The Perils of an Overconfident Leader

Posted on August 18th 2014

The Perils of an Overconfident Leader
One might think that confidence is broadly speaking a positive thing in the workplace, as it provides one with the necessary belief to do unusual or innovative things without doubting your abilities or the potential outcome.  Take it too far, however, and it’s easy to see the pitfalls.

At an organizational level, we see this writ large in the innovators dilemma, where companies achieve a degree of success by doing things in a certain way or with a certain product.  It then becomes hard to see past that, blinkering both the organization and its managers to potentially better ways of doing things.

A similar malaise can affect executives on an individual level.  A recent paper published via INSEAD highlights the challenges executives face.  A particular obstacle to overcome if we’re to learn from our environment is to first seek out feedback and then to absorb it in our future behaviours.

The paper highlights how overconfident people are so often excessively optimistic, which causes them to underestimate the chances of them making an error.  What’s more, such folks tend to have a rather polemic approach to success.  When things go well, they prefer the limelight to fall purely on themselves, but when failure looms, that is then deflected onto others as much as possible.

The preponderance of narcissism within the boardroom is quite well known; the INSEAD paper looks specifically at how these traits hamper managers ability to receive feedback.  The study saw some 300 CEOs given feedback over a 15-year period on the accuracy of the various forecasts they made over that period.

The study saw overconfidence measured in one of three ways.  These included the way the executive was portrayed in the media, their tendency to keep hold of stock options and of course, their recent record.

As one might expect, the study discovered that the more overconfident the executive was, the less likely they were to pay any attention to past errors when making future forecasts.  This in turn meant that their future performances showed minimal signs of improvement compared to their less confident peers.

Studies into narcissistic leaders have shown a panapoly of negative traits that hamper everything from team performance to innovation.  So why do companies persist in hiring such people?  Much of the roots of attraction rest in the hope that this one person can save a struggling organization.  That person is often charismatic and larger than life.  They’re also likely to have achieved success previously.  Sadly, that doesn’t create a magic recipe for success, and there are all too many examples to highlight that.

It does however underline the critical role feedback plays in a social business.  Indeed it is one half of what it takes to be a sense and respond organization.  So just as you can’t afford to be too entrenched in your organizational strategy, nor can you be too confident of yourself as an individual.  After all, feedback only works if you actually take it on board.

overconfident leader / shutterstock

Adi Gaskell

Adi Gaskell

A writer on management and social media for sites such as Technorati, Professional Manager, CMI, DZone, Work.com and Social Business News, as well as at my own blog.

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