You Be the Judge

Nearly everyone’s an expert on the qualities of a great leader. Here are some standard descriptions: calm under pressure, gets people to follow no matter what, has vision for the future, is always upbeat and motivating, and finds creative solutions to problems.

And then there are the many theories about what makes a great leader. Some experts say leaders must be charismatic. Others say they must be visionary strategists. Still others say they must be execution-minded managers of the bottom line. But to Noel Tichy and Warren Bennis, two leading business thinkers, great leadership comes down to a single quality: judgment.

“The essence of leadership is judgment,” write Tichy and Bennis in Judgment: How Winning Leaders Make Great Calls (Portfolio, 2007). “In the face of ambiguity, uncertainty, and conflicting demands, often under great time pressure, leaders must make decisions and take effective action to assure the survival and success of their organizations. This is how leaders add value to their organizations. They lead them to success by exercising good judgment, by making smart calls, and ensuring that their decisions are well executed.”

Of all the leadership qualities that have been proposed over the decades, judgment is one that seems particularly appropriate for sales leaders and professionals. As in selling, the only thing that matters when it comes to judgment is results. Good judgment that leads to a bad outcome is a contradiction in terms. As in selling, not all judgments are critical. But the ones that are can make or break a leader and a company. And as in selling, managers can improve their ability to make sound, successful judgments. Leaders who develop their judgment skills and follow a process can raise their odds of success.

There are three “domains” of judgment that are most critical for sales leaders to make and make right. “The three judgments you make are, who is on your team, what mountain do we climb, and what do we do when the inevitable storm hits,” explains Tichy, professor of organizational behavior and human resource management at the University of Michigan’s Ross School of Business. “The more Warren and I got into interviewing and studying judgments made by leaders, the more we realized that people, strategy, and crisis decisions are the most important judgments leaders undertake. If you don’t get people right, you end up getting thrown under the bus. How you make money or succeed in the marketplace is life threatening or life enabling, and if you don’t deal with crises right, you are in trouble.”

PEOPLE FIRST. Sales leaders need to make all three kinds of judgments well, but Tichy maintains that “people judgments” are the most important. These judgments revolve around building your sales team – hiring people, assigning them the right accounts, working with them effectively, and when necessary, firing them.

“When I talk to audiences about the book, I do a very, very unscientific survey,” says Tichy, formerly the head of General Electric’s storied Crotonville Leadership Development Center.

“I tell them to picture the absolute worst and the absolute best judgments they have ever made as leaders. Then I ask them how many of the worst judgments were about people. About 75 percent of the hands in the room go up.”

Bob Knowling, CEO of Telwares, a fast-growing Greenwood Village, Colorado-based provider of procure-to-pay telecom spend management solutions, clearly agrees. “First and foremost, having the right people in the right jobs is mission critical and is paramount, regardless of industry, of sector, of geography,” says Knowling, who earlier in his career led sales and marketing for Indiana Bell and was tapped by Mayor Michael Bloomberg to serve as CEO of the New York City Leadership Academy, an innovative business/government partnership aimed at resolving the city’s chronic shortage of qualified public school principals.

“People judgments” have been top of mind for Knowling recently, because he had to replace Telwares’ newly appointed head of sales and marketing after just two months on the job. “I could not get a sense of the criteria that he was using to determine how long to ride with salespeople who are not producing,” he explains. “It does take new salespeople some time to come up the curve, and that can be a huge drain on an organization, especially if your attrition rate is 25, 30, or God forbid, 50 percent. So you have got to have some real leading indicators and judgment to determine when to pull the cord. The ability to judge whether you’ve got a winner or not is paramount for a sales leader, and I didn’t see it in this guy.”

Knowling explains that his own people judgment was flawed in this case, which involved reassigning executives from an acquired company. “I knew that this call was problematic from the start,” he readily concedes. “He had never been in a sales leadership position before. I told the board that it was a problem and that I planned to coach him for about six to nine months.”

Knowling recovered by acting quickly as soon as he realized the executive was not suited for the job. “We are a little bit hesitant to change people out, because there is a part of every one of us that really wants people to succeed. But Jack Welch said it best when he said the thing that he probably failed at the most was the lack of speed in people judgment even when he had all the data that he needed,” Knowling says. “Now I’ve hired a guy who has to have the ability to understand how every aspect of the sales engine works and is really accountable for ensuring that we’ve got the right people in the field so that we can execute in the market.”

STRATEGY CALLS. The second set of critical judgment calls that sales executives must make are related to strategy. Choosing markets, identifying high-potential segments within them, choosing the best processes for penetrating them, and creating effective plans for specific accounts are all examples of strategy-related judgments that sales leaders must get right.

