Ignorant and intransigent: Beware the Dunning-Kruger Effect!

psychology of small business success

All of us suffer from the condition that we don’t know what we don’t know. However, for many, there lurks a problem that is even greater and it has come to be known as the Dunning-Kruger Effect.

Psychologists David Dunning and Justin Kruger uncovered and described an interesting – and troubling– phenomenon. Many of the people who are the least informed or knowledgeable, nonetheless believe that they are among the most informed and knowledgeable.

This is exactly the opposite of the way it should be, right? We would like to think that we can recognize our weaknesses, but the Dunning-Kruger Effect (which has been reaffirmed by many follow-up studies) says that we often don’t. Dunning and Kruger found that people whose knowledge puts them in the bottom 12 percent thought they were in the top 65 percent.

This has practical implications for small business owners:

  1. It’s another reason every small business owner should be working with a coach or mentor.
  2. It should make you cautious to believe everything employees tell you with regards to their skills and knowledge.
  3. It proves how important ongoing training and retraining are for your team.

Let’s look at each of these three issues a bit more closely.

Get a coach

It’s a great idea to be working with a coach or mentor because an experienced business professional will be able to teach you things beyond your personal experience. This person will have lived through economic conditions and business situations that have not yet crossed your path.

But beyond this, if you have an open, honest, and communicative relationship with your coach, your coach will be able to point out areas where you hold misguided – or flat out wrong – ideas. Your responsibility is to be open to the possibility, and even the likelihood, that some of your pet ideas may be way off base.

By the way, I came across a simple five-question financial literacy quiz as I was preparing to write this. It so happens that one of the areas where Americans suffer from the Dunning-Kruger Effect most is in the financial realm. We think we understand finances better than we do. I hope you’ll ace this quiz, but if you don’t, let it be a warning sign that you need to talk about finances with a professional!

Be somewhat skeptical

People oversell their skills and knowledge during the job interviewing process anyway, but when you add the Dunning-Kruger Effect to that, it compounds the problem.

You need to always have a respectful, polite and open “show me” attitude. When people on your small business team say they can do something, be on hand to watch them do it the first time. Let your employees know that everyone on your team is there to help one another, including you.

Put emphasis on training

All of this shines a spotlight on the importance of training. Another element of your training and your company culture should be that you want processes done in a uniform manner. In other words, you don’t want it to be “every man for himself” when it comes to processes and procedures.

Unfortunately, with severe cases of Dunning-Kruger, sufferers are reluctant to let go of their ways. After all, they believe in their hearts that they are right. Consistent nudging via ongoing training and retraining will often help change this attitude. However, if you have someone on your team who refuses to admit that he or she is wrong after many opportunities, it might be time to part ways with that person.

Have you witnessed the Dunning-Kruger Effect personally? Do you think there might be areas in your life where it has affected your judgment? If you answered no to that last question, ask someone you trust and whose knowledge you respect if he or she has ever witnessed the Dunning-Kruger Effect in you.

And, be willing to accept the answer…