Overconfidence

By Khatera Sahibzada Ph.D. 

Confidence is arguably one of the most highly rated leadership virtues. But too much of it can be catastrophic, particularly when it comes to judgment and decision-making. Research has found negative implications of an overconfident leader on organizational performance such as introducing risky products that are unlikely to be successful to poor decisions about mergers and acquisitions. The foremost thought leader in decision-making, Daniel Kahneman, singles out overconfidence as the bias he would eliminate if he had a magic wand.

Despite these findings, overconfident people attain higher social status and are viewed as more competent allowing them to reap the reputational benefits. “Confidence makes individuals appear more competent in the eyes of others, even when that confidence is unjustified and unwarranted,” says Cameron Anderson from Berkeley’s Haas School of Management. Overconfidence undeniably wields a great deal of influence. The question is, why?According to psychologist and author, Maria Konnikova, “Human beings don’t like to exist in a state of uncertainty and ambiguity.” Confident people give off an air of assurance and certitude and are perceived as being competent which makes us an easy target to influence. In fact, emerging research has identified a particular area in the brain that responds to confidence, the ventromedial prefrontal cortex (vmPFC), an area involved in emotional regulation.

Types of Overconfidence

Overconfidence can come in many forms, the three most common being overestimation, overplacement, and overprecision. Overestimation is believing that you are better than you actually are. Overconfident people erroneously believe that they are more effective than they actually are. This is seen from the boardroom to the golf course, where CEOs over-estimate their ability to generate returns,  and golfers of all levels believe they will be able to hit the ball farther than they actually do.Paradoxically, people tend to overestimate their performance on tasks that are hard and underestimate their performance on easy tasks, known as the hard-easy effect.

Taking it one step further, overplacement is the belief that you are better than others – more talented, smarter, less biased, more competent, even better drivers – even though you may not be. Overprecision is believing with complete certainty the accuracy of your judgments. This is the most robust form of overconfidence with a wide reach: it’s seen across “cultures, professions, genders, ages and levels of expertise.”

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Reflection

By Khatera Sahibzada Ph.D. 

One of the most admirable and arguably underrated qualities of leadership is the capacity for reflection. Confucius called it the most noble way to learn wisdom.

But when we talk about what makes someone a successful leader, we typically describe attributes like the ability to innovate, make strategic decisions or manage uncertainty. We rarely mention reflection among the core traits of a great leader.

Yet their capacity to reflect on decisions, behaviors and learning certainly helped guide them toward success. Media mogul Arianna Huffington, for example, recommends reflection as a way to connect with one’s own wisdom and creativity. Billionaire investor Ray Dalio credits reflecting on painful experiences with helping him build Bridgewater, the world’s largest hedge fund.

Reflection is different than critical thinking, which is more focused on problem solving and an end goal. Reflective thinking helps us understand our underlying beliefs and assumptions and how they influence our decisions, guide us in problem-solving and drive behavior.

In my consulting work, I help organizations select top talent and rising stars who can achieve superior levels of performance. Companies tell me they want leaders who can make the “right” decisions quickly and decisively, often while balancing competing interests.

Given the fast-paced nature of the world we inhabit, it may seem counterintuitive for them and others to include the ability to reflect as among the most important traits that will determine a leader’s success. Yet there is growing evidence showing precisely that.

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Feedback

By Khatera Sahibzada Ph.D.

Giving feedback is unquestionably one of the most challenging tasks for any leader, as it can be painful to both the giver and receiver. It is nonetheless invaluable: Research has shown that employees recognize the importance of feedback – whether positive or negative – to their career development.

Many even welcome it, provided it’s given well. One study of nearly a thousand employees both in the U.S. and abroad found that 92 percent believed that negative feedback is effective at improving performance – “if delivered appropriately.”

Unfortunately, most leaders are reluctant and uncomfortable providing negative feedback – and when they give it, they don’t follow the “appropriate” advice above. In a study of 2,700 leaders, researchers found that a majority tend to avoid giving negative feedback and 43 percent described doing so as a “stressful and difficult experience.”

