Wednesday, March 5, 2008

The World Pays Off on Judgment

In 1998, I became general counsel of a start-up company (24/7 Media) in a new industry (Internet advertising). I was right-hand man to CEO Dave Moore, and advised the Board.

 Like all companies caught in the "no rules" wondrous bubble, we made strategic decisions we'd like to have back. But we made good ones as well, especially when our backs were pinned to the wall during the 3 year crash, and we were one of the few survivors from our peer group.

 I used to clunkily explain my role as "when we're facing a difficult situation and Dave asks 'what should we do now,' I'm good at helping him come up with the right answer." And then I had an "Aha !."

I read an essay by Judge Joseph McLaughlin, of the 2nd Circuit Court of Appeals and former Dean of Fordham Law School, in which he wrote that he long ago learned that "the world pays off on judgment - not brilliance, knowledge, and not experience or compassion either, though a fair portion of all of these is essential to the exercise of good judgment."

 In a single, precise word, Judge McLaughlin captured why many brilliant people fail; they have bad judgment. I vowed to use this word to focus my thinking in all future critical situations. This vow was cemented a few days later when I read a WSJ article about the sacking of a Fortune 50 CEO; a board member discussed a situation that the CEO handled very poorly, and said that the Board could forgive a mistake, but what the CEO did showed bad judgment.

Over the remainder of my long tenure at 24/7, most of the blow-ups that I witnessed at other companies could usually be pinned on bad judgment, often at companies run by young CEOs who may have lacked "experience or compassion." Facebook keeps popping up in scandal lately. It has a 23yo CEO whose prescience in a critical decision - whether to accept lucrative offers to sell the company for much less than its current value - is almost overshadowed by some colossally bad decisions that can only be ascribed to bad judgment. Now I read that he has hired a 38yo COO from Google, and plans to hire other senior executives. No doubt all of them will be brimming with brilliance and knowledge. One can only hope these qualities will be supplemented with equal measures of experience and compassion, and that this young CEO will rely on their good judgment to put an end to the parade of poor decisions that has made his job so difficult lately.

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