.י: וַיֹּאמֶר יִתְרוֹ בָּרוּךְ יְ־הֹוָ־ה אֲשֶׁר הִצִּיל אֶתְכֶם מִיַּד מִצְרַיִם וּמִיַּד פַּרְעֹה אֲשֶׁר הִצִּיל אֶת הָעָם מִתַּחַת יַד מִצְרָיִם :
10. [Thereupon,] Jethro said, “Blessed is the Lord, Who has rescued you from the hands of the Egyptians and from the hand of Pharaoh, Who has rescued the people from beneath the hand of the Egyptians.
יא: עַתָּה יָדַעְתִּי כִּי גָדוֹל יְ־הֹוָ־ה מִכָּל הָאֱ־לֹהִים כִּי בַדָּבָר אֲשֶׁר זָדוּ עֲלֵיהֶם:
11. Now I know that the Lord is greater than all the deities, for with the thing that they plotted, [He came] upon them.” (18:10-11)
What is it that he now knew?
There is a well-known Midrash that Pharaoh had 3 advisers during the episode of the Jews slavery in Egypt – Bilam, Iyov (Job), and Yisro. When Pharaoh sought to annihilate the Jews by drowning the Jewish boys in the river Nile, Bilam supported this and Iyov abstained, whereas Yisro advised against this and subsequently had to flee to Midyan to escape Pharaoh’s clutches.
With regard to our question, (what did Yisro ‘now’ know) I heard a fabulous explanation on a pshat level. What he now knew was Hashem’s system of hashgacha – oversight – the system of midda k’neged mida, measure for measure.
Pharaoh had sought to destroy the Jews by drowning them, and the reverse had happened to him and the entire Egyptian army.
. יא: עַתָּה יָדַעְתִּי כִּי גָדוֹל יְ־הֹוָ־ה מִכָּל הָאֱ־לֹהִים כִּי בַדָּבָר אֲשֶׁר זָדוּ עֲלֵיהֶם
11. Now I know that the Lord is greater than all the deities, for with the thing that they plotted, [He came] upon them.” (18: 11)
So now he saw that Hashem delivers justice, he realized that he was in a bad situation. Although he had fled Pharaoh when it became clear that official Egyptian policy was genocide, what had he done up until that point? The entire enslavement episode occurred whilst he was in Pharaoh’s cabinet government, and what had he advised then? Nothing in the Jews favor, as it was only when he did that he had to flee. So Yisro realized he had erred and required a tikkun, a solution, to achieve teshuva, repentance.
His solution to the bad advice he had given was to offer good advice.
‘13. It came about on the next day that Moses sat down to judge the people, and the people stood before Moses from the morning until the evening.’ (18:13) – after which he offered the solution of having elders judge as well, solving the inefficiency of the judicial system in the state it was in.