Wisdom in Leadership - A Matter of Judgment

The status of wisdom has been explored and debated by various fields over thousands of years.  While definitions may vary, the notion of wisdom across domains of psychology, philosophy and religion is characterised by the ability of individuals to draw on an intuitive understanding of past experiences and knowledge to help them and others find solutions to problems. 

 One of the commonly held views is that wisdom is something we acquire with age.  As if grey hair and wrinkles bring with them powers of intuition that transcend rational thinking.  While time and our portfolio of experience may inform the decisions and actions we take, time alone is not a perquisite.  Nor is wisdom a destination.  As Ghandi once said, “it is unwise to be too sure of one's own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err”.

So what is the place of wisdom in the rational world of business? 

It is in judgment that wisdom and leadership intersect.  In a practical sense our traditional notion of wisdom underpins judgment, the ability to draw on our experience, knowledge and understanding of self to guide and inform our decisions and actions. 

Decision-making has always been fundamental to the role of leadership. Leaders make decisions about people, markets, products, processes and policies. But today’s leaders are required to make more decisions to navigate a business environment characterised by increasing complexity and competition, rapid change and uncertainty.

As I continue to engage in discussions with executives and leaders, I am constantly reminded that the effectiveness of a leader, is ultimately defined by the quality and efficacy of their judgments.

So what is judgment? How is it different to traditional concepts of decision-making? And is it possible to identify people with good judgment and/or develop it?

Traditional decision-making is about applying rational models that typically define a series
of steps:

•         Define decision (including criteria, process, involvement)

•         Gather information

•         Explore alternatives and risks

•         Choose solution and create plan

•         Check and refine

•         Communicate

•         Implement, monitor, adjust and learn

In practice, managers and executives are typically unable to apply the traditional model because of the limitations and problems inherent in the demands of rationality. For example, a rational model recommends the clear articulation of criteria and objectives before exploring alternatives. In reality, executives are often faced with multiple, even competing, unclear objectives. With respect to the generation of alternative solutions, time and costs often limit an executive’s ability to seriously evaluate a range of alternatives. Further managers may be asked to deal with new and unfamiliar situations, often with little precedent.

In considering the anatomy of executive judgment, research and experiences points to the view that judgment is influenced by the interplay of several factors—experience, knowledge, skills, values and personal tendencies.  It is through the interplay of these elements that people create ‘mental models’. The mental models can be simple generalisations or complex theories. They shape how we act and the judgments we make. They are the seeds of what others might call wisdom.

There is no question that great experience, knowledge and capability contribute to better judgments. But why do we still see highly experienced and capable leaders making bad decisions? 

In recent times, and against a backdrop of increased executive failure and deteriorating global economic conditions, considerable attention has been given to the role of judgment and in particular executive ‘derailers’—the attributes of personality that contribute to failure. The link between derailers and judgment is fundamental. While a rich portfolio of experience and skills is critical, an individual’s style and strong predispositions can significantly distort their judgment and decisions.

While judgement can not be ‘learnt’ there are means by which judgment may be developed.  This includes:

• Providing individuals with exposure to a broad range of experiences (real and simulated). The case method is one example of a learning approach designed to accelerate experience through exposure to a diverse range of perspectives on real business cases. It provides a framework for building a portfolio of knowledge and experience while testing and challenging dominant assumptions, biases and approaches.

• Learning and applying more traditional models of decision making and more contemporary models of ‘rapid’ decision making and judgment. For example the ground breaking work of Daniel Kahneman.

• Developing an awareness of one’s own style and potential derailers. There are several instruments available to help understand one’s dominant personal style. At Three Leadership, we find the Hogan Personality Inventories provide a particularly powerful insight in to both the bright side of personality and potential derailers. Tools like the Hogan Personality suite, help leaders to identify tendencies (both positive and negative) that may influence their judgments and actions.

So while the glamorous notion of wisdom may not find its way to the boardroom, judgment will.  As organisations call on leaders to exercise judgment in an increasingly complex and diverse global business environment, proactive steps should be taken to help individuals understand and apply the elements of successful judgment.

If you are interested in finding out more about our approach to judgment and developing the skills and insights of your leaders, please feel free to contact us.