The Confidence Curve is a Trap

Like a horseshoe, but not so lucky

So you close that sale. Now get off the phone as fast as possible and make another call. If you are on a trading floor a lot of noise will come over the line, but the only thing a customer needs to hear is success - that confidence in your voice. Humans, you see, are social little monkeys and that is the way we perceive competence. And competence is how we alleviate uncertainty. As a rule of thumb it’s one of our worst traits.

Let’s define our terms: competence is essentially your ability or expertise in something. Generally it comes from exposure, practice, intent and time. Natural talent and dazzling genius are helpful, but not necessary. Confidence is, more or less, the ability to project that competence. Like dazzling genius, some expertise is nice when projecting all that self-assurance, but at best it’s irrelevant. At worst it will actively work against you.

I once read a study that actually plotted the confidence/competence axis. You’d think (and hope) you’d get one of those graphs where both axes start at zero gently increase together. They don’t. You’d be wrong. Again. What you get a U-shaped graph with high levels of confidence at the beginning and the end. Like a horseshoe, but not nearly so lucky. A person with almost no competence gets very confident with enough self-belief, YouTube and AI doing all the heavy lifting. As we gain competence and real experience, however, we naturally start to lose our “irrational” confidence as we begin to understand a) the enormity of what you don’t know and b) that most people are just making it up too. Over in the far high end is someone with a rational confidence justified by competence. Should this person have much hair at all, it will be grey.

Discovery v. Confirmation

Confidence, in ourselves and others, is a mental and emotional labor saving device: It tamps down on the uncertainty washing over us and saves cognitive calories in a world of information overload. And for that it is rewarded handsomely. The executive who inspires confidence and certainty goes further than the one explaining the complex reality of a situation. This isn’t all BS, a certain amount of irrational confidence is often the entry fee for extraordinary achievement. The trouble is when success starts feeding the confidence machine. Success has a nasty habit of convincing us that our judgement is better than it is. Unlike our mistakes, we take full credit for our successes and discount the role of dumb luck and everyone else involved. The QED being that when we do make mistakes, we cling to them for longer.

Technology has made this problem worse because you can build a model to prove almost anything. The data become less a tool of discovery that one of confirmation to “prove” your bad idea. At which point you become Bernie Sanders.

Remember, if you torture the data long enough, it will confess anything. So will graduate programs.

The MBA Playbook Trap

Business schools do a valuable thing: they expose students to proven strategies, famous turnarounds, and legendary entrepreneurial victories. They instill confidence, but I suspect that many MBAs never fully recover from case studies. Once you've fallen in love with a particular framework, you start seeing it everywhere. Playbooks are addictive because, like anything addictive, they essentially short-circuit something tedious in the brain - like thinking it through. Not too long ago, every new start-up was billed as the next Uber, but the ride-hailing app stepped into a very singular space to solve a unique problem: an over-regulated, corrupt, centralized and expensive taxi concession. There aren’t that many of those around to replace. So your start-up wasn’t the next Uber - it was just an app.

Instead of adapting the playbook to the environment, executives adapt their perception of the environment to fit the playbook. It's a little like studying tank warfare and then deciding the mountain range in front of you isn't actually there. The map becomes more important than the terrain. And that is idiotic.

The Field Guide

How do you tell confidence from competence? And where do you place it on the confidence curve?

In dealing with yourself, a modicum of self-awareness makes this easy but uncomfortable. Write it down - the nature of the problem that need to be resolves, what a resolution would look like, and how it would work given the nature of the known constraints - physical, social and political. That will give you a good picture where you are and, as a bonus, increase your competence.

With a team, you have no self-awareness, only black boxes. I have a friend who used to make people on his team explain everything like they were talking to third graders. This delivered two positives: laid out the problem and knocked the irrationally confident off their high-horse. The frame: Can you explain it? Can you explain it in reverse? And crucially can you explain the dynamics of the larger system they are trying to affect? If you can sort out the dynamics first, it will save you heaps of time, frustration and money.

To know when you need to hit the brakes and start asking these questions, you need an early warning signal. And here it is:

Against all of your monkey instincts, the faster and louder the response, the more your should question it.

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