Putting On A Face
Confucius, the famous Chinese philosopher, once said: “He who speaks without modesty will find it difficult to make his words good.” Three academics – Kenny Phua, who recently graduated with a PhD in Finance from Nanyang Business School in Singapore, Mandy Tham and Chisen Wei, both assistant professors of Finance at the Singapore Management University – beg to disagree. In a recent article, published in the Harvard Business Review, they suggest that leaders who are overconfident perform better than those who are not. Could this be true in a country like South Africa where modesty is seen as a virtue?
Unrealistic or indispensable skill?
How do we define overconfidence? Jason Sandler, a Cape Town-based professional speaker and corporate trainer, says that it is a state of being “so confident in your abilities or decisions that you go ahead with them without any thought and consideration to the possibility of failure.”
For Kerstin Jatho, an organisational behaviour specialist and executive coach at 4Seeds, a Johannesburg-based consultancy, overconfidence is “when the self-evaluation of your competencies succumbs to a cognitive bias and is overstated.” This leads to a belief that “we are better than we actually are.”
Overconfidence, then, has negative connotations. But Phua, Tham and Chisen conclude that overconfident CEOs tend to have the ability to develop better and long-lasting relationships with major suppliers. They give the example of the late Steve Jobs, Apple CEO, who showed confidence in his unrealistic timelines to the effect that others working with him were able to buy into his vision. They argue that this shows that there is a positive side to overconfidence as it can “increase the commitment of other people to your venture.” Asked how corporate SA would respond to the argument that overconfident people make better leaders, Jatho implies that leaders in SA would rather be modest and “demonstrate high integrity (opting) to do the right thing for the greater good of society”. She believes that leaders in South Africa understand the importance of surrounding themselves with a “strong executive team that can hold a leader accountable when they become overconfident”.
Sandler claims that leaders can still be overconfident as long as they understand that “overconfidence is arrogance if the person is not a team player; if you’re a team player then the higher level of confidence is based on a group dynamic and not one person pushing a belief”.
Walking a fine line
Jatho says that there is evidence that “overconfident leaders produced greater shareholder returns than lesser confident leaders”, but such conclusions need to be taken with care as the line between being overconfident and being arrogant is a thin one.
Once an individual crosses that line they begin to be unable to “realistically self-reflect and analyse one’s competencies versus one’s actual performance. The consequences are that one misjudges one’s values resulting in making poor choices or engaging in risky decisions, says Jatho.
While the boastful attitude may go well in the short-term, in the long-term this attitude is not only unsustainable, but can produce detrimental results both for the overconfident individual and others.