LBS’ Sir Andrew Likierman on making better choices in the age of AI
Professor of Management Practice in Accounting at London Business School and author, Sir Andrew Likierman unpacks the six elements of good judgment
In a time where artificial intelligence is reshaping the modern workplace and decision-making seems increasingly driven by data, judgment — a deeply human quality — remains as crucial as ever.
In his latest book, Judgement at Work: Making Better Choices, Sir Andrew Likierman, professor of Management Practice in Accounting at London Business School (LBS), offers a clear, actionable framework to develop and sharpen this elusive skill.
Drawing on years of leadership experience, from his tenure as dean of LBS to serving on the board of the Bank of England, he explores how sound judgment is built, how it differs from decision-making, and why it is more essential —and teachable — than many realise.
In this interview, Sir Likierman unpacks the six elements of good judgment, the dangers of overconfidence, and why, even in a world powered by AI, the responsibility to judge wisely will always lie with us.
In your latest book, Judgement at Work: Making Better Choices how do you define ‘good judgment’, and what distinguishes it from decision-making or problem-solving?
I have defined judgment as the combination of personal qualities with relevant knowledge and experience to form opinions and take decisions.
Note that judgment is not just about decision-taking. It is involved in forming an opinion or taking a view.
To illustrate other differences between judgment and decision-making:
- Judgment is a personal quality, decision-making is the process of taking action. We say we want people with judgment, not with decision-making. We talk about people exercising judgment but taking decisions.
- Of course, the two are connected — judgment is usually required for decision-making. But not always. Decisions may be based on a computer-generated formula or when we use our instincts.
You outline a six-part framework for developing sound judgment. Could you briefly explain these six elements and how they interrelate?
The six elements in making a judgment are:
- What relevant knowledge and experience do I have?
- How aware am I of what is going on when I make this judgment?
- Who and what do I trust? This applies to both the people and the data sources for my information.
- What do I feel and believe? This includes any biases I have and the emotions when I am making a judgment
- How do I make the choice? For example, have I considered the right options.
- For decisions, how feasible is delivery?
These six elements make up the framework for exercising sound judgment.
What common pitfalls do leaders face in exercising judgment, and how can they avoid them?
The most obvious are when leaders are unaware of their personal biases in making difficult choices. When I interviewed Nobel prize-winner Daniel Kahneman, he pointed to overconfidence in leaders as being the most dangerous bias because it stopped them from listening to others and learning from their mistakes. But good judgment can be a casualty when there are problems with other elements of judgment where there are problems, such as inexperience, lack of awareness in understanding the context of a particular choice, trusting the wrong people or being dominated by emotions.
The great advantage of recognising judgment as a process is that leaders can avoid making mistakes and also can (and must) learn from when things go right and wrong.
How can organisations cultivate an environment that promotes and enhances good judgment among their teams?
By giving clear signals that judgment is important. One way of doing so is to include judgment as a criterion in selecting new employees. Another is having it as a measure of success in annual appraisals. A third is when we review what went right or wrong in a particular choice that we consider the role of judgment and in doing so give a clear message that judgment is important.
Do you think success is a good measure of judgement? How can one measure good judgement?
What we are doing in exercising judgment is stacking the cards in our favour of getting the outcome we want. But while good judgment is important to success, success is not necessarily a sign that there has been good judgment. Success without judgment can come when everyone in an industry or country is doing well — gaining wealth as a result of a general rise in house prices is a good example. Success may also be based on luck — competitors going out of business, the government giving an unexpected subsidy, other currencies moving in our favour.
The opposite applies to failure. For example, failure may be as a result of bad luck (think about starting a business just before Covid). But with failure there is an additional factor that a deliberate decision may have been taken to take a risk which did not come off. Taking a 5 per cent chance, the 5 per cent may happen. In this case we were presumably prepared to accept this chance of failure. Bad judgment is when we don’t understand the risks or fail to take them into account.
However, having acknowledged that judgment is not a magic bullet, the chances of success will be enhanced by good judgment, such as on big decisions or at when the number of good judgments outweigh the number of poor ones.
Finally, we can indeed measure good judgment — it’s whether we have approached the choice we have to make on a systematic basis to give ourselves the best chance of getting that outcome.
What advice would you give to an individual that is facing the aftermath of misjudgement or a poor decision?
The same advice as when anything has gone wrong — after putting it right, learn from your mistakes. As an example, if you have a tendency to do insufficient preparation, spend more time on preparing for your next important task or activity. Or if your misjudgment is the result of inexperience, next time get make sure you get more relevant experience yourself or find someone who has the experience you lack.
The workplace is rapidly changing with the adoption of AI tools and technology. Do you think this impacts the way leaders approach judgement today compared to a decade ago?
Yes. AI has the power to give us new and amazing tools to help us make our judgments. Just think about how Waze has helped us in getting us to our destinations and how ChatGPT provides a wealth of information instantly.
However, we need to be very clear — while AI can help us in our judgments, we cannot outsource judgment to a machine. Humans have to programme AI, train data the data used by it, monitor the data quality that goes into it and interpret the results which it provides.
AI doesn’t have many things that are an essential part of being human, such as consciousness, intentionality, the capacity for abstract thinking, a sense of context, or conscience and ethics. Perhaps most significantly, if judgment is always context-specific, there are limitations on how AI can be programmed if the required outcome cannot be specified.
So while AI will be able to do more and more and as it takes over many tasks now done by humans, judgment is one of the things that will remain the province of the human being.
For someone just starting their career, what’s the one piece of advice from Judgement at Work would you encourage them to focus on to build a strong foundation for decision-making?
Be systematic in using a process to make your judgments when faced with difficult choices.
It will improve your chances of getting what you want. It will also enable you to learn for the future as you learn more about yourself, including your biases (such as a tendency to over optimism or over pessimism) and the role of your feelings and beliefs in making difficult choices.
Reflecting on your tenure as dean of London Business School and director of the Bank of England, how did your understanding of judgment evolve, and how has it influenced your approach to leadership?
My experience in a wide variety of executive and non-executive roles has been very important in demonstrating and then reinforcing how important good judgment is for those in leadership positions. It has also shown me why bad judgment can have such bad results. But most of all my experience has shown me that all of us have the ability to improve our judgment.
In my book I offer a comprehensive guide to how to improve each aspect of judgment and I hope that everyone reading it will find something useful for themselves.
