To Avoid Colossal Losses, Hone the Art of Judgement

Errors of Judgement Can Cause Horrors

Crash of Life, Careers, Marriages, Families, Friendships, 

Businesses, Projects, Cars, Planes, Missiles, Spaceships

“Judgement!!” exclaimed the cricket commentator, when a fielder stopped the ball just short of the boundary, secured a direct hit and bagged a wicket for his side. In that one word tinged with high excitement, the commentator summarised judgement skills like learning, motivation, understanding, concentration, commitment, attention, experience, choosing options, etc. The acid test of judgement, as this anecdote shows, is in the result.

A keen sense of judgement is the master key to success in all fields. Dr Noel Trichy’s statement  makes clear the singular make-or-break nature of this virtue:

With good judgement, little else matters.

Without it, nothing else matters.

When masters of judgement gain mastery, they become champions, demonstrate sustained high-level performance that turns them into legends, and some, even historical heroes.

Even the Giants are not Immune 

However, as declared by eminent authors Hammond , Keeney and Raiffa in their authoritative treatise “even the best and most experienced managers are not immune to errors of judgement”(emphasis added).

There are many cases of eminent personalities suddenly crashing out due to serious errors of judgement, often not directly connected to their own professional pursuits. With respect to them two legendary giants who had to quit senior positions in the companies they founded come to mind and the incidents are well-documented:

• The CEO of Uber had a heated exchange with one of his drivers. The video of the incident went viral and Travis Kalanick admitted the mistake and openly declared: “This is the first time I have been willing to admit that I need leadership help……” and added a profound apology. Later, he quit as chairman of the company he founded. It is implied that the leadership help meant essentially improvement in judgement skills.

• Steve Jobs, a towering and monumental visionary also, a publication claims, was surprisingly fired from Apple, the company he founded. Once again the reason was not lack of business skills, but according to press reports, it was “abrasive and authoritative approach with people” which can be interpreted as lack of ‘judgement‘ skills. He recreated himself into a great charming leader, returned to Apple and took it to dizzying heights.

Horrors Due to Errors of Judgement

“Oh hell!” might have been the exclamation of those who witnessed a ghastly road accident in which at least 24 vehicles were damaged as the accident led to a 48-vehicle pile-up on the highway. According to a newspaper, report the likely reason was an error of judgement.

According to the National Transportation Safety Board (NTSB), every year, the lives of approximately 1.3 million people are cut short as a result of road accidents. Between 20 and 50 million more people suffer non-fatal injuries, with many incurring a disability as a result of their injury.

Also, there are several plane crashes, including mid-air and collisions on the runway involving a large number of people being dead or injured.

Surely, the drivers of road vehicles and pilots of planes are well trained and experienced. It would appear then that the possible reason for the ghastly accidents is error of judgement and several news reports allude to it.

Losses in the Financial World

The subprime credit crisis of 2008 (the first depression after the ‘30s) created havoc first in the USA and later the world over. The losses were in astronomical figures. Retail investors also suffered. The failure of several banks, and downgrading of AAA-rated bonds to junk status, led to loss of credibility of the financial wizards in the banks, the regulators and rating agencies. All of them were highly educated and experienced. It appears they all suffered from a collective error of judgment.

It was expected that elite brains of that time and successive generations would learn from the errors of judgement and would reform thinking to ensure NO, NEVER AGAIN! But, we have just seen a repeat this year with the failure of three regional banks in the U.S. as well as Credit Suisse.

A report in a U.S. newspaper says “this story has more to do with crypto, huge error in judgment  (emphasis added) by veteran bankers,” quoting Christopher Whalen of Whalen Global Advisors, which specializes in analyzing and consulting on financial institutions. Result was the same with a run on deposits.

According to a Global Insolvency report “the rebound in business insolvencies is picking up speed: Our Global Insolvency Index is set to jump by +21% in 2023 and +4% in 2024. Half of the countries we analysed are likely to exceed their pre-pandemic levels of insolvencies in 2023, and three out of five in 2024.” 

The Reasons/ Remedies for the 

‘Errors of Judgement’ Malady

The trillion dollar question that has attracted the best brains in financial, technological, biological and other fields has not led to any immunity injection.

One conclusion with which most experts agree is summarised in a 1998 (HBR) article: ‘The Hidden Traps in Decision Making’. It states that “sometimes the fault lies not in the decision  making process but rather in the mind of the decision maker. The way the human brain works can sabotage our decisions.” That is summed up in the term ‘heuristics’ which is defined as “mental shortcuts for solving problems in a quick way”. Another possible reason is our biases like anchoring, overconfidence hindsight, confirmation, etc. Some  (unconfirmed} sources also attribute ‘overload’ as possible reason. They claim that “an average person makes an eye-popping 35,000 choices (judgments) per day.” Well, even if the load is 10% of that, it can lead to errors of judgment.

 Incidentally, John C Maxwell’s says, ”Life is a matter of choices and every choice you make makes you”. So be cautious and very careful in making your choices, particularly when deciding on academic courses, jobs, spouses, friends, confidants. These decisions should be made after conscious thought, seeking advice and sharing learnings from others’ experiences. 

A very laconic and simple advice is to be composed and patient and ‘respond - do not react’. Or, as per grandma’s wisdom “count to ten before you act”. The great poet Sahir Ludhianvi’s song in the film ‘Kajal’ has wise lyrics - ”Tora man darpan kahalaye; bhale bure sare karmo ko dekhe aur dikhaye ……man hi devata, man hi ishwar, man se bada na koy” which translated means: “Your mind is a mirror that reflects both good and bad. It watches the flow and reveals all. It is God-like and nothing is greater than it”. So watch your mind i.e. always be mindful and act mindfully. 

It appears simple but most find it to be the toughest task. The great mindfulness guru, Thich Nhat Hanh, was having dinner with a CEO who had completed the former’s course on mindfulness. The guru asked the disciple If he had grasped the essence of the art. The CEO nodded in affirmation. The guru said, “I don’t think so”. The disciple was dumbstruck and asked why? The guru said that even as you are chewing the morsel in your mouth, you are holding the fork and knife mid-air. Let them rest on the plate until you are ready for the next bite.” The disciple was stunned and admitted that he had gone to the course because he was under tremendous pressure and had not really been attentive during the sessions.   

The moral of the story is that one should ensure that s/he is not indulging in ‘self-deception’. There is a very authentic book on this subject by the same title, reviewed on this website (can be found in the archives). Do read it. And also cultivate the virtues listed below: 

           Judicious, Understanding, Dignified, Gracious, Empathetic, Mindful, Equanimous, Noble, Trusting                 

Wizards of the world!!

Spread the Message: Learn & Practise

Mindfulness.

It Is

Wise Olympian wonderful