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The Importance of Intellectual Honesty

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Louis Gerstner - IBM

Louis Gerstner – IBM

Before leaders can assess risks they must be intellectually honest to completely comprehend the reality surrounding their circumstances. A noteworthy illustration of the practice of intellectual honesty is  (IBM), who was appointed to turn around the floundering company. “He spent his first few months visiting all of IBM’s facilities all over the world taking the opportunity to explain to his concerned employees that his intention was to help the company recover, while at the same time preparing them for forthcoming tough decisions. He also spoke to customers, competitors, consultants, and analysts. Gerstner came to several conclusions:

  • Customers wanted to be provided with solutions to their problems not sold hardware.
  • Computer networking had the potential to transform the way people worked and required different hardware and software to that which IBM was producing.
  • IBM’s products were not the best in the market.
  • The existing plans to split the company were inappropriate because the company could gain many advantages through better integrating what it did.
  • Cost cutting was essential and, despite a reduction of 20 per cent in the workforce over the last six years, more employees would have to go.” [1]

Before Gerstner could transform IBM, he had to face a foreboding sense of reality. The five conclusions he arrived at provided a sobering picture of the reality of what IBM was facing. Without being intellectually honest about what he was dealing with, Gerstner would not have been able to succeed to the degree he did at IBM.

John D. Rockefeller (Standard Oil) also exhibited a high degree of intellectual honesty. Rockefeller’s greatest gift… was the ability to keep a clear head. Hope never skewed his calculations. ‘Look ahead,’ he advises. ‘… Be sure that you are not deceiving yourself at any time about actual conditions.’ He notes that when a business begins to fail, most men hate ‘to study the books and face the truth.’[2]

David Packard (Hewlett-Packard) exhibited a similar characteristic. “Even though Packard is… remembered as a gruff, straightforward man who wasn’t afraid to point out what was wrong and suggest improvements. When he returned to HP in the early 1970s after his stint as deputy secretary of defense and found the company on the verge of borrowing $100 million to cover a cash-flow shortage, he immediately met with employees and gave them what came to be known as a ‘Dave Gives ‘Em Hell’ speech. Packard lined up the division managers in front of employees and told them, ‘If they don’t get inventories under control, they’re not going to be your managers for very long.’ Within six months, the company once again had positive cash flow, to the tune of $40 million.” [3]

Jack Welch (General Electric) made the following observations concerning investment opportunities, which are risks, since the outcomes are never known and can be difficult to accurately predict. He noted, “The facts are, not all investment opportunities are created equal. But some leaders can’t face that reality, and so they sprinkle their resources like cheese on a pizza, a little bit everywhere. As a result, promising growth opportunities too often don’t get the outsized infusions of cash and people they need. If they did, someone might get offended during the resource allocation process. Someone, as in the manager of a weak business or the sponsor of a dubious investment proposal.” [4]

Sam Walton (Wal-Mart) incorporated and institutionalized intellectual honesty into his company. He observed, “From the very start we would get all our managers together once a week and critique ourselves – that was really our buying organization, a bunch of store managers getting together early Saturday morning, maybe in Bentonville, or maybe in some motel room somewhere. We would review what we had bought and see how many dollars we had committed to it. We would plan promotions and plan the items we intended to buy. And it worked so well that over the years, as we grew and built the company, it just became part of our culture. I guess that was the forerunner of our Saturday morning meetings (where company managers get together and review what they’ve seen in the stores that week). When we made a bad mistake – whether it was myself or anybody else – we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next day’s work.” [5]


[1]  Johnston Robert, IBM – Creating a Customer-Focused Organization (Warwick Business School, 2007)

[2]  Baida Peter, Rockefeller Remembers (American Heritage Magazine, September/October 1988, Volume 39, Issue 6)

[3]  O’Hanlon Charlene, David Packard: High-Tech Visionary (CRN, November 8, 2000)

[4]  Welch Jack, Bosses Who Get It All Wrong (Business Week, July 23, 2007)

[5]  Sam Walton in His Own Words (Fortune Magazine, June 29, 1992; from: “From Sam Walton: Made in America” by Sam Walton and John Huey)

Excerpt: Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Majorium Business Press, Stevens Point, WI 2011)

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Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2013 Timothy F. Bednarz, All Rights Reserved

What Does Sound Judgment Have to Do With Decision-Making?

