experience us. Feedback from others helps us to balance our self-assessment. My current position in self-knowledge is very concrete. I am aware of my personal values, goals, and aspirations. I have chosen my desired career path and plan on attaining it after I graduate from college. I do not consider my self-awareness as conceited; I consider my self-awareness very confident. I plan on being a part of the trading industry where constant traveling overseas is required. I know myself the best and I do think that I am capable of making a good living.

My strategy for attaining that goal is to gain all the connections I can and network to make myself more noticeable, which brings us to our next type of knowledge. Even though this is the second knowledge, but I think this is one of the most important knowledge. This type of knowledge is social network knowledge, which is the understanding of the personalities, skills, and judgment. Virtually every leader relies on a group of trusted advisors. For most leaders, their team is the group with which they spend the most time. When there are difficult judgments to be made, they convene their team to debate and deliberate.

In today’s world it is a given that the people on a team need to be business savvy, technically competent leaders. Every role on a team should have a job description, and there should be core requirements that set minimum expectations for someone in a leadership role. Organizations today are littered with technically competent people who possess poor judgment. There should be no “neutral” ratings in one’s assessment. If someone is neutral, he or she has failed to impact the judgment process. There is a tremendous opportunity cost to relying on someone who is not trusted or incapable of offering good advice as you make judgment calls.

Once you have evaluated the judgment impact of each individual team member, it is important to look at what each person brings to the team. If a team has been well formulated, there are diverse skills, perspectives, and relationships that can help the leader as they prepare to make a judgment call. The current position in my social network is still building. I am still trying to network my way out of the circle of friends and build a team that can help me in the future. Organizational knowledge is the third knowledge. This knowledge is defined as knowing how people in the organization will respond, adapt, and execute.

This also includes personal networks or mechanisms for learning from leaders at all levels in the organization. Good leaders word hard to continuously enhance the team, organizational, and stakeholder capacity at all levels to make good judgment calls. My current position in organizational knowledge is not strong because I am not a part of the work force. However, my desired position in organizational knowledge would be to understand and know how people in the organization respond, adapt, and execute in situations. I would like to implement all the things I have learned in my previous employments and apply them to my organization.

I would like to keep my company very organized and easy to work at. The last type of knowledge is contextual knowledge. This is also known as stakeholder knowledge. This is the understanding based on relationships and interactions with stakeholders such as customers, suppliers, government, investors, competitors, or interest groups that may impact the outcome of a judgment. This entails anticipating not only how they will respond directly to a judgment but how they will interact with one another throughout the judgment process.

All of a leader’s judgments happen in the context of the stakeholders who surround the individual or organization. Failure to anticipate how a key stakeholder will react can threaten the success of any strategy or people judgment and force a leader into crisis mode. However, leaders can also “proactively work with stakeholders to build relationships that provide new knowledge and assist in mobilizing action” (Judgment, pg. 359). The current position of my contextual knowledge is irrelevant in my situation because I do not have any stakeholders to impress.

However, my desired position in this type of knowledge is to be able to satisfy all my stakeholders and build solid relationships with them. That way I would have better judgment calls in the future based on the situation. My strategy for attainment of this goal is to first establish a solid foundation with all of my stakeholders. Initially, I would talk with my investors and discuss the outcomes of the company in order to satisfy them. I would need to get to know my clients and fulfill any of their needs. In addition, I would need to follow the rules in order to prevent any crisis with the government.

Finally, I would have to deal with competition coming from the other talent agencies. In the future, I will have to make many judgment calls, and knowing the facts will allow me to make good calls. In Noel M. Tichy and Warren G. Bennis’ novel Judgment: How Winning Leaders Make Great Calls, there were many strong assertions that the leader’s most important role is good judgment calls in three domains—people, strategy, and crisis. What makes a leader great is the high percentage of good judgment calls; they are good only if the execution is successful.

The second most important role we play is to develop other leaders who can make good judgment calls. This book explains judgment calls, leadership, and decision making within an organization. It identifies four types of knowledge which include self-knowledge—personal values and goals; social network knowledge—regarding those who surround you daily; organizational knowledge—people at all levels; and contextual knowledge—the myriad other stakeholders (customers, supplies, government, stockholders, competitors, and interest groups).

Theodore M. Hesburgh says that his “basic principle is that you don’t make decisions because they are easy; you don’t make them because they are cheap; you don’t make them because they are popular; you make them because they are right,” and I believe that one should make a judgment call not because it’s what they think is right, but based on the fact that it is the right thing to do.