Over the years, I have met and taken advice from many entrepreneurs and the most common characteristic I’ve seen among them is confidence. Confidence in their ideas, their business plans and most importantly themselves. Confidence is a great characteristic and it’s critical to driving our businesses forward to success. But studies have shown that confidence can be a sign that we may need more help and guidance than we thought.
Justin Kruger and David Dunning of the Department of Psychology at Cornell University did some very interesting research based on their hypothesis that poor performers tend to overestimate their own abilities, while hyper-competent people tend to underestimate theirs. They performed a number of studies that had people perform tests and then compared their actual scores to their perceived ability. What they found was that people in the bottom three quartiles based on actual test scores tended to overestimate their own abilities relative to their test scores. And the lower the quartile, the greater the over-estimation. In the top quartile, however, the test subjects tended to slightly underestimate their ability.
It’s been common wisdom for a long time that underperformers tend to over-estimate their abilities. What this research showed was that this is true for the vast majority of people, not just the underperformers. And if you look at the top performers in any field, they often think they need help and seek out experts to surround themselves with. Confidence in our abilities means nothing in the face of these results.
What does this mean for entrepreneurs? If you look at the most successful entrepreneurs out there, they usually had some doubts in their own abilities. In order to alleviate these doubts, they would seek out advice, guidance and help from other experts. They would surround themselves with other competent people in order to fill any perceived gap in their own abilities. On the flip side, entrepreneurs who fail often can point to an overestimation in their own abilities, which leads them to either ignore others’ advice or simply not seek it out.
The lesson: no matter how much we believe in ourselves, we shouldn’t try to do everything ourselves. We need to find good advisors to give us feedback and guidance as we develop and execute our business plans. We need to find good people to add to our teams. Because even if – maybe especially if – we think we don’t need any help, we probably do.
I’m organizing the Ivey Venture Forum on November 4 at the Metro Toronto Convention Centre. It will bring together entrepreneurs, investors and expert speakers with a keynote address from Peter Fowler, CEO of SIR Corp. It’s a great place to network with other entrepreneurs and meet potential advisors and team members. Just the place for those who don’t think they need any help (ahem).