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    Over-Confidence: How It Affects Your Organization and How to Overcome It

    Leader
    • 27 Dec 2016
    Patrick Healy Author Staff
    tag
    • Business Essentials
    • Leadership

    There’s been a lot written about cognitive biases in the last decade. If you walk into the Psychology section of Barnes of Noble today or browse Amazon for “decision-making,” you’re sure to see a library of books on how irrational humans can be. In my last post, I spoke of the first of the three - confirmation bias.

    What's second on our list?

    Over-Confidence

    For newbies to the literature on cognitive biases, this one should at least be familiar. We’ve all met over-confident jerks that think planets revolve around them (you might even work for one), or the wishful thinkers with their head in the clouds, but all of us, myself included, have fallen victim to moments and sometimes stretches of over-confidence. If you’re like me, these stretches have usually ended with bitter disappointment, or even catastrophic failure. And yet, despite what we think we have “learned” for next time, we continue to be over-optimistic about our abilities and the state of the future. The same mistakes occur again and again.

    In business, over-confidence is rampant. And it’s no surprise to see why. In complex organizations filled with many individuals with diverse ideas and views, you have to speak up to be heard and market your abilities to get noticed. Being humble takes a back seat to arguing without legs to stand on. How many M&As have you heard about that have failed? Quaker buying Snapple, anyone?

    One outcome of over-confidence is missed deadlines and delayed projects on account of the planning fallacy. When’s the last time your business finished a project early? Or under budget? And yet we continue to create unrealistic project plans in hopes that the future will somehow be different than the present; this is over-confidence at its best/worst. Another classic example of over-confidence is the illusion of control, the idea that if we can quantify something, we can measure it, understand it, and thus manage it. Many financiers have fallen victim to this illusion for decades. And yet, as the market collapse of 2008 showed, confidence can sometimes only be an illusion.

    If over-confidence is not constantly checked, poor business outcomes often result. Thus, businesses and individuals need to install objectivity into their systems to keep them in balance. For projects, teams should look at historical averages for timelines and past budgets to plan future projects. Another option is hiring consultants. There’s an old joke that consultants have made money for decades telling companies the things they already know but don’t want to hear. This is because companies were over-confident but didn’t want to admit it.

    Look out for the third bias that befalls many organizations, coming soon.

    Credential of Readiness | Master the fundamentals of business | Learn More

    About the Author

    Pat served as a member of the HBS Online Course Delivery Team and worked on the Economics for Managers course for the Credential of Readiness (CORe) program, Management Essentials, and Negotiation Mastery. Pat holds a B.A. in Economics and Government from Dartmouth College. In his free time, he enjoys playing tennis and strumming the guitar.
     
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    How are HBS Online courses delivered?

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    We offer self-paced programs (with weekly deadlines) on the HBS Online course platform.

    Our platform features short, highly produced videos of HBS faculty and guest business experts, interactive graphs and exercises, cold calls to keep you engaged, and opportunities to contribute to a vibrant online community.

    Are HBS Online programs available in languages other than English?

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    We expect to offer our courses in additional languages in the future but, at this time, HBS Online can only be provided in English.

    All course content is delivered in written English. Closed captioning in English is available for all videos. There are no live interactions during the course that requires the learner to speak English. Coursework must be completed in English.

    Do I need to come to campus to participate in HBS Online programs?

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    No, all of our programs are 100 percent online, and available to participants regardless of their location.

    How do I enroll in a course?

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    Certificate Programs

    HBS Online welcomes committed learners wherever they are—in the world and their careers—irrespective of their professional experience or academic background. To extend the reach of HBS Online, we no longer require an application for our certificate programs. (Applications are still required for our credential programs: CORe and CLIMB.) You can now immediately enroll and start taking the next step in your career.

    All programs require the completion of a brief online enrollment form before payment. If you are new to HBS Online, you will be required to set up an account before enrolling in the program of your choice.

    Our easy online enrollment form is free, and no special documentation is required. All participants must be at least 18 years of age, proficient in English, and committed to learning and engaging with fellow participants throughout the program.

    Updates to your enrollment status will be shown on your account page. HBS Online does not use race, gender, ethnicity, or any protected class as criteria for enrollment for any HBS Online program.

    Credential Programs

    HBS Online's CORe and CLIMB programs require the completion of a brief application. The applications vary slightly, but all ask for some personal background information. You can apply for and enroll in programs here. If you are new to HBS Online, you will be required to set up an account before starting an application for the program of your choice.

    Our easy online application is free, and no special documentation is required. All participants must be at least 18 years of age, proficient in English, and committed to learning and engaging with fellow participants throughout the program.

    Updates to your application and enrollment status will be shown on your account page. We confirm enrollment eligibility within one week of your application for CORe and three weeks for CLIMB. HBS Online does not use race, gender, ethnicity, or any protected class as criteria for admissions for any HBS Online program.

    Does Harvard Business School Online offer an online MBA?

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    No, Harvard Business School Online offers business certificate programs.

    What are my payment options?

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    HBS Online offers a variety of payment methods to provide flexibility, including:

    • Credit and debit cards (Visa, MasterCard, Discover, and AMEX)
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    You may split your payment across two credit card transactions or send a payment link to another individual to complete payment on your behalf. A minimum payment of $350 is required for the first transaction.

    Some learners may also qualify for scholarships or financial aid, which will be credited against the program fee once eligibility is determined. Please refer to the Payment & Financial Aid page for more information.

    What are the policies for refunds and deferrals?

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    After enrolling in a program, you may request a withdrawal with refund (minus a $100 nonrefundable enrollment fee) up until 24 hours after the start of your program. Please review the Program Policies page for more details on refunds and deferrals. If your employer has contracted with HBS Online for participation in a program, or if you elect to enroll in the undergraduate credit option of the Credential of Readiness (CORe) program, note that policies for these options may differ.

     

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