The World Pays Off on Judgment
In 1998, I became general counsel of an Internet advertising start-up, 24/7 Media. I was right-hand man to CEO David J. Moore, a member of the Executive Team, and advised the Board of Directors.
Like all companies caught up in the wondrous “no rules” Internet bubble, we made some decisions we came to regret. But we also made quite a few good ones, especially when our backs were pinned to the wall during the three-year Internet bust. We were one of the rare survivors from our peer group, and sold the company for a considerable sum in 2007.
When asked to explain my role in the early days, I would clumsily explain, “When we’re facing a difficult situation and Dave asks ‘what should we do now,’ I’m good at helping him find the right answer.”
Then I had an “A-Ha” moment.
In early 1999, I read a memorial tribute in the Fordham Law Review by the late Judge Joseph McLaughlin, then of the Second Circuit Court of Appeals, and former Dean of Fordham Law School. Judge McLaughlin wrote that he long ago learned about the “primacy” of judgment:
“The world pays off on judgment — not brilliance, knowledge, and not experience or compassion either, though a fair portion of all of these is essential to the exercise of good judgment.”
In a single, precise word, Judge McLaughlin captured why many brilliant and charismatic leaders fail: they have bad judgment.
I vowed to use this word — defined as “the ability to make considered decisions or come to sensible conclusions” — to focus my thinking in all future, critical situations.
This vow was cemented a few days later when I read a Wall Street Journal article about the resignation of Douglas Ivester, CEO of Coca Cola, less than two years into his reign. Mr. Ivester had been pressured by the company’s board, not for a single blunder, but rather for a series of missteps that reflected “tone deafness.”
When discussing an incident that for many was the final straw, an insider said that Mr. Ivester had shown bad judgment, which, in the view of most of the board members, was something that could not be easily taught.
In the ensuing years, most of the blow-ups that I have witnessed at companies of all sizes and industries could usually be pinned on bad judgment. These are often companies run by young CEOs who may have lacked “experience or compassion.”
However, a 2014 article in The New York Times DealB%k section discussed how a series of “ordinary decisions” by a skein of more experienced professionals at well-established firms led to “not so ordinary consequences.”
The article discussed the fall of the white-shoe law firm Dewey & LeBeouf, the mishandling of a recall by General Motors, JP Morgan’s failure to get out ahead of disclosures about a colossal trading loss, and the associates of Bernie Madoff who are themselves facing lengthy prison sentences.
The DealB%k article led with a quote from The Nobel Prize winning physicist Richard P. Feynman, who once said,
“The first principle is that you must not fool yourself, and you are the easiest person to fool.”
The article noted that the actions of many of the actors in these unfortunate events “rarely seem to have recognized the path they were going down because they decided to fool themselves.”
So how do we, as leaders, avoid fooling the “easiest person to fool”?
There is but one way to ensure that your critical decision-making reflects good judgment in the particular set of circumstances currently staring you in the face. You must ensure that each critical decision draws upon an ample supply and proper balance of brilliance, knowledge, experience, compassion, perspective, objectivity, imagination, courage, adaptability, grace and other “soft” qualities that are essential to the exercise of good judgment.
No one person is abundantly blessed with all of these qualities. I learned early in my career to lean on others to supply those qualities I lacked in any particular circumstance. I later came to realize that the colleagues I most admired were those even better at “leaning on others” than me.
Often, the “exercise of good judgment” requires consultation with dozens or even hundreds of people. Yet sometimes, a triumvirate of passionate leaders, committed to an effective process, is sufficient.
If you can consistently find the right formula for the equation, then you, too, will be able to boast, “When anyone asks ‘what should we do now,’ I’m good at helping him find the right answer.”
More succinctly, you’ll be the rare leader who can say, “I exercise good judgment.”