Great ideas vs. confidence: Which counts more?

What's better? Having a great idea or being confident that you have a great idea?

Granted, it's not always a choice between confidence and a great idea - sometimes you really can have both. But keep those two things in mind as you read about this experiment done with business students at MIT.

The subjects were a group of up-and-coming business executives gathered at MIT to present their business plans to their peers. Their incentive was the promise that the best ideas would be recommended for funding.

The first experimental twist here is that the group members were not the only ones watching and evaluating the business plan pitches. A specially designed digital device - a sociometer - was also monitoring each presentation. Through measurements such as the amount of variability in their speech, their activity levels, the amount of mimicry shown between the presenter and the listeners, among others, this device wasn't recording what each person said in their pitch but rather how they said it. The sociometer was measuring another channel of communication that works without spoken language: our social sense.

At the end of the meeting, the business executives selected the ideas that they agreed would sell the best. And here comes the second experimental twist: the venture finance experts read the business plans but saw no live presentation. In the end, they had very different opinions of which business plans were most likely to succeed. Why?

Remember the other observer in the room - the sociometer? As it turns out, the sociometer was able to predict which business plans the executives would choose with nearly perfect accuracy. Both the sociometer and the executives (although they were unaware of it at the time) were busy measuring the social content of the presentation, quite apart from the spoken, informational content. And clearly, the social channel of communication informed more of their final decision. While listening to the pitches, the executives were gathering unspoken but crucial social information such as: How much does this person believe in this idea? How confident are they when speaking? How determined are they to make this work? And this social information - information that is clearly not on the printed business plans - is what influenced the executives' choices of business plans to the greatest degree.

When the finance experts read the business plans, this social sense was disconnected from the decision and so they had to evaluate the plans based on rational measures alone. Unfortunately, research has shown that investments made without that "personal connection" are far more likely to fail. This is why venture capital firms normally only invest in companies they can visit regularly iin person, and why many investors pay more attention to face-to-face interaction among the company's founders than they do to the business plan itself.

Clearly, projecting confidence can get you a long way in situations like this - although it's even better if you have a truly good idea that warrants that confidence! It's sobering, however, to think about how many great ideas are still sitting on the shelf because they weren't presented with the proper confidence ... and how many not-so-great ideas got the green light because of the overconfidence of the presenter. While our social sense provides us with a great deal of useful information, perhaps sometimes it can also lead us astray.

One of the ongoing aims of this blog will be to explore cutting-edge research about this social channel of communication and its implications. Across many studies in many situations ranging from dating to job interviews, this social channel of communication seems to profoundly influence major decisions in our lives - for better or for worse - even though we are largely unaware of it.

References:

Baker, W., and R. Faulkner, 2004. Social networks and loss of capital. Social Networks 26: 91-111.

Olguin, D., J. Paradiso, and A. Pentland. 2006. Wearable communicator badge: Designing a new platform for revealing organizational dynamics. Proceedings of the tenth International Symposium on Wearable Computing, Montreaux, Switzerland, October 11-14. See http://hd.media.mit.edu

Pentland, A. On the collective nature of human intelligence. Journal of Adaptive Behavior 15(2): 189-198.

Pentland, A. and T. Heibeck. 2008. Honest signals: How they shape our world. Cambridge MA: MIT Press.

For more information see:

Human Dynamics Laboratory, MIT