Why would this seemingly small point matter so much in a discussion of managers that overrate their performance? What matters is WHY most people believe in the fallacy of the hot hand. They believe because they're susceptible to memory biases. The undeniable fact is streaks are far more memorable than boring regularity. Believers also habitually perceive patterns where patterns don't exist. We humans get twitchy when witnessing random phenomena. We solve that by applying patterns to comfort us. Don't believe me? Check out the constellations in the night sky and tell me if Ursa Major looks like a big bear or the guy you draw when playing hangman? These frailties appear regularly in our work — often to the detriment of our objectives. In business, we'll call anything that happens twice a streak, and if the happening was bad enough, a manager will never forget it. Making matters worse, we'll write off a promising new receivables specialist that incorrectly applies the same customer's payments twice in six months.
The lesson: Use a distortion-free mirror to spot your vulnerabilities and limitations — we all have them but not everyone works to limit their impact. Seek out and wipe clean any biases or misperceptions that might be affecting your decision making. When you work hard to bring high-quality people onboard, use their talents and experience to help you find the sweet spot in your choices. Overconfidence is this century's dodo bird. Declare overconfidence to be a remnant from a time when 20th Century people thought knowing it all was a possibility.
"There are three things extremely hard: steel, a diamond and to know one's self" Benjamin Franklin, Patriot & Kite Enthusiast
About the author: Chris Traynor, SPHR, is the Director for Whip-Smart™ Management Consulting, Wayne, N.J., and has 25 years of experience in the solid surface industry as a consultant to fabricators, distributors and manufacturers. He can be reached at email@example.com.