The Danger of Overconfidence

Malcolm Gladwell, author of The Tipping Point, Blink, and Outliers, discussed the danger of overconfidence during Catalyst's second session. Here is what he said:

People who are experts still make mistakes, which led to the current financial crises.

If you have more information, do you get better at making a prediction? A recent research study shows that more information doesn’t really make a difference. However, with more information people’s confidence in their prediction improves.

Too much confidence in a guess is called miscalculation.

Incompetence irritates me, but overconfidence scares me. Incompetent people rarely have the opportunity to make mistakes that greatly affect things. But overconfident leaders and experts have the dangerous ability to create disaster.

In 1863 during the Civil War in Virginia, the Union army was in incredibly poor shape. And President Lincoln was becoming increasingly worried. Fighting Joe Hooker came and happened to know more about Confederate General Lee than anyone. Hooker devised a brilliant battle plan to distribute his army in thirds and surround the Confederates. Lee was significantly outnumbered 2 to 1. Hooker said that even God Almighty couldn’t prevent them from victory. What happened next was the Battle of Chancellorsville. Hooker expected Lee to retreat, became entrenched in his confidence, and did not plan for anything else. The Union army lowered their guard; Lee attacked, and Hooker’s army retreated — suffering one of the worst defeats of the war.

Overconfidence is “the disease of experts.” They think they know more than they actually do. In fact, they make mistakes precisely because they have knowledge. This is what happened on Wall Street and General Hooker at Chancellorsville.

The lesson is this: In times of crisis, we think we need leaders who are bold and confident. This is completely wrong-headed. What we really need are leaders who are humble and willing to listen.

As leaders ourselves, how can we avoid becoming overly confident? Three ways:

1.    Listen to those around us. We cannot afford to create a culture that is not safe for dissent. Our people need to feel the freedom to disagree with us and tell us the truth.

2.    Plan for contingencies. We might be right. We might be wrong. We need to accept this and create a plan A and a plan B. We can’t afford to assume that our plans are infallible.

3.    Enlist the help of our team. When organizations are small, they can be run by a single, entrepreneurial leader. But when the organization gets bigger than about 150 people (according to Gladwell) our leadership has to change. It must become a more collective, collaborative effort.

The good news is that, as leaders, we can learn. We can grow. But above all, we must remain humble. If we don’t, we risk large-scale, public failures that will have a catastrophic, negative impact on the people we are trying to lead.

 

(This article compiled by summaries created Michael Hyatt and Kent Shaffer)

If you missed the Catalyst Conference you can still get all the great content and many more resources with the Catalyst Experience Kit.

2 Comments »

1. Nuggets of gold from Mr. Gladwell. Without a doubt one of the speakers whose talk I found most useful. Thank You Malcolm.

   Comment by Sean Marion - Oct 14, 2009 @ 01:52 PM

2. Truly enjoyed hearing Malcolm in person.  His book Tipping Point has greatly influenced me.  In this message on overconfidence there was great insight.  How often have we asked the question, “How can so many experts be wrong?” The idea that more information doesn’t always lead to more effective decision making is very helpful.

   Comment by Lon Dean - Oct 23, 2009 @ 05:32 PM

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