Overconfidence

2010-06-12T23:17:00.000-07:00

Overconfidence is a common problem.

Being pessimistic isn’t good, of course.

But being overconfident isn’t good either.

Here are two reasons why:

You may fail to deliver on your promise
You may blame yourself too much

This is the other side of being overconfident. When you are overconfident about something and fail, you may blame yourself too much for the outcome. Robert Shiller mentioned a finding inSearching for a Corporate Savior about how companies often fired their CEOs who didn’t perform as expected even when the entire industry actually declined. The CEO couldn’t be blamed for an industry-wide problem, but the board – who had initially been overconfident with the ability of the”charismatic” CEO – still put the blame on him. This happens at individual level too. You may put all the blame on yourself which make it difficult for you to move forward.

Now that we’ve seen the danger of overconfidence, how can we overcome it? Here are some tips:

1. Acknowledge the role of luck

Many people in the financial market think that they can predict how the market will do. The more they make correct predictions, the more they are confident about their ability. They aren’t aware that in many cases they are just lucky. Hard work is important, but luck does play a big role.

Paul Graham once wrote that Bill Gates is a very smart man, but he is also very lucky. Without the luck factor, he would probably end up near the bottom of the Forbes 400 instead of being one of the richest men in the world. Bill Gates himself said on different occasions about how lucky he is.

Outliers by Malcolm Gladwell discusses the role of luck at great length.

2. Don’t credit yourself too much

Continuing the previous point, be careful not to credit yourself too much when you are successful. Remember that you are probably just lucky.

This doesn’t mean that you don’t need to work hard. After all, successful people are those who capitalize on luck with hard work. But without luck, hard work won’t mean much either.

3. Comprehend the complexity of a project

When you are about to take a project, dig deep into it to really understand the breadth and scope of the project. Be on the lookout for potential pitfalls. Taking the time to really understand the complexity of a project helps you avoid unpleasant surprises later on.

4. Have a cushion

Even after you comprehend the complexity of a project, you still need to have a cushion. Give yourself extra time and resources for unexpected things. But be careful not to give yourself too much cushion. Otherwise you may become less competitive than your competitors.

5. Be prepared for failure

Some people are so confident in themselves that they can’t think of the possibility of failure.

Robert Shiller told the story of Irving Fisher – a Yale professor in the early 20th century – who said that the stock market in 1929 was in “permanently high plateau.” He invested heavily in the stock market, but ended up losing a lot of money in the 1929 crash. Yale needed to buy his house and rented it out to him for him not to be on the street. Did he change his view after all that happened? No. He still insisted that he was right. He borrowed money from his wealthy relatives, invested it, and lost it all.

So be prepared for failure. Doing so will help you recover quickly.

Is It Right to Argue?

2010-06-12T10:06:00.001-07:00

Winning an argument is tempting for most people working in a team. Who does not wish to be right? Who does not want to have the last say and feel victorious? But if your focus is on the team’s progress and not on personal whims, sometimes it is better in the first place not to get into an argument. The best way to get your message across to people is to win them over instead of winning an argument with them.

What happens when you try to win arguments

When you get into an argument with people, they become defensive. Both of you try to assert your point of view without bothering to listen to the other person whether or not he/she is right. This makes both of you even more fixed on your opinions. Arguments never reach a satisfactory conclusion.

You can never achieve the right thing for your team by trying to win an argument and forcing them to accept your views. You may not always be right. And even if you are right, by arguing, you only harm your working relationships.

How arguments affect working relationships with each other

When you argue, you are trying to control the other person’s thoughts, feelings and actions. Nobody likes that. When you are out to prove that you are right, it only provokes the other person. Passive aggression, frustration, and lack of distrust will follow. Some people might not show it outwardly, but they will silently think of how to settle scores.

For the sake of your team, collective goals and healthy working relationships with each other, do not get into arguments. Instead, use the following tips to converse with people and arrive at the right conclusion.

How to win people over rather than winning arguments

1. Stay calm: Maintain your composure when you talk. If you lose it, the talk will turn into an argument.

2. Be Present and Listen: Never interrupt people when they talk. Not only is this irritating to them, but you may also lose out on some useful important point that they may have. Listen intently and acknowledge what they say before putting forth your point.

3. Be logical: Spell out your thoughts in a logical sequence to make them understand your point. Use pauses to allow them to comprehend. Ask “Does this make sense?” to help you check if the other party understands what you say.

4. Find a win-win situation: Try to accommodate some of the valid points that people raise. The challenge is usually to find the things that you both agree on and work on it.In one of my trainings, we practice the 101% principle, this means that sometimes you have to find the 1% we both agree on and give it our 100%.

Ensure that everyone can WIN from the disagreement and how to arrive at the best agreement.

For example, if a team member wants a pay raise and his manager is reluctant, an argument will naturally ensue. But what if the manager agrees on the condition that the team member learns a new skill or hits certain Key Performance Indicators (KPI)? Both will benefit.

Remember, winning a person over is more important than winning arguments. This is because relationships last for a long time while problems are only temporary.

Personal development

Overconfidence

Is It Right to Argue?