Gerald Shields, CIO of Aflac, the $14 billion disability insurance company, believes in the power of continuous learning for his IT directors and managers. In fact, his lunch hour book club doesn't read books about IT, but about leadership. His book list often includes the works of Noel M. Tichy, a professor at the University of Michigan Business School, and director of the School's Global Leadership Development Center. Both BusinessWeek and Business 2.0 have rated Tichy as one of the Top 10 Management Gurus in the country.

As the former head of General Electric's Crotonville Leadership Development Center, Tichy packs his books, such as  The Leadership Engine and The Cycle of Leadership, with plenty of management insight from General Electric. He also co-wrote the best seller, Control Your Destiny or Someone Else Will. Recently, enterpriseleadership.org sat down with Professor Tichy to talk about his recent book, Judgment: How Winning Leaders Make Great Calls. Here's what he had to say:

EL: What judgment challenge does a functional leader like a CIO  have?

NMT: Functional leaders, such as CIOs and CFOs, have a dual role -- a lead role and a supporting role.  They run an organization. CIOs run IT. They have to make judgments about people, strategy, and crisis. They also have to support the line organization, which has to make better judgments.  You have to be conscious about what makes good judgment.

EL:  When should someone begin to go on the journey of  self-understanding?

NMT: In my ideal world, it ought to start as people are growing up. Immelt's intense journey began when he was starting to run the major appliances business unit at GE in the late 1980s.

Good leadership requires a good self-understanding. The good leaders, such as A. G. Lafley, CEO of Proctor & Gamble, are reflective. They're actors who can also reflect. Welch had an amazing ability to move fast and to make good decisions. He'd also have down time where he'd write and he'd reflect. A lot of leaders act and don't reflect. If you don't have some of that self-reflect time, you'll have a hard time making good judgments.

EL: Why did Carly Fiorina, the  former CEO of Hewlett-Packard, have trouble making good  judgments?

NMT: Carly Fiorina's problem was her background.  She never ran a true profit and loss business.  This experience requires you have to make tradeoffs in marketing, sales, and manufacturing. Lucent flew high before the dot.com bust. She sold switches to executives at eight companies, such as Ameritech and Verizon. These executives moved millions and millions of dollars of switch gear. That's not running anything.

If you wanted to develop her as a leader, then you'd put her in a true P&L situation. You don't go to the major leagues without first playing in the minor leagues. She was at risk the minute she walked into HP. She could argue that Mark Hurd has gotten credit for all of the great things she did.
There's some truth to this. She did accomplish some significant things. The Compaq acquisition is paying off. Mark Hurd had plenty of minor experience at NCR, which is not as large as HP. He, however, had true P&L experiences in his career. He really understood operationally how to run an organization that had manufacturing, engineering, and marketing. He knew how to make tradeoffs.

EL: When you ran the leadership development program for HP, did you see Carly Fiorina make frequent appearances as Jack Welch did at Crotonville?

NMT: I saw a good example of her failing to connect with employees, especially future leaders. When she first joined HP, I was running HP's leadership development program for upper middle managers. About 30 HP employees at the time would attend a four-day workshop at the University of Michigan, and then return for a three-day workshop after 100 days. At first, the women said they were happy to have a female CEO. At the end of three months, these same women gave Fiorina low marks, saying she didn't relate well to people. They said she was arrogant and standoffish. She never came to the program once. Jack Welch or Jeff Immelt visited Crotonville regularly. You couldn't keep then away.

EL:  Can you briefly describe what you mean when you say a good leader needs a  teachable point of view?

NMT: In the Leadership Engine book I laid out the four components of a teachable point of view. First, create business ideas that will drive shareholder value. Second, determine the values you want people to live by in the organization. Third, learn to energize people so they buy in and support the values and business ideas. Fourth, have the courage to make yes/no decisions. If you don't have a set of values people can model their behavior by, then you'll create more Enron's, Imclone's, and Tyco's. I've been talking about this for the past 15 years. It's just part of being a good leader. Every so often, we have to remind people about it. A good organization has always had a strong set of values.

