Can Overconfidence in Executives be a Good or Bad Thing?

There are times when confidence makes a positive and constructive change in an organization and there are times when overconfidence can cost companies much more than they bargained. Executives are naturally more confident with higher self-efficacy when compared to the average population. That makes sense considering they needed to beat out the competition and move up the organizational ranks. 

(Let us also plug a caveat in there that those who rise from modest backgrounds are much more grit-oriented and confident than those who have had opportunities presented to them based on their family background and wealth. One worked for it and the other had to put in much less effort and with many more resources. )

The Queen of Hearts
Wooded Pathway Gallery

Confidence means betting on oneself. Approximately 83% of decisions are based on confidence in oneself and the expected outcome. 

Unpacking Overconfident Behavior When Betting on Oneself

Where we run into problems is when we are overconfident (Different than conviction). When this happens we can make big mistakes if we have not pondered alternative possibilities that may be more accurate. We know this when we listen to someone who has all the answers, talks as though they have all the answers, will not accept alternative perspectives and we find out in hindsight the major mistakes they made. You may read more about Finance and Overconfidence Bias.

Tip on Critical Thinking: 

What I have learned is that mistakes are a natural part of life. If one seeks to create multiple perspectives one should look at all the feasible other explanations and see which ones are the most parsimonious. If they all might have some likelihood then we know we need new information to solidify the possibilities. Sometimes, based on the strength of the information, I assign a percentage to each of the possibilities and adjust those likelihoods based on new information (i.e. game theory). 

If you leave room for doubt you are likely to rarely be wrong. In other words, accept that you don't know what you don't know and make your decisions accordingly to ensure you have maximum options in case you are wrong.