What is Good Judgment…Really?


Good judgment isn’t about being smart. It’s not even about making good decisions. The essence of good judgment is about learning from past mistakes. It’s about applying feedback to the next opportunity so as not to needlessly repeat blunders or continue to pursue a course that just isn’t panning out. It’s about remaining open to reviewing the landscape, and understanding that unexpected outcomes are a real and likely occurrence. Even though around half of our decisions will lead to unintended consequences, that’s not to say we’re only as good as chance in making them. That would mean we could just flip a coin and hope for success. Rather, if we can all accept that each and every one of us brings our own inherent biases to a situation, we can raise our strategic self-awareness to better monitor shifting parameters and readjust accordingly. Judgment, therefore, is less about getting it right, and more about the personal and cognitive characteristics that enable us to recalibrate so as to continuously improve.

Below are three examples of well-known business leaders whose good judgment led to their success.

Alibaba: The story of “1001 Mistakes”

In the early 2000s, Jack Ma, founder of Chinese e-commerce firm Alibaba, decided to relocate the domestic headquarters from Hangzhou to Shanghai, the so-called business center of China, and to move the global base to Silicon Valley. It turned out that the environment was not right for the firm. The headquarters in the U.S. took a hit when the dot-com bubble exploded, while the Shanghai office faced the reality of difficulty reaching small manufacturing companies interested in going global (the backbone of their business at the time, of which there were few in Shanghai). The strategy caused distress and dismay to its number one priority, the customers.

“We expanded too fast,” Ma said in an Inc. interview. “By 2002, we had only enough cash to survive for 18 months. So we developed a product for China exporters to meet U.S. buyers online. This model saved us.”

With constant refocusing on the customer, and improving each year, Alibaba has become one of the most valuable tech companies in the world after raising $25 billion from its 2014 U.S. IPO. As Ma puts it, Alibaba is the story of the successful firm built on “1,001 mistakes.”

Disney: Why have one, when you can have two for twice the price?

In Married to the Mouse: Walt Disney World and Orlando, Richard E. Foglesong explains a scene between Disney brothers Walt (the creative brother) and Roy (the business-oriented brother). At one meeting, there was a large parcel of land in Orlando [Florida] available for about $100 per acre. Walt said, “Buy it!” Roy asked, “But Walt, we already own 12,000 acres. Do we have the money?” Walt replied, “Roy, how would you like to own 7,000 acres around Disneyland [California] right now [if you had the chance]?” to which Roy immediately responded, “Buy it!” Despite the stretch of resources, the business-oriented Roy Disney understood the value of property. They learned their lesson in California with Disneyland. What if they had purchased more? They could have expanded and avoided the tacky sets of shops and stores that sprung up around Disneyland. It only made sense to get as much land as possible so that Disney could have room to grow his dreams and insulate his utopian vision.

Virgin Wines: So it shall be written…

Rowan Gormley previously worked with Richard Branson at Virgin for many years and set up Virgin Wines.

“The lowest point in my career was when I refused to acknowledge my mistakes and believed my own publicity,” he said. “The data was telling us where we were going wrong at Virgin Wines but we kept reading how brilliant we were in the press. I was in denial. It’s amazing how a group of highly intelligent people can get things so categorically wrong. What looks good on a Powerpoint presentation just didn’t do it for the customer. Once we accepted what was wrong, we stripped the business down and rebuilt it and then it really took off.”