Competence and Confidence

In our daily lives we tend to encounter all types of individuals. Some of them know what they are doing, some of them do not; others have the allusion of knowing something with great degree, but don’t necessarily have any competence to back it up.

The world is filled with all sorts of people with varying degrees of competence and confidence. Have you ever stopped for a moment to think of the relationship between these two things, though?

Competence: “The quality of being adequately or well qualified physically and intellectually.”

Confidence: “Assurance: Freedom from doubt; belief in yourself and your abilities.”

From our youngest years we either have skills forced upon us (learning to fold towels, clean our rooms, or take out the trash, for instance) or we actively seek them out (putting things together, taking things apart, drawing, etc). When I was in the military I became acquainted with the government model of assessment of one’s competencies: Knowledge, skills, and abilities; known simply as “KSAs.” The theory, I gathered, was that various bits of knowledge built upon one another towards the end of developing skills, combining to form greater abilities: The knowledge, for instance, of such things as telephony fundamentals work together to form the basis for skills to work with telephone platforms, switching equipment, and the like. These skills cohesively bind to form the ability to maintain, troubleshoot, and repair these systems.

In human resources the term “skill set” is thrown around to describe just that—particular sets of skills that go into various job domains or career fields. We seek education, training, and our own versions of the school of “hard Knox” to acquire the various skill sets which each of us possess.

Well, most of us, at least. Let’s look at the other side of the coin.

Confidence, as described above, is a function of assurance in oneself. Following this to a logical conclusion of “what happens if you have confidence, but no competence” we are left with a simple, glaring truth: Arrogance.

In a book in which he speaks about MBA graduates and their successes, Henry Mintzberg writes “confidence without competence breeds arrogance.” In this article he goes on to describe the relationship between confidence and competence:

“Imagine a 2 x 2 matrix of confidence and competence. The effective people have both, the sad ones neither. The unfortunate people have competence but lack confidence. They are worth worrying about, however, because a small boost in confidence can have great benefits. The dangerous people, especially in this hyped-up society, are the remaining group: those whose confidence exceeds their competence. These are the people who drive everyone else crazy.”

I couldn’t have said it better myself.

If you think Mr. Mintzberg has some good ideas, you can pick up the book here!

It Doesn’t (Necessarily) Take an MBA

Many people in recent decades have been incessantly taught that college is the right way to go: Get a good job, retire, so on and so forth. While in this conventional wisdom lie some very valid points—education is completely worthwhile, there are diminishing returns in some scenarios. The classic picture of an Ivy League education being responsible for making one’s way up the corporate ladder and into the corner office isn’t necessarily the one that is based in reality.

In fact, the Wall Street Journal reports:

“Most CEOs of the biggest corporations didn't attend Ivy League or other highly selective colleges. They went to state universities, big and small, or to less-known private colleges.”

In fact, I know for a fact (as the article reports), went to Pittsburg State University in the small community of Pittsburg, KS: A place where I resided for a small time. An accounting major there, H. Lee Scott ascended to the top spot in the world’s top corporation: Certainly no small feat.

In fact, the “Oracle of Omaha,” the third-richest man in the world Warren Buffett, is quoted as saying “I don't care where someone went to school, and that never caused me to hire anyone or buy a business.”

Following the line of logic that this allows, let’s take a look at Gabriel Hammod, a Johns Hopkins student who had his mind set on law school. During the course of his undergraduate years there, however, he traded stocks, placing $1000 on Caterpillar. Finding he had a knack for it, Gabriel decided to join Goldman Sachs as a stock analyst. Instead of going to business school for an MBA, like many of his colleagues, he chose to raise $5 million and start his own hedge fund, Alerian Capital Management. Three years into it, his company now manages $300 million from New York and Dallas. Gabriel, on the other hand, at the age of 28, enjoys a seven-figure salary.

What was his logic?

“Like other young people on the fast track, Mr. Hammond has run the numbers and figures that an M.B.A. is a waste of money and time — time that could be spent making money. “There’s no way that I would consider it,” he says.”

The finance world is rife with these sorts of stories.

“At funds that manage $1 billion to $3 billion, people with just a few years of finance experience will make $337,000 this year, Mr. Zoia says, and those with five to nine years of experience will average $830,000, up 6 percent from last year. These estimates include analysts and researchers but not portfolio traders, who can make much more because they sometimes share in profits.”

The moral of this story is clear: While extrinsic qualifications such as college degrees and other pieces of paper are good, intrinsic qualifications such as leadership skill, are the make-or-break critical factor in success.