A contextually informed decision-making process is the essence and core of leadership. Noel Tichy and Warren Bennis contend that “the single most important thing that leaders do is make good judgment calls.” ¹

“With good judgment, little else matters. Without it, nothing else matters.” ²

The decisions we make determine the quality of our lives. When we assume leadership, “the importance and consequences of our judgment calls are magnified exponentially by their increasing impact on the lives of others.” ³

Usually, the most critical decisions are made amidst ambiguity, uncertainty, and conflicting demands, and each “comes down to a go point – that decisive moment when the essential information has been gathered, the pros and cons are weighed, and the time has come to get off the fence,” Michael Useem indicates. Unless the leader does so, the organization will be paralyzed by inertia.

Leaders are defined by – and remembered for – the decisions they make: Harry Truman, for his decision to drop the atomic bombs on Japan to end the Second World War; Richard Nixon, for the Watergate scandal. Under Robert Goizueta, the Coca-Cola brand became the best-known trademark in the world. He introduced New Coke, which was a disaster. Fortunately, he reinstated Coke Classic. Carly Fiorina is remembered for destroying Hewlett Packard’s redoubtable culture and the staggering 58% drop in HP’s stock value during her tenure.

Leaders make critical judgment calls most frequently in crisis situations, strategic directions, and people decisions.

In crisis situations, the urgency of a decision is made acute by stakes in the balance; survival is determined by a judgment call. Commanders on battlefields make quick decisions with life and death results. Bond traders take 485 milliseconds to make a decision that reap a fortune or lose an inheritance.

Leaders make the least optimal decisions under stress. When the mind stops processing in those high-pressured conditions, they resort to default responses learnt in normal situations. Poor preparation and great stress are pernicious when combined. The best time to prepare for a crisis is before the crisis.

Experience enables skills to be honed by trained practice. Experienced firemen who have to make the right call under stress report that they “pay particular attention to their inner voice.”

Intuition is your subconscious offering the benefits of a lifetime of experience. Malcolm Gladwell observes: “In an emergency the mind reaches for resources that have been stored … That is the power of thinking without thinking.” 4

Leaders assume responsibility for the destiny of the organizations they lead by making strategic decisions. Cynthia Montgomery from Harvard Business School asserts that “strategy does not just position a firm in its external landscape; it defines what a firm will be.”

Strategic thinking asks the raison d’etre for our existence and what we want to be in the future; how we add value to our clients or constituents. Strategic decisions can only be made by those with the authority to chart and change directions in the organization.

In the 1990s, Apple was producing high-end computers that nobody wanted. Its share price was at a 10-year low and its market share plunged to 3%. When Steve Jobs returned as CEO, Apple made strategic changes and redefined its vision. The reinvented company changed its name to Apple Inc. in January 2007, and the rest is history.

People decisions are perhaps the most difficult. We usually hire for competence but fire for relational reasons. People decisions take precedence over strategy decisions as good people are hard to find. If there are no committed stakeholders, good strategies will not be implemented. A good team member can rectify what is going wrong in an organization, while a bad one can disrupt the most brilliant strategy.

But making decisions on people is difficult. Economic conditions as well as personal circumstances change. Emotional insecurities or psychological challenges may demand a change of contexts so a person can flourish. Intractable conflicts create hostile environments that drain energy. There is no ideal strategy. Each person is unique and decisions on the future of the individual in the company must be customized.

Today’s decisions are tomorrow’s realities.

The leader has the responsibility to make good decisions today, because that will determine success or failure tomorrow.

<sup>1. Noel M. Tichy & Warren G. Bennis, Judgment: How Winning Leaders Make Great Calls. 2007; NY: Penguin Group. p 4.
2. Tichy & Bennis, p 1.
3. Tichy & Bennis, p 4.
4. Malcolm Gladwell, Blink: The Power of Thinking Without Thinking. 2005: Back Bay Books, Hatchett Book Group.</sup>