EL: Several years ago, Fortune magazine did an article describing how a new management paradigm is replacing the venerable Jack Welch style. What's your assessment of this?

NMT: I know Jack Welch very well because I worked closely with him. He used to visit GE Crotonville once a week. All of my books have chapters filled with tremendous insight from GE. Many people who write about Jack Welch have never met him or even worked at GE.

Welch was a very collaborative team builder beginning when he was a hockey player in Salem, Massachusetts. He built an incredible team for 17 years in plastics. He knew how to build gangs and groups of people. He introduced workout, which took layers out of the organization. 

He developed more leaders than any other CEO in the history of business. Jim McNerney now runs Boeing, while David Cody runs Honeywell. Robert Nardelli, who messed up as CEO of Home Depot, now runs Chrysler. About 30 leaders developed by Jack Welch run Fortune 500 companies. That kind of record of accomplishment doesn't happen by beating up on people. He was an incredible coach. He spent 30 days a year on succession planning. He was tough on business matters, which explains why GE succeeded and Westinghouse didn't.

EL: When it comes to making good judgments, do many  leaders put a lot of weight on analytics?

NMT: I don't know to what degree companies today rely on analytics. You have to look at the history of analytics, which goes back to GE in the late 1960s. GE developed the PIMS database. Things like, strategic planning and systems thinking, originated at GE. When I started as a graduate school business professor in 1972, we immersed ourselves in analytics. Over the years, we learned that business schools had oversold analytics as being able to lead to the answer. Analytics comprise one part of the puzzle. For example, before making a patient diagnosis, a physician compiles analytics from all the tests the patient took. At the end of the day, that physician has to make a judgment.

Some organizations, however, do rely heavily on analytics to provide answers. On the other hand, you shouldn't just wing it. Good judgment requires two things:  as many analytics as you need to frame your decision, and the courage to take a leap of faith.

EL: What was your most interesting assignment at GE's  Crotonville?

NMT: Developing the next generation of leaders turned out to be my most interesting assignment at GE. In 1986, Jack Welch said because the world had changed and because the business had changed, the way we developed leaders in the past no longer applied. We had to look at the leadership pipeline from 22-year-old campus hires to future CEOs. Eighty percent of development happens on the job and in life experiences. Crotonville, however, will never go out of business.

For example, how do you help a 22-year-old bench engineer develop an awareness of his or her own values, the values of GE, the work planning tools, and a combination of both the soft people skills, as well as the hard business issues? What happens when that same person becomes a 28-year old manager of seven other bench engineers? He or she has to learn, not only what their values are, but also how to teach those values to other people. They need to learn how to manage a team, and how to do appraisals.

When Jim McNerney ran GE's aircraft engine business, he oversaw 40,000 employees. He had the challenge of teaching those people the appropriate company values. If you're in a similar situation, you need to say: How do I set a strategy in a business and in an industry? How do I deal with the types of conflicts that come up in a unionized shop? At every level, you start thinking through. You then say what are the developmental experiences you need to give people? What formal experiences can accelerate what you actually can imprint on people?

EL: What advice do give your consulting clients about  succession planning?

NMT: Whenever I work with clients, I tell them to forget about what path they used to take to the CEO post. They, instead, need to examine their business and their environment. From this, they can determine how they can develop people.

EL: How well do Fortune  1000 companies handle succession planning for C-level  leadership?

NMT: Terrible! Whenever you need to go outside for a CEO, you've failed. HP went outside twice. 3M went outside twice and failed. Merck failed. Home Depot is on its second outsider. Citigroup was lucky to have someone inside. Succession planning ranks at the top on a CEO's and the board's list of responsibilities.  It should be number one. Most major companies don't have many prospective candidates in the succession pipeline. We mention this in Judgment.

There are some wonderful exceptions to this dilemma. Indra Nooyi, CEO of PepsiCo, came from in house.  A.G. Lafley at P&G came from in house. GE can produce a surplus of leaders.  The minorities of companies that have done it successfully had succession planning in their DNA from the start.

Author: Elizabeth M. Ferrarini - She is a technology writer  from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.