Overconfidence in Full Effect
Every so often, I hear the hilarious statistic cited that ninety percent of drivers think that they are better than the average driver. It goes without saying that this is a mathematical impossibility. And it demonstrates the proven cognitive bias known as “illusory superiority.” Why, in an evolutionary sense, humans ended up overestimating their own abilities is beyond me (although it’s a stimulating web search rabbit hole), but it never ceases to astonish me when I see it. And see it I did during a recent foray into some of APQC’s Open Standards Benchmarking® data on the finance organization.
For this survey, APQC asked representatives from 752 organizations “what is your assessment of your business entity’s overall performance relative to industry peers?” The results were, like I said, astonishing.
We found that more than half (58 percent) of organizations consider themselves to be in the top quartile of performance. That’s not even remotely close to possible! Moreover, only 4 percent consider themselves to be in the bottom quartile. And, yes, I double-checked that previous sentence for typos.
For another fun look at this data, let’s see how the different industries surveyed stack up on this overconfidence scale:
Percent of Organizations that Consider Themselves to be within the Top Quartile
As you can tell, not one of the industries polled has a realistic view of itself. Even the most humble industry—industrial products—is 17 percentage points away from the mathematical reality.
So why am I telling you this? To remind you of something that, deep down, you already know: human intuition is flawed and needs objective data to counter-balance it. APQC can help you with that. Our vast reservoirs of benchmarking data—accessible via the benchmarking portal— can help give you and your organization a sanity check to determine where you really stand compared to your peers. Hopefully that’s within the top quartile, but isn’t it worth making sure?