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Managers wishing to build trust and rapport with their employees need to establish sound decision making skills that consistently produce fair and ethical judgments and evaluations.

Managers who consistently make fair and sound decisions and judgments will see their effectiveness and credibility increase. Individual employees and customers will learn that they can rely on the manager to make a fair judgment and evaluation despite the fact that it may not be easy or popular.

When subordinates know they can rely on the equity of their manager’s judgments, trust is strengthened. The personal and professional reputation of the manager thus enhanced, employees will rely on their judgment and be eager to work more closely with them.
Managers must exercise sound judgment in all of their decisions. Effective decision-making plays an important role in the development of good judgment skills. Initially, managers may need to deliberately go though a checklist of key points until they become second nature.

Related: The Importance of Intellectual Honesty

Developing good judgment is based upon the manager’s ability to look at all sides of a problem or issue and to weigh all of the options before a final determination is made. Typically good judgments are:

Fact-Based

Facts form the basis of all sound judgments. While perhaps self-evident, it is all too easy to base judgments upon opinions, assumptions and personal biases.

Before a judgment can be made, managers must take the time to firmly establish the truth of the matter and filter out any opinions, assumptions and biases. When at all possible, facts should be fully documented.

Objective

Sound judgment is based upon an objective evaluation of the facts. Managers must be careful to ensure their emotions, assumptions, expectations, opinions and personal biases do not affect their objectivity. Where possible, managers should step outside of the immediate situation to view the facts from the other person’s perspective and gain objective insights into potential solutions.

Related: The Need to Test Opinions Against the Facts

Fair and Balanced

Sound judgment requires that all sides and viewpoints be carefully weighed and considered by managers. One pitfall in sound decision making lies in only considering one side of the issue and thereby limiting objectivity with opinions, assumptions or personal biases. When this occurs, the decision is intentionally slanted toward one side of the issue without fully considering other viewpoints and insights.

When managers are focusing on making ethical judgments, they must consider all sides of the issue and make sure the input they are considering is balanced. When balanced facts and viewpoints are objectively evaluated, the manager is able to arrive at a fair judgment.

Related: Eight Ways Others Evaluate Trust in Leaders

Made When Managers Are Emotionally Stable

Managers must refrain from making determinations and judgments in an emotionally unsettled state of mind. Decisions made when a manager is angry or hostile will be rash and subjective. Before effective and sound judgments can be made, managers must assure that their emotions are in check.

Addressing the Needs of All Parties

Sound judgments and decisions encompass the needs of all individuals involved with and affected by them. The final judgment should be in the best interests of all parties. Even when tough decisions are to be made, the best interests of all involved must be considered. For instance, if a manager must let an employee go due to poor performance, that decision – when based on facts – may be in his or her best interest. The individual may need a wake-up call or just may not have the necessary skills to be successful in their job, in which case it is best they pursue another profession.

Related: Have You Earned Permission to Lead?

Carefully Considering All Options

Sound judgments demand that managers consider all possible options. When a problem or issue is first considered, only one viable option may be apparent; however, effective managers will explore and consider all possible options before a decision is to be made.

Once managers have collected all the facts, viewpoints, insights and options, they need to take the time to thoroughly consider all aspects of the problem or issue before a final judgment is made.

Fully Assessing Risks

Effective managers fully assess all the risks associated with their decisions and judgments. They are not risk-averse, but instead weigh all facts and make their decisions based upon the judgment yielding the lowest risk and biggest payoff.

Excerpt: Ethics and Integrity: Pinpoint Management Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 17.95 USD

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreward Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

Written by Timothy F. Bednarz, Ph.D.

