How to stop under-confidence.
28th October 2016
Thereâ€™s a really interesting piece in Time magazine this week. The theme is how under-confidenceâ€ hurts the economy. The thesis is, â€œmuch like we underestimate risk when we are over confident, today Americans are doing the reverse.â€
There’s a really interesting piece in Time magazine this week. www.time.com/4545074/under-confidence-economy. The theme is how under-confidence” hurts the economy.
The thesis is, “much like we underestimate risk when we are over confident, today Americans are doing the reverse.” This draws clearly on the two types of thinking – fast and slow or system one and system two - proposed by Nobel prize winner Daniel Kahneman.
Under-confidence is limiting economic growth.
Peter Atwater, writing in Time Magazine suggests: “when we are under-confident, self-interest and near-term time frames dominate our behaviour… when we are under-confident we routinely struggle with abstract thinking.” The result is seeing “opportunity as finite and something others seemed to have somehow gained at our expense.” His conclusion is that the consequence is “limiting business investment and economic growth.”
Although Atwater is writing about the American scene, we can relate the same experience closer to home. Not least because it is human nature. Kahneman’s work identified a dichotomy between two modes of thought – System 1 is fast, instinctive and emotional: System 2 is slower, more deliberate, and more logical. The struggle is to ensure one type of thinking doesn’t bias our behaviour. The struggle is to sail between the Scylla and Charybdis of under and over confidence.
Building business confidence.
Earlier this week I attended a Department of International Trade Event, Kick Start your Exporting, conceived and delivered by Newable. Walking up to the event I was worried about Newable throwing a party that no one would turn up to. In these really uncertain times, it isn’t best to hunker down rather than even think about starting to export?
But that’s system one (under-confidence) taking over. The event was all about system two thinking in the form of Newable’s International Trade Advisers. The ITA’s have quite a lot going for them – they’ve seen it before and done it before. They don’t promise the earth to potential exporters, but they do provide a boost of confidence – as well as many other practical things – that ensure that businesses do not miss out on economic growth.
Building business confidence.
This was also the theme of my meeting with Newable’s Patrick Nicholson who delivers our Get Ready to Supply programme in partnership and on behalf of the JPMorgan Chase Foundation. This programme is designed to address the lack of confidence sometimes found in micro, small and media sized business faced with the same challenge of procurement and supply chain opportunities that exist within major corporates.
Confidence is also a key component of Newable’s small business loans service. Mentoring is baked in, helping to provide the support businesses need when faced with uncertainty. As Erica, who run the Busy Brush Café, told us: “it’s given me the confidence that no matter what happens, I can do it, I can run a business and make it successful and make it work.”
Working on your confidence.
The article in Time suggests that: “undoing under-confidence is slow and tedious work.” Actually we beg to differ. It is not easy for sure. However, my experience at Newable suggests that if you put your mind to it (particularly the System 2 mind!) then it is not slow and certainly not tedious.