Now There’s A Name For It

Grading our own decision process skills is worthless when we’re unfamiliar with the standards.

I recently overheard a manager dismiss Lean Manufacturing, techniques that save industry billions of dollars in reduced costs.

Despite zero knowledge of what Lean Manufacturing entailed, this manager “knew” Lean wouldn’t help. “It would be a waste of money. I’m already running this place as lean as possible.”

From the outside, we can shake our heads when someone’s obvious lack of knowledge produces unfounded confidence in his or her abilities and accomplishments.

From The-Institute-Of-Stuff-We-Already-Knew
As it turns out, in 1999 two social psychologists dubbed this condition the “Dunning-Kruger Effect”

An effect in which incompetent people fail to realize they are incompetent, because they lack the skill to distinguish between competence and incompetence.

This isn’t a startling finding, or even very compelling at first read. But notice that it’s not that this incompetent person lacks intelligence. No, they lack sufficient knowledge of the skill itself to provide a sound self-evaluation. And this is not limited just to individuals. Whole professions or industries can become ingrown, dismissing anything not invented inside their community.

Back in 1871, long before Dunning and Kruger named this condition, Charles Darwin observed, “Ignorance more frequently begets confidence than does knowledge.”

Bringing It Home
Almost all project leaders rate themselves high on decision processes, that is, proposing the best solutions for their firm. But ask them which decision disciplines they use and most will respond with a blank stare. They have never been trained in decision disciplines – decisions are just something you “do.”

As a result, project teams often present second-rate solutions masquerading as winners. Absent any evidence to the contrary, the proposal is approved, an opportunity squandered, and resources wasted… and no one will ever know (see The Perfect Crime).

Consider your own organization: Are all your project teams trained in decision process disciplines? Or, do they just “know” they are good decision makers. As Will Rogers said,

“It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so.”

P.S. In all fairness to Dr. Dunning and Dr. Kruger, they elevated our awareness of this pitfall and expanded our understanding of its impacts. We can better challenge ourselves with more effective questions to avoid this error and produce superior outcomes.

© 2012 Verax Point Consulting, LLC

About Dave Wittenberg

I am all about equipping business teams to enjoy greater payoffs on their biggest bets. I bring a unique combination of evaluation expertise and behavioral insights developed over the course of more than 300 major strategic initiatives. Applying a highly effective, disciplined framework, teams unleash their full capabilities to generate better solutions, wring out hidden waste, and deliver superior returns. Specialties: Investment Evaluation, Decision Excellence, Strategic Analysis, Mergers and Acquisitions, Investor Relations, Leadership Development, Education & Training
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