Knowling faced the biggest sales strategy judgment of all when he was appointed CEO of Covad Communications, a pioneer in the DSL services space, in 1998. “We had probably $600,000 worth of revenue and 35 people,” he recalls. “It was my first time as CEO, and within 30 days I had my first board meeting and I had to tell them that the entire sales model was flawed.” 

Covad was using a direct sales model to sell high-speed Internet access, but the sales cycle was far too long to generate the revenues the start-up desperately needed. Instead, Knowling proposed that the company jettison its small sales force and shift to a wholesale model that would enable Covad to offer DSL to the hundreds of thousands of customers of large telecom companies. The board backed him, and in just a few months, Covad was offering its DSL service through companies such as AT&T, US West, and EarthLink. Within 15 months, revenues had risen from $600,000 to almost $300 million.

One of the most common strategy judgments that sales leaders flub is choosing which prospects to pursue, according to Michael Fritzlo, the founder and managing partner of Hoboken, New Jersey-based TRM Partners LLC, a $10 million telecom consulting company that specializes in the financial services sector. “Often sales leaders spend too much time focusing on the types of accounts they want,” says Fritzlo, who previously rose through the ranks of retail sales management at Sprint, until he headed its entire Northeast region and later served as head of global sales for Global Crossing. “They are thinking about profiles, accounts, the power of the customer’s logo in a PowerPoint presentation, and the sheer size and revenue potential that these big accounts carry.”

Instead, Fritzlo thinks that sales leaders should be building their plans with a great deal more attention to the financial and operational side of the business, as opposed to a pure marketing perspective. This business-first perspective enables sales leaders to reconsider their offerings in light of their revenue and profit potential. When carried through to the identification of prospective customers, it leads directly to a prospect set that can fulfill that potential.

“From a sales leadership perspective, my goal is first and foremost, what are the financial goals of the business and what is the surest way I can achieve those goals. You should sit around the table with your peers – the CFO and COO – and say, ‘OK, where do we really want to be? What do we want to look like? And how much time do we have to get there?’” Fritzlo explains.

CRISIS JUDGMENT. The final set of judgments that make or break sales leaders are crisis responses. These hopefully infrequent problems can range from mistakes to outright malfeasance, and when responded to incorrectly can cost companies goodwill, customer relationships, and in extreme cases, their future.

On the other hand, good judgment in a crisis can rescue a situation. Consider Xerox CEO Anne Mulcahy’s response when Wachovia Corporation, a major customer, announced it would end its relationship with Xerox after 20 years. Another leader might have rushed to salvage the relationship, but Mulcahy, who rose through Xerox’s sales ranks, admitted, “We really weren’t doing a great job in supporting this customer.”

Instead, as she recounted at a 2005 business conference, she wrote a letter to Wachovia’s CEO. “The purpose of the note is to say thank-you,” she wrote. “You have been a great customer, and I hope we have had the opportunity to say thanks often, but now particularly that we know we screwed up. You made a different choice. We respect it.” In addition to taking responsibility for the problems that caused Wachovia to switch vendors, she also offered to serve as a troubleshooter: “We are going to help you transition to that choice because you don’t want to disrupt your business.”

As it turned out, Wachovia’s CEO and his team had been working out how to respond when they lost customers. He circulated Mulcahy’s note and invited her to meet with his team. “You know,” says Mulcahy, “we are starting to do business with this customer, and I don’t think we would have been there unless we had taken the opportunity to thank them for the relationship over time and acknowledge that we screwed up.”

Making a sound judgment in the face of a crisis can be as much an art as a science, but it always requires knowing the facts. Michael Fritzlo learned that lesson early in his career as a sales leader when his sales team wasn’t making its numbers.

“I had four regional vice presidents who had a ton of autonomy in the business,” he says, “and I just couldn’t get the numbers in the door. I automatically assumed it was because everybody was just goofing off, and I was going to tighten the reins. I would say that was one of the worst knee-jerk decisions I have ever made. I dug in and spent three and a half months building metrics and monitoring every single thing that went on – I never saw my wife, working until all hours of the evening.”

Belatedly, Fritzlo realized that the problem had nothing to do with the efforts of his sales force; it was that the company was poorly positioned in the marketplace. “[My response] was just a complete waste of time, and now I was even further behind in my goal,” he recalls. “I also did some collateral damage to my peoples’ faith in me, because they felt like I didn’t trust them.”

Getting the facts is one of the simple secrets behind good judgment. As Bob Knowling says, “One of the things I don’t believe leaders understand very well is how much input and data they should collect to come to a point of view. The ability to ferret the right information and make the right call is critical. Leaders who can do that in a systematic way are the kind of leaders who can vault to the top and help their organizations thrive.”