Executive Times






2008 Book Reviews



Judgment: How Winning Leaders Make Great Calls by Noel M. Tichy and Warren Bennis




(Highly Recommended)




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Leadership experts Noel M. Tichy and Warren Bennis have collaborated on a new book titled, Judgment: How Winning Leaders Make Great Calls. The authors focus on three areas of judgment: people, strategy and crisis, and present an approach on how to address decisions in each area. They describe the approach in detail, provide examples, and include a handbook on putting their methodology to work for you, should you choose to do that after your critical assessment of their methods. Here’s an excerpt, from Chapter 2, “Framework for Leadership Judgment,” pp. 22-24:


These are the three domains that make the most difference to the survival and well-being of any institution. If they are unattended to or if bad calls are made in these domains, it can be fatal to an organization.

1. People Judgment Calls

While misjudgments in any of the three domains have the potential to be fatal, the one with the most potential is people. If leaders don't make smart judgment calls about the people on their teams, or if they manage them poorly, then there is no way they can set a sound direc­tion and strategy for the enterprise, nor can they effectively deal with crises. The first priority is getting the right people on the team, and then setting the strategy and being ready for the inevitable crises.

The selection of Mark Hurd to succeed Carly Fiorina as CEO of Hewlett-Packard made all the difference. Almost without changing Fiorina's strategic portfolio at all or changing her team, he turned her dismal failure into a roaring success. When Fiorina was fired in early 2005, her $19 billion acquisition of Compaq was considered a bad strategic judgment. The company was in disarray. HP's stock price had declined 15 percent during a period when rival Dell's shares had surged a remarkable 90 percent. Morale was terrible.

When Hurd walked in the door two months later, he immedi­ately turned his attention to "rebuilding the foundation," as he put it. Undoing the Compaq merger was not an option. But there was a rising clamor on Wall Street for a strategic shift. Spinning off the company's marginally profitable PC business from its very profitable printer business was one often-discussed scenario. But Hurd judged that after years of turmoil, the people at HP didn't need yet another new vision. What they needed was to buckle down and solve the thorny problems in the existing businesses.

Hurd's philosophy of leadership and his personality couldn't have been more different from Fiorina's. She was a celebrity who viewed her role as being the highly visible poster girl for HP. She talked about her grand vision for the company in an interconnected world and jet­ted around the globe attending conferences and making speeches. But her look-at-me style and failure to deliver results alienated both employees and investors.

Hurd, who had previously been CEO of NCR, was a hands-on operations guy. He was immediately welcomed within HP because he seemed to be the "anti-Carly." Unlike her, he avoided the limelight and focused all of his attention on fixing internal problems and pleas­ing customers. His unflashy style and no-nonsense approach were what allowed him to succeed where Fiorina failed. He laid off an additional fifteen thousand workers, on top of the twenty-six thou­sand that were let go after the Compaq merger. He reached outside the organization to bring in a few key executives and he made cost cutting a top priority. Under another leader, these could have been unpopular moves. But Hurd dug in and went to work alongside his new colleagues. He focused on the fundamentals and delivered on Fiorina's promises where she could not. To be fair to Fiorina, Hurd got the benefit of her strategic judgments, including the company acquisi­tion that finally started paying off.

At Merck, there were several serious failures in the people judg­ment category. One very questionable judgment was the hiring of Ray Gilmartin as CEO. He appears to have delayed and avoided facing up to the problems with the company's Vioxx drug until a rising tide of evidence tying the drug to heart problems forced a multi-billion­dollar recall. There were over 86 million people using Vioxx in eighty countries. In planning for his anticipated retirement, Roy Vagelos, Merck CEO, who preceded Gilmartin as CEO, had begun grooming a successor, and in 1993 had named Richard Markham, chief operat­ing officer, the heir apparent. But just months before Vagelos was to retire, Markham abruptly left for "personal reasons" and the Merck board began a frantic search for a successor.

Driven by the urgent need to replace Vagelos, who was approach­ing the mandatory retirement age, the board made a poor judgment call in Gilmartin. His background and job as CEO of Becton Dick­inson, a much smaller company in the medical technology business, had not prepared him to lead a company of the size and complexity of Merck, nor did he have any experience in big pharma, a vastly differ­ent industry than medical technology.

Mark Hurd also joined Hewlett-Packard from a much smaller com- pany, but NCR's business was much more similar to HP's than Becton Dickinson's was to Merck's. In fact, an HP board member said that the reason Hurd was chosen was that he demonstrated in his interviews that he had a deep understanding of HP and how it made money.

Once Gilmartin arrived, he was unable to build the sort of high-performance team he sorely needed. The 'deck was stacked against him in part because Vagelos, as a longtime Merck insider, a medical doctor, and former head of research at Merck, had been comfortable dealing with the scientific side of the business. Because he had exper­tise of his own, he was less dependent on his scientists and was able to make better judgments about their work. But Ray Gilmartin, who was not a research scientist, had to depend on others. And, as things turned out, he depended on the wrong people. He didn't put together a team that gave him good information and wise counsel.

Carly Fiorina was similarly unprepared to head HP. Her previous career had been as a sales and marketing executive manager at AT&T and then Lucent Technologies, where she rose to group president of Lucent's Global Service Provider business. She lacked the experience to lead a complex, multibusiness, high-tech multinational firm. Both Fiorina and Gilmartin did not exercise good judgment in people and did not put together strong collaborative teams to augment their own competencies.

People calls are often more complex and difficult to get right than other types of calls. They are more likely to be affected by the emo­tional attachments or dislikes of the leader, and they evoke emotional reactions in the people affected by the calls. People calls must be made while the actors in the drama are reacting to and shaping the judgment process as it is under way.

People calls are often viewed as win-lose decisions for various players in the organization, and as such they unleash the most power­ful of political forces in an organization. In order to make good judg­ment calls, a leader must effectively manage these forces.


Reading Judgment is well worth your time and attention.


Steve Hopkins, March 21, 2008



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The recommendation rating for this book appeared

 in the April 2008 issue of Executive Times


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