November 11, 2013
When developing leaders, I spend a lot of time trying to convince people to take appropriate risks, think bigger and live out purposeful, extraordinary lives. We talk often about missed opportunities and shadows that need to be jumped. But what about those who don’t struggle with taking chances. Is it possible there is a whole strain of folk out there who are just a bit overconfident? And where can that take you?
Well, it turns out that being overly confident isn’t always the best thing in the world. In fact, it can lead to disaster. According to Chip and Dan Heath (2013) having too much “hubris” (that kind of exaggerated self-confidence that led the Greek mythological character Icarus, to fly too close to the sun) is alive and well in the world. You can find it in overly confident CEO’s, political leaders, non-profit organization leaders and even the leaders of families.
In a study back in 1997, business school professors Mathew Hayward and Donald Hambrick, discovered that CEO’s of companies often overpay for new acquisitions (to the tune of a 41% increase over market-value) because of a sense of self-importance. And this becomes even more likely if that corporate leader has received positive media attention and has experienced strong corporate performance in the past. And most of the time it does NOT work out well for them. So, why does this phenomenon keep happening? It’s the curse of thinking you’re better than you are. Confidence gone awry.
How can you protect yourself from the blind spot of overconfidence? Protection begins from understanding what causes it. Here are two suggestions as to why some leaders become too sure of too much.
- The insulation of your companions. Does everyone in your circle already agree with you? Have you created an environment where all of your decision-making goes through the same cycle with no one raising concerns or objections? If you’re ever in a meeting where everyone agrees with you, perhaps you need new people in that meeting – people who will either punch holes in your ideas or provide an alternative that is worth considering. If you’ve ever wondered how so many people surrounding President Obama thought that Obamacare would be a doable idea, you’ve seen the result of the “insulation of your companions.” (Health care is always a good idea – “doable” health care for a county of 300+ million is going to be a little trickier.)
- The insulation of your brain. Even if you’re not surrounded by “yes men” and you’re not in a position to make “board-level” or “nation-altering” decisions, you still have to contend with your own mind – your own less-than-trustworthy brain. It turns out that our brains are not the objective investigators you’d hope they’d be. Our brains tend to protect what we already think – that which we already believe. It’s called “confirmation bias.” (Lickerman, 2013) When searching for information, we are all more likely to search for evidence that supports the already-held belief. For example, if you like James Blunt’s new album, (and who doesn’t?? 🙂 ) you are likely to read more good reviews than negative reviews of the album. If you already have a bias against Syrian President Assad – and think he gassed his people, then regardless as to any other evidence, you will find and read more reports that agree with you. If you, on the other hand, already have a bent that Syrian rebel fighters are all radical jihadists, then you will gravitate towards any media reports that support the position that the rebels were responsible for the chemical attack back in October. And according to experts, you are more than twice as likely to seek out information that supports what you already believe (whether it be media, research or just those around you who agree with you), than you are to lean towards information that disagrees with your held beliefs. (Heath and Heath, 2013)
So, how does one get over himself? How do you become more objective and less hubris-driven? You’ve got to break free of the habit of insulation and self-protection if you ever want to see the world, and your decisions in a more objective fashion. And it takes conscious effort – because the natural bent of most people is to either protect what we already believe or to hide in groups of like-minded people. Or both.
- Seek the alternative. Whatever the case – whether it’s a business decision, organizational decision, political belief or life decision, actively pursue the idea of the “other.” What are other possibilities. What are other thoughts? What are other ways issues can be considered? What information have you not considered? Over time, this will become our default system of dealing with information and decisions. It takes purposeful practice.
- Put people around you who will play the “devil’s advocate.” I’m not talking about negative people – I’ve worked with this kind before. Some people just want to be negative for the sake of negativity. I’m talking about those people who will ask insightful and wise questions. Those who will challenge your ideas and ask, “but what if…” I’m talking about people who are problem-solvers, not just problem-recognizers.
- Choose listening over being right. Sometimes the smartest people do not talk – they listen. They listen with the intent to hear, to learn, to consider and to find wisdom. And they listen with the intent to learn something – not just to fish for support.
Confidence is a good thing – you just want to be sure you can survive it. As Larry Kersten says, “Before you attempt to beat the odds, be sure you could survive the odds beating you.”
Sources:
- Hayward and Hambrick, (1997) “Explaining the Premiums Paid for Large Acquisitions: Evidence of CEO Hubris” http://www.jstor.org/discover/10.2307/2393810?uid=3739920&uid=2129&uid=2&uid=70&uid=4&uid=3739256&sid=21102924816973
- Heath and Heath (2013) Decisive: How to Make Better Choices in Life and Work. New York: Crown Business.
- Lickerman, Alex, M.D. (2013) “How to Ensure You’re (Almost) Always Right” http://www.psychologytoday.com/blog/happiness-in-world/201302/how-ensure-youre-almost-always-right
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