Wisdom in Leadership - A Matter of Judgment
The concept of wisdom has been explored and debated across numerous disciplines for thousands of years. While definitions may vary, wisdom is often characterised by the ability to draw on an intuitive understanding of past experiences and knowledge to help oneself and others find solutions to challenges. This is a unifying theme across psychology, philosophy, and religion.
A commonly held belief is that wisdom comes with age — as if grey hair and wrinkles somehow bestow intuitive powers that transcend rational thinking. While time and experience can indeed inform our decisions and actions, age alone is not a prerequisite. Nor is wisdom a destination to be reached. As Gandhi aptly observed, "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."
The Role of Wisdom in Business
So, where does wisdom fit within the rational world of business?
It is in the realm of judgement that wisdom and leadership intersect. In a practical sense, wisdom underpins judgement—the ability to draw on experience, knowledge, and self-awareness to guide decisions and actions.
Decision-making has always been a cornerstone of leadership. Leaders are tasked with making choices about people, markets, products, processes, and policies. However, today’s leaders face an environment marked by increasing complexity, rapid change, and uncertainty. As a result, they must make more decisions, often under challenging conditions.
In my discussions with executives and leaders, I am continually reminded that the effectiveness of a leader is ultimately defined by the quality and efficacy of their judgements.
What is Judgement?
How does judgement differ from traditional concepts of decision-making? And can good judgement be identified—or even developed?
Traditional decision-making often follows a rational, step-by-step model, such as:
Defining the decision (including criteria, process, and involvement)
Gathering information
Exploring alternatives and risks
Choosing a solution and creating a plan
Checking and refining
Communicating
Implementing, monitoring, adjusting, and learning
In practice, however, managers and executives frequently find it difficult to follow such models. The demands of rationality can be constrained by the realities of leadership. For example, while rational models call for clearly defined objectives before exploring alternatives, leaders often face competing, unclear, or shifting goals. Similarly, time and resource constraints can limit the evaluation of multiple options. Leaders may also encounter new or unfamiliar situations with little precedent to guide them.
The Anatomy of Judgement
Research and experience suggest that judgement is shaped by the interplay of several factors: experience, knowledge, skills, values, and personal tendencies. Together, these elements form "mental models"—frameworks through which individuals interpret and respond to situations. Mental models can range from simple generalisations to complex theories. They are the seeds of what we might call wisdom.
While experience, knowledge, and capability are undoubtedly vital to sound judgement, they are not foolproof. Even the most experienced and capable leaders can make poor decisions.
The Role of Derailers
Recent attention has focused on executive failures and the so-called derailers—personality traits that contribute to poor judgement and decision-making. While experience and skills are critical, strong personal predispositions can significantly distort a leader's judgement. For example, overconfidence, stubbornness, or impulsivity can lead even a seasoned executive astray.
Developing Judgement
Although judgement cannot be "taught" in the traditional sense, it can be developed through deliberate efforts:
Exposure to diverse experiences: Providing individuals with a broad range of real and simulated experiences helps build a portfolio of knowledge and perspective. The case method, for instance, exposes leaders to diverse viewpoints on real-world business problems, challenging biases and assumptions.
Learning decision-making models: Familiarity with both traditional decision-making models and contemporary approaches, such as Daniel Kahneman's groundbreaking work on fast and slow thinking, can sharpen a leader's judgement.
Self-awareness and understanding derailers: Tools like the Hogan Personality Inventories offer valuable insights into both the positive and negative aspects of a leader’s personality. Such instruments help individuals identify tendencies that may influence their decisions, allowing them to mitigate risks and refine their judgement.
Judgement in Leadership
While the lofty ideal of wisdom may not always feature in the boardroom, judgement most certainly does. In an increasingly complex and globalised business environment, organisations must equip leaders to exercise sound judgement. This means taking proactive steps to help them understand and apply the elements that contribute to effective decision-making.
Ultimately, the interplay of knowledge, experience, and self-awareness remains at the heart of wise leadership.
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.