Even high intelligence and experience do not instinctively produce the BEST solutions.
Smarts and experience. Who could ask for anything more when assembling a project team?
How then do we explain the 70% to 80% failure rate on acquisitions? Don’t organizations assemble their A-team for acquisitions? Don’t they engage investment bankers– firms that hire the cream of MBAs from the top schools?
This topic was triggered during my discussion with the CFO of a large hospital system. This CFO enjoys the enviable luxury of project teams staffed with physicians – certainly very intelligent folks trained to rely on data.
Two Steps Forward…
Our best and brightest are usually afflicted with an Achilles’ heel. Intelligence, training and experience definitely provide a marked advantage in problem solving and forecasting. But at the same time, success breeds overconfidence that erodes (and some research says, nullifies) that advantage!
I’ll pick on doctors because that’s where this topic was provoked, but overconfidence applies equally to I-Bankers, engineers and other top professionals.
My July article, What Happens in Vegas, describes a common test used by social scientists to measure overconfidence. Physicians score significantly higher in overestimating the accuracy of their opinions and predictions on both trivia and medical knowledge – they are more overconfident than the rest of us.
Overconfidence sabotages the three critical activities in project proposals:
- Enthusiasm for brainstorming possible solutions quickly wanes after the first reasonable solutions surface. Not expecting to find a great solution outside their normal frame of reference, they don’t.
- Value estimates (benefits and costs) are biased by their instinct that they “know” the right answer.
- Risk assessments exaggerate the likelihood of overcoming difficulties and underestimate the potential for negative events.
Compounding this issue is that many professionals feel the expectation to inspire confidence in other people. So they tend to project even greater certainty when reporting their opinions.
The strong analytical training of many if these professions (finance, medicine & engineering) is definitely helpful – but only when objective, reliable data is available. Most strategic decisions, however, lack objective data and more often hinge on estimates of highly subjective factors, such as market share predictions.
Hire The Mediocre?
So… what? Ban your A-team from projects? Of course not, but overconfidence needs to be proactively managed. Either appoint a neutral but strong project leader or include a facilitator trained in the techniques for subduing the overconfidence bias among highly capable team members.
After all, we want to get the best out of our best!
“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” — Bill Gates