Friday, August 22, 2008

Am I Lucky or Am I Good?: Sports, Business & Self-confidence

Confidence is a funny thing, if you have it you can sometimes perform beyond expectations, when you don't you can perform well below expectations.

I originally started this post months ago as I was reading "Fooled by Randomness" where the author, Nassim Nicholas Taleb, makes the point that in high-randomness professions (like technology management) it is actually pretty hard to tell who is good and who isn't based on results alone. Books like "Fooled by Randomness" and "The Halo Effect" have similar themes in that both warn against placing too much value in the successes of other people. By doing so, both books implicitly warn against placing too much value in your own success.

My initial reaction upon reading these books was to cast a critical eye on my own performance. Where was I strong? Where was I weak? How did I know I was really strong in the areas I thought were my strengths? I began to think about ways to prove to myself that I was Good and not merely Lucky. (Hence - my blogs on "Hiring Great People" and "Calibrating Your Interview Gut" which tried to break down that process into a more measurable process).

As I occupied myself on the professional side with these questions, I happened to start trying to learn how to play golf a bit more seriously on the personal side of my life.

One of the things that I quickly noticed about golf was how important the "mental" side of golf was to the game. Books like "The 15th Club: The Inner Secret to Great Golf" and "The Inner Game of Golf" paid attention to player's tendencies to be overly critical of themselves in pressure situations and the negative effects of those thoughts. As someone who has played a fair amount of basketball, I have experienced the difference in performance between being "in the zone" of confidence versus lacking that confidence and could see how that could play a huge role in golf as with other sports.

Basically, it helps to have a positive outlook and to see yourself succeeding. (It's probably not much of a surprise to hear that the author of "The Inner Game of Golf" also wrote a book called, "The Inner Game of Work".) As I started learning the game more, I began to come to the conclusion that perhaps my self-critical nature actually was NOT a good thing.

In his book, Nicholas Taleb recounts the story of a wall street trader who was able to make million, and then subsequently lose millions, because the trader didn't take into account the inherent randomness of his profession and put too much stock (yes, bad pun) in his own abilities. After thinking about this more though, I'm not sure this was actually a bad thing for the trader in question. By being supremely overconfident (and perhaps arrogant) about his own capabilities he was able to convince many smart, capable investors to place millions with him. If he had been realistic and self-critical about his capabilities this particular trader would never have seen the amount of success that he did.

As I thought about how this applied to the tech world and entrepreneurship, I could see how supreme over-confidence in one's ability can be an advantage in itself. The odds are already stacked against any one entrepreneur, and yet, an entrepreneur has to not only convince himself, but convince his investors and his employees of his ultimate ability to lead the company to success.

I believe there are very few successful entreprenuer out there that would read "Fooled by Randomness" or the "Halo Effect" and think "Yeah, I'm one of the lucky ones - I didn't know what the heck I was doing." (if this is you, you are my kind of person!) It's just like those surveys we've all heard about where everyone ranks themselves as an "above average" driver.

On the flip side, just as all poker winners use skill and all poker losers suffer from bad luck, I would hazard a guess that most failed entrepreneurs do not blame their own abilities but rather "the market", "luck", "timing" or a myriad of other reasons.

This is not a bad thing. Just as any basketball "shooter" knows, the trick to getting out of a shooting slump is simply being 100% sure that the next shot is sure to go in. (This attitude might not endear you to your teammates though :)) This capacity for self-delusion is essential to maintaining your competitive edge.

At the end of the day, our capacity to delude ourselves of our own superiority is only matched by our capacity to delude ourselves of our deficiencies. One delusion can inspire us to achieve the impossible, while the other prevents us from doing the ordinary.

Some of us are "lucky" enough to know people that just seem imbued with overwhelming self-confidence (whether deserved or not). How about the rest of us that are more naturally inclined to be self-critical? Is it possible to balance self-criticism and self-improvement with self-confidence? Sure. How do you do it? I'll let you know when I get there :)

In the meantime, I have a few guesses based on what I've read as well as my own experiences with sports:

1. Practice: Nothing builds self-confidence more than the knowledge that you've done it before. Knowing you have sunk thousands of foul shots makes hitting the foul shot during a game that much easier. What's the equivalent of "practice" in the work world? Talk and think about problems and issues you are likely to run into on a regular basis. At business school we would do case studies, at the work place treat every business situation that you read about in the Wall Street Journal as a case study and think about what you would do in that situation. Don't stand idly by as your managers or exec team make decisions, think about what you would do in there place and find some like minded people with whom to share those thoughts - not to criticize but to practice the thought process.

2. Measure: Track your decisions - big and small - and the results. Whenever you make a decision send yourself a quick note so that you can evaluate it later down the road. Don't worry too much about the end result, focus on whether or not you felt you made the decision the right way given the data you had on hand. Celebrate your good decisions, extract the lessons from the bad but then forget them. Keep a count of your good decisions (and don't count your bad decisions :) ). (This is from sports psychology - the good shooters never remember their bad shots and certainly don't dwell on them)

3. Visualize: This goes hand to hand with practice but I think it helps to be able to see in your mind's eye where you want to be. Just as a good golfer can visualize a ball's path before he hits it, we should be able to visualize where we want to be professionally. I think this comes over time (it's taken me a long time to get even a sense of where I want to be) - but I think its critical.

So, it appears to me that in order to improve we need to recognize our weaknesses, but in order to excel we need to ignore those weaknesses and believe in our strengths. Pretty tricky stuff.

In any case:

If you've had a bad run, you should know its just bad luck.

If you've had a good run, be confident that it was 100% because of you :)