How to Diagnose Critical Overconfidence

by / Wednesday, 20 August 2014 / Published in Business Lifestyle

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In a recent article that appeared on, a case study was examined that detailed the dangers of both bandwagon thinking and blind overconfidence in relation to the Massachusetts housing market. One of the major takeaways of the piece was that confidence can be a good thing, but overconfidence can have major implications on the ability of an entrepreneur to exercise sound judgement.

How can you tell if you or a business partner are confident to the point that it jeopardizes your business? When does  healthy level of confidence turn into an excessive one? The interesting and potentially complicating factor in diagnosing overconfidence is the fact that it is pretty universally considered a virtue, especially among entrepreneurs. Having a real belief in the ability of your business to succeed is essentially a prerequisite for entrepreneurship- if you don’t believe in your idea then nobody else will. That being said, when confidence gets in the way of being realistic and productive, it’s a dangerous situation. Here are some symptoms of overconfidence to look out for:

  • Absolute belief in the viability of an idea, but no evidence to back it up. If there is no evidence to suggest that something will work out, then it is a mistake to back up the hype without seeing real proof first. While it can be tempting to brush off doubts surrounding a “sure thing”, should it turn out to be a honeypot or based on assertion, wishing you had double checked against some real facts is not where you want to be.
  • Refusal to change any aspect of a plan or idea. Claiming that an idea is perfect and cannot be improved on or tweaked is a bad sign. At the very least, being open to listening to potentially constructive feedback should be something you are willing to do. If someone will not even allow another person to make a suggestion, something is wrong.
  • Getting defensive when questioned about individual points of a plan. This hearkens back to the first point, since most of the time if people are getting defensive about parts of their plan, it is because they may not have sufficient evidence to back up its viability and are throwing up a smokescreen. There is nothing wrong with being proud of a plan, but at the same time, it is important to recognize that it is not an extension of your being, rather something that you have created that can be improved through collaborative effort. When people express concerns about parts of it it does not mean they are criticizing you, rather it demonstrates their desire to work with you towards a mutually rewarding outcome.

Photo Credit to Chelsea Gabriel on Flickr

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