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Executive Times |
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2008 Book Reviews |
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Judgment:
How Winning Leaders Make Great Calls by Noel M. Tichy and Warren Bennis |
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Rating: |
**** |
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(Highly Recommended) |
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Click
on title or picture to buy from amazon.com |
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Framework 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: THE THREE JUDGMENT DOMAINS: PEOPLE, STRATEGY,
AND CRISIS 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 URL for this review: http://www.hopkinsandcompany.com/Books/Judgment Tichy.htm For Reprint Permission, Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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