One of the traits that hampers executives and leaders in many realms is over-confidence. And so 95 percent of college professors think they have above-average teaching skills. And Time magazine asked Americans, are you in the top one percent of earners? And 19 percent of Americans believe they are in the top one percent of earners. And yet, some people have the ability to look inside themselves and say, "Okay, I’m over-confident. Actually let me stop. I missed something that will be germane."
And so two researchers gave tests to business executives and tests about their own industries. And then they asked them, "How confident are you that the answers to these tests about your own industries are correct?" And people in the advertising industry were convinced they got 80 percent of the answers right on these tests. In fact, they got 60 percent wrong. The most over-confident industry was the computer industry. And so people in the computer business thought they got 95 percent of the answers on the test correct. In fact, they got 80 percent of them wrong.
And so we all have this tremendous bias to be over-confident, over-value our abilities to pick out evidence that confirms what we already believe. And so a wise executive says, “Hey, I’ve got an over-confidence bias. I need to build modesty bootstraps for myself.” Charlie Munger, Warren Buffett’s partner in his investment business, says, "Okay, here’s what I’m going to do to control my over-confidence. Here’s what I’m going to do to bias myself in the opposite direction."
Peter Drucker, the great management guru had a modesty step. He said, "When you make a decision, write it on a piece of paper, seal it in an envelop for nine months, open it after nine months, and you’ll see that a third of your decisions were right, a third were wrong, and a third somewhere in between. But in most cases your reasoning will be completely irrelevant. And if you do that, you’re going to remind yourself how little you know and you’ll build modesty bootstraps." So you don’t want to be so modest that you don’t’ do anything, and just sit there like a puddle, but when you do things, you constantly want to be checking for your own biases.