November 2021 would be remembered in history as the month the whole of America held its collective breath when the rightfully elected president Joe Biden was challenged by the vanquished rival Donald Trump who threatened in every possible way to usurp the legal victory.

Trump even went ahead and allegedly incited the march to Capitol Hill with his supporters creating a ruckus, something America will forever feel ashamed of. Why was Trump so much unwilling to cede to Biden? The main reason is that Trump has always held the notion that he is the best option America has ever had for the post of President. Having being elected once, which many say was the biggest mistake the US citizens did in a long time, his notions about his competence were so exaggerated that he could not accept the fact that the US had chosen someone else.

Scientists call this behavior the Dunning Kruger effect when a person overestimates his capabilities or rather absence thereof.

All it means is that the person is himself incompetent to fathom the extent of his lack of abilities, cognitive or otherwise. The two social psychologists David Dunning and Justin Kruger brought out these findings with participants being gauged on inductive, deductive and abductive logical reasoning and levels of understanding or ability in grammar, humor and logic over a series of four experiments. Apparently, those in the lowest percentile were seen to exhibit dramatic overestimation of their abilities in these areas. Dunning- Kruger called this ‘meta ignorance’, that is the ignorance of ignorance!

Why does this happen

The overestimation of one’s abilities as a result of the inability to understand one’s innate lack of it, is a cognitive bias and this phenomenon is called illusory superiority. A more common example would be all those ‘Height of stupidity’ videos that keep flooding the internet where you see people jump from chairs into kid pools and break the chairs while they fall flat. You end up feeling in disgust and disbelief ‘what was he thinking’ or even ‘how could someone even think about doing such a thing’. But these people find it perfectly normal because they believe, and without any justification, that they can pull it off. A quote attributed to Confucius states that ‘He who knows not and knows not that he knows not, is a fool, shun him’. That could very well be stated keeping such people in mind.

Some Real life examples

Examples galore of people who fail miserably in ventures in life because they overestimate their abilities which are absent in reality. Take the example of people who believe into ponzy financial schemes, MLM scams and promises of exorbitantly high returns on money. Not only do they invest in such schemes themselves, they go about convincing other people of how attractive they are and how they themselves are making a wise decision in investing. This only lasts till the schemes bust. People around them watch in disbelief how a person could come to believe in such projects and how this particular person cannot see through its fallacy altogether.

Examples in business scenarios

The impact of a person with such an illusory superiority bias is multifold. If in personal life, the loss and defeat is limited to the person alone, when such a person exhibits this bias in business, it affects the business in terms of financial losses and possibly a dent in the company’s brand equity, not to mention the impact on the employees who feel let down and dejected at the most.

Business leaders with the illusory superiority rarely take advice from professionals and feel that they know everything about everything which is actually not the case. They don’t pay heed to any unsolicited advice either and brush away suggestions of caution or correction. A classic example is derived from the decades old rivalry between Coke and Pepsi. On the occasion of the centenary of Coke in 1985, the company decided to alter the taste of the immensely popular soft drink to make it 20% sweeter, to beat the competition from Pepsi which was considered a tad milder than Coke. The consumers were aghast at this abrupt change and wondered what made the people at Coke take such a decision. Coke had to go back on this change and come up with the original taste where they even pasted a ‘classic coke’ label.

Such people take impulsive decisions based on gut feeling rather than based on solid data and professional consultancy. Such decisions too often go the wrong way.

These people don’t make good managers, leaders or decision makers because they don’t feel the need to take everyone along and thrust decisions on the team.

People who suffer from this tendency make laughable claims and propositions. Take example of a nondescript firm called Landomus Realty who has, in an advertisement, written to Indian Prime Minister to invest $500 billion in the development projects of India. The firm has just 19 employees and a revenue of $ 5 Million. It would be any sane man’s guess how the company would raise such a colossal amount and how it expects the government to respond to it positively. Read more....