There are a host of reasons why this may be the case, most of which can be boiled down to the notion that humans are wired to avoid pain. So how can managers become better at providing their employees with negative feedback that successfully highlights problems and how to resolve them?

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Job Insecurity

By Khatera Sahibzada Ph.D.

Rapid changes in technology, shifts in demographics, and unrelenting 24/7 global work environments have left many of us feeling uncertain about the future state of our jobs. For example, a recent article in the Atlantic claims that, “nearly half of today’s jobs are likely to become obsolete in the not-too-distant future. “ Specifically, they referenced a study conducted at Oxford that found that, within a few decades, 47% of today’s jobs are likely to be replaced by machines.

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Uncertainty

By Khatera Sahibzada

“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” Thus declared Daryl Zanuck, 20th Century Fox executive—in 1946. A quarter of a century later, Business Week reported, “With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market.” And most recently, Steve Ballimer in 2007 famously predicted that, “there’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item.”

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Competitive Advantage

 

By Zachary Feder and Khatera Sahibzada Ph.D.

In an age where authoritarian power is being questioned from the classroom to the boardroom, the emerging research is conclusive — humility is a dramatically more powerful and effective way of leading.

Scientific inquiry into the power and effectiveness of humility in the workplace has shown that it offers a significant “competitive advantage” to leaders.

According to a study from the University of Washington Foster School of Business, humble people tend to make the most effective leaders (that’s right, the most) and are more likely to be high performers in both individual and team settings, according to associate professor Michael Johnson.

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Bias

 

By Rob Bueschen

The importance of sound investment decisions is critical in the investment world, as one mistake can lose a firm billions of dollars, not to mention a loss in credibility.

On the surface, it appears that investors have everything under control, exerting confidence in their decisions as they hit consistent home runs. But as we peel back the layers, empirical research shows extremely challenging and costly cognitive biases that must be battled to make sound decisions.

Cognitive biases are defined as “thinking patterns based on observations and generalizations that may lead to memory errors, inaccurate judgements, and faulty logic.”

“People are inherently biased and our unconscious biases affect our decisions and perceptions,” according to Dr. Khatera Sahibzada, an industrial/organizational psychologist who helps VCs and start-ups capitalize on talent by developing assessment and selection processes.

Because of the pressure and uncertainties investors face in making decisions, these biases are especially important to understand, as any bias factor can be amplified and become detrimental. For entrepreneurs, on the other hand, understanding how these cognitive biases come into play may provide leverage points for bringing ideas to fruition. According to research, the following five cognitive biases can affect investor decision making.

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Entrepreneurs

 

By Khatera Sahibzada Ph.D. and Rob Bueschen

Entrepreneurs are the 21st century’s superheroes. They develop products that make our lives easier and better, create jobs, and inspire us to follow our dreams. But it can be hard getting past the mythology around successful entrepreneurs to see what traits they actually share. That’s where empirical evidence comes in handy. Here are six factors researchers say go into the entrepreneurial makeup.

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Success

By Tim Hattan & Khatera Sahibzada Ph.D.

Failure is an inevitable, unavoidable and integral aspect of evolving into a successful leader. Leadership requires the ability to manage setbacks and overcome obstacles, typically with finite resources, support and time. You may recall the old adage, “When life gives you lemons; make lemonade.” Now it’s time to take the adage one step further, “When life gives you lemons, make grape juice, then sit back and let the world wonder how you did it.” The question is how do we put this philosophy into action. Read More…




Leadership Humility



By Zachary Feder and Khatera Sahibzada Ph.D.

We recently wrote an article on the importance of humility in leadership for Entrepreneur.com and were pleasantly surprised that the article generated 500+ comments on Yahoo. Interestingly, a large number of those comments were from people who shared personal experiences of working with a humble manager. The resoundingly positive feedback is the inspiration for this month’s entry.

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