Even good CEOs can pick the wrong direction

The secret to leadership may not boil down to that vision thing. It may not be some exceptional ability to inspire others, nor the courage to zig when all signs point to zag.

Fresh research by top leadership gurus suggest that if great leaders have something in common, it could be this: a knack for escaping lapses of bad judgment. Or, at least the luck to do so. It may not even require an all-star's batting average in judgment. From Abraham Lincoln, our greatest leaders often have inconsistent judgment but, over long careers, find a way to be on the right side a few times when judgment is critical.

The latest judgment victims are Stanley O'Neal and Charles Prince, CEOs who made good calls to rise to the top of Merrill Lynch mer and Citigroup c. But under their charge, the companies waded deeply into subprime mortgages that cost the companies billions of dollars and cost O'Neal and Prince their jobs. Time Warner's twx new CEO, Jeff Bewkes, won respect in 2000 by opposing then-CEO Gerald Levin's decision to merge Time Warner with AOL, what has since gone down as one of the worst business judgment calls of the decade.

David Novak has been CEO since 1999 of Yum Brands yum, the giant fast-food company that includes KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W. Back in his days as Pepsi's pep marketing chief, he thought he had hit a grand slam. Crystal Pepsi, a cola that looked like 7Up, was his breakout idea. CBS Evening News devoted 140 seconds to it in 1992. Trouble was, the media lapped it up, but consumers didn't, and about the only evidence left that Crystal Pepsi existed is the 1993 Super Bowl commercial on YouTube.

In an interview, Novak chalks up the failure to bad judgment and says he landed back on his feet with a valuable lesson. He says he had rightly determined early in his career that big ideas always produce naysayers who will chirp, "It can't be done." He trained himself to ignore them. His judgment lapse was that sometimes the naysayers have a point. In this case, Pepsi bottlers had agreed with the idea of a clear cola but warned Novak that Crystal Pepsi tasted nothing like Pepsi.

Novak, author of The Education of an Accidental CEO: Lessons Learned from the Trailer Park to the Corner Office, now listens and weighs criticism for merit. Other leaders never made adjustments, or never had the chance, and the battlefields of war and business are strewn with fallen generals who had but one major lapse in judgment.

Authors on judgment

As crucial as judgment is to success, when Noel Tichy, author of a dozen books on leadership, and Warren Bennis, author of more than 30, researched the literature, they found almost nothing about it. The two decided to co-author Judgment: How Winning Leaders Make Great Calls, which goes on sale Thursday.

No previous book has been as "daunting and challenging to write," says Bennis, management professor at the University of Southern California, founder of USC's Leadership Institute and the 82-year-old dean of leadership gurus after the death two years ago of Peter Drucker.

Tichy, professor at the Ross School of Business at the University of Michigan, says they didn't consider Enron-like illegalities and ethical lapses but focused on CEOs who made judgment calls with the companies' best interests at heart.

The ousters at Merrill and Citigroup underscore that "with good judgment, little else matters. Without it, nothing else matters," Tichy says.

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