How to Rely on Our Knowledge if We Misjudge What We Know
By Karen Firestone
One of the tenets of sensible risk taking, the topic of my recent book, “Even the Odds,” is relying on own knowledge and experience. The more I describe that principle, the more I realize that it needs a footnote. Often, we do not have a solid grasp on what we do and do not know about a given subject. We may underestimate what we know or, on the other hand, exaggerate our understanding or competence.
A condition, originally discovered in high achieving women. As the name implies, these highly capable women felt that they were fooling everyone into believing that they were responsible for their accomplishments. They were convinced that they would eventually be exposed as imposters. These hapless victims never attribute positive outcomes to their own innate abilities. They truly believe that their success is a function of luck or some non-innate element, even if it’s their own determination.
“Overclaiming” is almost the opposite phenomenon, in which individuals of all competences exaggerate their own knowledge about a given subject. Most of us have ample experience with individuals – colleagues, clients, vendors, friends, and sometimes, ourselves – who overstate knowledge and expertise. We are less aware, naturally, of when people around us are feeling like frauds because few people want to admit that. However, when decision makers fall under either spell, the results can be harmful.
70% of adults admit to having experienced Imposter Syndrome in their professional lives. The downside to believing that your success is not merit-based includes a lack of self confidence, fear of advising others, and reluctance to take on new challenges. However, a silver lining is that these “imposters” are often high achievers who will work even harder avoid being exposed as frauds. Despite their insecurities, people who suffer from Imposter Syndrome generally take on heavy responsibilities and persevere with extreme discipline and determination.
Overclaiming presents a set of very different problems. These people exaggerate their competence to others and to themselves. Studies even show how individuals will profess to know about terms related to their own field of expertise which the researchers have made up. Rather than saying that they don’t know or that they have never heard of these terms, (think “meta-differential collateral credit”, for example) they indicate an understanding of these bogus concepts whether medical devices, financial instruments, or chess moves.
We don’t want managers who magnify their knowledge to advise staff with misinformation or volunteer for tasks far above their skill level. However, over-claimers generally have much more self-confidence than imposter sufferers, so they might be best tapped for tasks that require reaching for difficult challenges.
How then can we rely on our own knowledge if we have a tendency to under or overstate what we know, even to ourselves? I would argue that we can test ourselves on that. Let’s use an example that draws from the headlines.
Moments after the UK citizens voted to leave the European Union, pundits everywhere limbered up their fingers and their vocal chords to expound upon the expected impact on currencies, global growth, stock markets worldwide, and labor force instability. At our investment management company, as we watched in some shock and dismay as equities tumbled, we decided that we needed to write something reassuring to our clients.
As the CEO, that task fell to me, but what could I write that would be helpful in any way? I am not an economist or an expert on international markets. My comments about Brexit, its effect, and our outlook needed to be based on what we actually knew rather than on speculation. We had all heard extensive amounts of conjecture leading into the vote, most of which was totally incorrect.
I read through numerous articles and forecasts by “experts”. Many predicted that the markets would fall at least 10%, that economic growth across the globe would decline, and that the UK would struggle with the complications of EU extraction for years to come. However, since this vote was unprecedented, there were no obvious examples from the past and I decided to focus only on the facts we had at hand.
The pound had fallen and the dollar was up – that was clear and undeniable. UK goods were on sale to foreigners, with the opposite result in the US. The growing probability that some other countries in the EU would also vote to leave would reinforce the dollar’s current status as a “safe currency.” Any macro calls beyond these points would be speculation and overclaiming on our part.
I honestly evaluated my partners’ and my own understanding of the Brexit vote and its implications, being careful to craft our statement to clients within the scope of that knowledge. Then I refocused on the strength of our business which is the professional discipline we apply to stock analysis, studying the fundamentals and financials, and making trading decisions. This is the realm in which we are legitimate professionals and not imposters.
To test whether you are falling into the Imposter or the Overclaiming camp, try the following guide:
- – You are NOT an Imposter in a field of expertise if:
- – You spend most of your day engaged in and succeeding in that pursuit.
- – You could handle questions about the specific nature of the subject matter.
- – Someone pays you for that competence.
You ARE Overclaiming if:
- – You cannot answer questions on the subject easily.
- – No one pays you for that expertise.
- – You have experienced limits to your knowledge in the recent past and have admitted to yourself that you need to augment your skill set.
- – You wouldn’t want your parents, spouse or children to rely on your ability to handle this particular risk.
Finally, be honest with yourself about whether this challenge is beyond your scope of knowledge and experience. It’s an opportunity to learn.