Leaders, from supervisors to CEOs, are crucial to any organization’s successes, but the research is showing that overconfidence in leaders can have a detrimental effect on organizational performance. This overconfidence problem in leadership has two main factors to consider:
- Overconfidence does not equal ability.
- Overconfident leaders are prone to “ideator’s bias.”
Let’s review overconfident leadership in a little more detail, based on the two ideas above. Overconfidence not equaling ability can be seen in the following examples, which were some of the biggest disastrous business decisions of all time that led to organizational downfalls:
- Western Union rejecting the patent on the telephone.
- Kodak creating the digital camera, then killing the idea as not feasible.
- Blockbuster passing on buying Netflix.
We know these decisions were critical mistakes for these organizations, but here is a quote that may take the cake on poor leadership decision-making, from Michael Lazaridis, founder of Blackberry. The creator of the smartphone said this, as he pointed to a BlackBerry with a keyboard:
Blackberry at its peak had 75% of the mobile phone market. The company no longer even makes Blackberry phones now. Where would Blackberry be today if its leadership had made some different decisions?
Not all disastrous organizational decisions are caused by an overconfident leader, but in the examples above, it must be admitted that the leaders’ decision-making was flawed.
In a Talent and HR Management article by John Hackston, a well-researched phenomenon known as the “Dunning-Kruger effect” (D-K effect) is outlined. This is a theory that posits that the less a leader knows about a topic, the more confident the leader is in making a decision about the topic. This is also known as the “Dunder-Mifflin effect,” which anyone who has ever watched Michael Scott on The Office, as he makes a series of blundering decisions, will understand. Click here to see some of Michael Scott’s worst decisions.
The second problem of overconfident leadership is closely tied to the D-K effect, and it is called “ideator’s bias.” Ideator’s bias occurs when the individual believes that their own ideas are better than the ideas of those around them. Leadership is about bringing out the best in your people, not believing you are the best in your organization. Leaders and organizations should try to remember Jim Collins’s ideas of leadership from his book Good to Great, and his concept of the Level 5 leader:
A quality that leaders need to adopt to become a great leader, and avoid the two pitfalls of the D-K effect and ideator’s bias, is to bring humility into their skill set as leaders. If a leader is prone to combining the phenomena of the D-K effect and ideator’s bias, one can only believe that it is just a matter of time before a leader’s decision becomes disastrous.
Discussion Questions:
1. Complete more intensive research on the D-K effect, ideator’s bias, and a concept called “optimism illusion” (not discussed in this post). Create an executive summary comparing these three concepts.
2. Imagine your VP of HR has just read your executive summary and now wants you to create a PowerPoint presentation. Create a five-minute PowerPoint presentation explaining how to prevent the D-K effect, ideator’s bias, and optimism illusion from occurring in your organization.
3. Review Jim Collins’s Level 5 leadership concept, and think about the supervisors you’ve worked with. What level of leadership would you place them at, and how did their leadership level affect your job performance?