10x Good Judgment

Good Judgment for Managers - Why it Matters and How to Cultivate It

What is Good Judgment?

Good judgment is the ability to make sound decisions and wise choices, especially in complex or ambiguous situations. It involves weighing multiple factors, considering various perspectives, and balancing risks and opportunities to arrive at a thoughtful and conscientious course of action. It is a critical skill for managers, who are often called upon to make decisions that affect their employees, their teams, and their organizations.

Good judgment is influenced by several factors, including experience, knowledge, critical thinking skills, and self-awareness. The more experience one has in a particular field, the better equipped they will be to make informed decisions related to that field. Knowledge about a particular topic is also crucial, as it allows individuals to have a deeper understanding of the subject matter and make better-informed decisions. Developing critical thinking skills, such as analyzing information and arriving at logical conclusions, is also vital for good judgment. Lastly, self-awareness is an essential aspect of good judgment, as individuals who are aware of their biases can take them into account when making decisions.

Leaders are Right, a Lot!

Amazon's leadership principle "Leaders are right, a lot" emphasizes the importance of making high-quality decisions, stating: "They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs."

For example, a manager might need to decide whether to launch a new product, enter a new market, hire or fire an employee, or allocate resources among competing projects. Each of these decisions involves trade-offs and uncertainty, and requires the manager to exercise good judgment to avoid costly mistakes and/or missed opportunities. In addition, good judgment can help build trust and credibility with colleagues, customers, and partners, as they see that the manager is thoughtful, responsible, and accountable. The higher up you’re in the organization, the more costly (and irreversible) are your decisions, so it’s very important to get them right. 

As a manager, your decisions can have significant financial, operational, and reputational consequences for the organization, and sometimes even for the broader industry or society. For example, a decision to invest in a new technology platform can require significant capital investment and have long-term implications for the company's competitiveness and profitability. Similarly, a decision to enter a new market can require extensive research, planning, and resources, and may have legal and regulatory implications. Another (more timely) example, a decision to lay off employees can have a significant impact on the morale and productivity of the remaining employees, although it may appease wall street, at least temporarily.

Moreover, the higher up you are in the organization, the less reversible your decisions become. While lower-level managers may have more flexibility to adjust or reverse their decisions, senior managers and executives often have to live with the consequences of their decisions for a longer time and with fewer options for correction. Therefore, it is crucial for managers in senior positions to exercise good judgment and make well-informed decisions based on careful analysis, rigorous evaluation, and consideration of the long-term implications.

How to Cultivate Good Judgment

Developing good judgment is not always easy and requires constant practice and self-awareness. There are a number of things you can do to cultivate good judgment, including:

• Seek diverse perspectives: Good judgment requires considering multiple viewpoints and sources of information, rather than relying solely on one's own intuition or experience. Managers can seek out feedback, dissenting opinions, and diverse perspectives from colleagues, experts, customers, and other stakeholders, and use this input to challenge their assumptions, broaden their thinking, and make more informed decisions.

• Build a decision-making framework: Good judgment involves more than just intuition or gut feel; it also requires a structured approach to weighing trade-offs and making choices. Managers can develop a decision-making framework that outlines key criteria, risks, benefits, and contingencies for each decision, and uses this framework to guide their analysis and evaluation.

• Learn from experience: Good judgment is not something that can be learned solely from books or lectures; it also requires learning from experience, including successes and failures. Managers can reflect on past decisions, analyze the outcomes and consequences, identify what worked well and what could have been done differently, and apply these lessons to future situations.

Good Judgment in a High Stakes Situation

When I was working as a Senior Manager at Cisco responsible for Hyperflex Data Protection, I was tasked with navigating a challenging situation with one of our key ecosystem partners. The situation was high stakes, as it involved saving our $100m per year backup business and enabling Secure Boot readiness for 3 letter agencies. The partner was not initially willing to comply with the requirements we had set forth, which put our entire business unit at risk. The reason for their initial hesitation, justifiably from their perspective, was that the startup unit Cisco had acquired had used undocumented APIs for their snapshot solution, which was never officially supported, and there were several technical unknowns that needed to be addressed before they could consider this solution enterprise ready.

To tackle this challenge, I knew I had to think critically and come up with a solution that would benefit our company AND our ecosystem partner in the long run. I analyzed the situation carefully, considered all possible outcomes, and evaluated the risks and rewards associated with each option. After much deliberation, I proposed a solution that would not only save the backup business going to the competitors and enable our Secure Boot readiness but also save our business unit more than $3 million in the process. I presented this solution to our executive team, and after careful consideration, they approved it. Implementing this solution required me to maintain a level head and work under immense pressure to ensure that our interests were prioritized. Through my actions, I demonstrated my ability to make important decisions under pressure and my commitment to the success of our organization.

In the end, I was able to successfully navigate this challenging situation, and our business unit was able to achieve its objectives while saving significant costs. This experience taught me the importance of critical thinking, strategic planning, and effective communication in driving successful outcomes in the corporate world.

In summary, good judgment is essential for success in any organization. Through a personal example I demonstrated navigating a challenging situation at Cisco, the importance of maintaining a level head, working under pressure, and prioritizing the organization's interests in making important decisions. By exercising good judgment, managers can build trust, credibility, and achieve the objectives of their organization.

~10xManager