August 16, 2012 at 10:23 am

The Importance of Intellectual Honesty

with 5 comments

Lou Gerstner - IBM

Before leaders can assess risks they must be intellectually honest to completely comprehend the reality surrounding their circumstances. A noteworthy illustration of the practice of intellectual honesty is Lou Gerstner (IBM), who was appointed to turn around the floundering company. “He spent his first few months visiting all of IBM’s facilities all over the world taking the opportunity to explain to his concerned employees that his intention was to help the company recover, while at the same time preparing them for forthcoming tough decisions. He also spoke to customers, competitors, consultants, and analysts. Gerstner came to several conclusions:

  • Customers wanted to be provided with solutions to their problems not sold hardware.
  • Computer networking had the potential to transform the way people worked and required different hardware and software to that which IBM was producing.
  • IBM’s products were not the best in the market.
  • The existing plans to split the company were inappropriate because the company could gain many advantages through better integrating what it did.
  • Cost cutting was essential and, despite a reduction of 20 per cent in the workforce over the last six years, more employees would have to go.” [1]

Before Gerstner could transform IBM, he had to face a foreboding sense of reality. The five conclusions he arrived at provided a sobering picture of the reality of what IBM was facing. Without being intellectually honest about what he was dealing with, Gerstner would not have been able to succeed to the degree he did at IBM.

John D. Rockefeller (Standard Oil) also exhibited a high degree of intellectual honesty. Rockefeller’s greatest gift… was the ability to keep a clear head. Hope never skewed his calculations. ‘Look ahead,’ he advises. ‘… Be sure that you are not deceiving yourself at any time about actual conditions.’ He notes that when a business begins to fail, most men hate ‘to study the books and face the truth.’[2]

David Packard (Hewlett-Packard) exhibited a similar characteristic. “Even though Packard is… remembered as a gruff, straightforward man who wasn’t afraid to point out what was wrong and suggest improvements. When he returned to HP in the early 1970s after his stint as deputy secretary of defense and found the company on the verge of borrowing $100 million to cover a cash-flow shortage, he immediately met with employees and gave them what came to be known as a ‘Dave Gives ‘Em Hell’ speech. Packard lined up the division managers in front of employees and told them, ‘If they don’t get inventories under control, they’re not going to be your managers for very long.’ Within six months, the company once again had positive cash flow, to the tune of $40 million.” [3]

Jack Welch (General Electric) made the following observations concerning investment opportunities, which are risks, since the outcomes are never known and can be difficult to accurately predict. He noted, “The facts are, not all investment opportunities are created equal. But some leaders can’t face that reality, and so they sprinkle their resources like cheese on a pizza, a little bit everywhere. As a result, promising growth opportunities too often don’t get the outsized infusions of cash and people they need. If they did, someone might get offended during the resource allocation process. Someone, as in the manager of a weak business or the sponsor of a dubious investment proposal.” [4]

Sam Walton (Wal-Mart) incorporated and institutionalized intellectual honesty into his company. He observed, “From the very start we would get all our managers together once a week and critique ourselves – that was really our buying organization, a bunch of store managers getting together early Saturday morning, maybe in Bentonville, or maybe in some motel room somewhere. We would review what we had bought and see how many dollars we had committed to it. We would plan promotions and plan the items we intended to buy. And it worked so well that over the years, as we grew and built the company, it just became part of our culture. I guess that was the forerunner of our Saturday morning meetings (where company managers get together and review what they’ve seen in the stores that week). When we made a bad mistake – whether it was myself or anybody else – we talked about it, admitted it, tried to figure out how to correct it, and then moved on to the next day’s work.” [5]

Excerpt: Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Majorium Business Press, 2011)

If you would like to learn more about the intellectual honesty of the great American leaders through their own inspiring words and stories, refer to Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It. It illustrates how great leaders built great companies, and how you can apply the strategies, concepts and techniques that they pioneered to improve your own leadership skills. Click here to learn more.

Copyright © 2011 Timothy F. Bednarz, All Rights Reserved


[1]  Johnston Robert, IBM – Creating a Customer-Focused Organization (Warwick Business School, 2007)

[2]  Baida Peter, Rockefeller Remembers (American Heritage Magazine, September/October 1988, Volume 39, Issue 6)

[3]  O’Hanlon Charlene, David Packard: High-Tech Visionary (CRN, November 8, 2000)

[4]  Welch Jack, Bosses Who Get It All Wrong (Business Week, July 23, 2007)

[5]  Sam Walton in His Own Words (Fortune Magazine, June 29, 1992; from: “From Sam Walton: Made in America” by Sam Walton and John Huey)

Written by Timothy F. Bednarz, Ph.D.

November 22, 2011 at 9:33 am

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