Nuala Walsh is CEO MindEquity, a Behavioral Scientist and TEDx speaker, holding Advisory Board roles in business, sports & nonprofit firms.
Why are so many intelligent, well-meaning individuals uncompromising in their positions and perspectives? Whether in mergers or trading decisions, leaders consistently repeat the same mistakes, often rooted in narcissism and overconfidence.
A 2018 study showed over 65% of Americans think they're above average intelligence. It may even be higher in organizations. Overconfidence isn’t just a career concern; it can be a commercial risk or societal threat. The more senior the leader, the less likely they are to accept contrasting opinions.
As a behavioral scientist with thirty years in business, I've found the most brilliant leaders understand that humility brings businesses further faster, with less fallout. But they’re rare. I’ve written how the biggest CEO failures can teach executives lessons in self-regulation of this unconscious bias.
An Innate Leadership Flaw?
Successful leaders and entrepreneurs are innately confident. It’s an essential prerequisite for hiring. But not to be confused with confidence, overconfidence is the unjustified belief in your ideas' supremacy, validity and accuracy, usually without foundation.
Many examples illustrate how leaders ignore the human at the end of the balance sheet. Former CEO of crypto exchange FTX, Sam Bankman-Fried, currently faces eight criminal charges by the Department of Justice for misappropriating $8 billion in customer funds from his trading company, Almeda. Elizabeth Holmes of Theranos was sentenced to 11.25 years for wire fraud. P&O Ferries CEO was castigated for firing 800 people over Zoom.
Typically, sycophants are complicit in perpetuating this curse of overconfidence. In my experience with clients, I find motivations for not challenging leadership judgment vary from fear of repercussions to unwillingness to forgo material benefits.
Conquering The Overconfidence Curse
No leader wants to be labeled "egotistic" or "narcissistic" even when they exhibit these traits. I’ve previously shared how to spot narcissism as an essential first step. I find that the most self-aware leaders tend to embrace three simple strategies to overcome this leadership curse.
1. Be humble.
It seems that the more successful we are, the more we think we’re right. The endowment effect suggests we overvalue items, ideas and initiatives we own. For example, if you assemble a cabinet from IKEA, you probably value it more than one you buy. There’s also more pressure than ever to be seen as bright. Clients almost expect genius status from highly-paid executives. For example, investor Warren Buffet was described as the "Oracle of Obama," and Apple investor Steve Jobs as a "genius." Idolatrous labels like these may reinforce self-delusion. Leaders can adopt humility toward employees and customers in several ways.
• Practice self-reflection: Remember that your customers put you into your job. Reflect on your own beliefs and assumptions, considering how they shape rigidity of perceptions.
• Encourage others to share views: Engage in dialogue to garner maverick views. Some executives try arguing with themselves to broaden the debate and explore every possible scenario.
• Use decision-making frameworks: Structured frameworks show the flaws in your arguments and help you evaluate potential outcomes more objectively and realistically.
2. Be open.
One of the best ways to counteract ego-centric bias is to consider alternative views. However, research shows experts are less likely to consider information that challenges existing beliefs, and rely on their own expertise. Leaders can practice being more accepting of advice in several fundamental ways.
• Seek disconfirming information: Look for evidence that contradicts your beliefs and be willing to change your mind when presented with new information.
• Seek feedback: Ask for feedback from others, especially on important decisions that can help to identify overconfidence bias.
• Be open-minded: Be open to new ideas and perspectives, even if they differ. It's a sign of professional character to change your mind and ask for help or a second opinion rather than doggedly pursuing a preferred path.
3. Be human.
Contemporary stakeholders will hold you to account for human-centered and compassionate leadership. For some, compassionate leadership seems a trendy buzzword punctuated with obligatory utterances about kindness and well-being. Leaders can practice humanity toward employees, customers and even themselves in several ways.
• Show empathy: Remember your own journey to your current position. Understand where others are coming from, and show appropriate compassion for their concerns. Try until you understand how your decisions affect others.
• Be yourself: Don't be afraid to show your team who you really are. They'll appreciate it. However, I find that cold and calculating leaders are utterly transparent, especially virtue signallers. In most cases, employees and customers may cancel those they find fake. If you can’t or don’t want to lead people, you might be better off working with tools or data.
• Recognize the value of diversity: It’s no longer cliché but mandatory. Deliberately include people from different backgrounds in your decision making. Easier said than done, but joining forces with others makes it easier to create a culture that respects diversity.
Looking Ahead
An oversized ego costs. Misplaced overconfidence can crater any company quicker than you think. You only have to consider flawed corporate or government policy decisions as evidence.
Overconfident leaders may typically discount randomness and attribute success to their own talent. This can be compounded when you think you're immune from harm and can reduce the inclination to learn or course-correct. However, these strategies show that expert overconfidence can be mitigated through a diverse group of complimentary experts, feedback and self-reflection.
Don’t let overconfidence conquer your career or the well-being of colleagues, clients and communities. That's a skill worth honing in any leadership playbook.
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