Judgment: How Winning Leaders Make Great Calls

Pre: What happens before the leader makes the decision The Call: What the leader does as he or she makes the decision that helps it turn out to be the right one Execution: What the leader must oversee to make sure the call produces the desired results

The optics were not good, nor was her popularity in HP. To make matters worse, HP missed more than half of its earnings targets during her tenure.

The role of the leader is to lead the organization to success, so when the current strategic road isn’t leading toward success, it is his or her job to find a new path. How well a leader makes strategic judgment calls is a function of both (a) his or her own ability to look over the horizon and frame the right question and (b) the people with whom

It’s instructive to look at crisis calls, not only because getting them right is so important, but also because they compress and highlight so many of the important elements of making judgment calls.

In the late 1990s, a group of midlevel students at GE’s Crotonville leadership institute challenged him, saying that the “#1, #2, fix, close, or sell” strategy was hurting the company because executives were gaming the system.

Within each domain, leadership judgments follow a three-phase process: preparation, the call, and execution.

“The ultimate test of management is business performance. Achievement, rather than knowledge, remains, of necessity, both proof and aim.”

And in the mid-1990s he redefined GE from a company that sold products to be a company that delivered services. It still manufactured many kinds of equipment and electrical machinery, but Welch’s new business model was, for example, to provide a hospital with an efficient radiology department, rather than just a good CAT scan or MRI.

Soon after he became CEO of General Electric, Welch had a meeting with Drucker. As they discussed GE’s various businesses, Drucker, Welch recounts, asked him at one point: “If you weren’t already in this business today, would you go into it?” It was a question that crystallized Welch’s thinking and ultimately resulted in his famous “#1, #2, fix, cl