Navigate the hidden dangers of confidence-related errors

Test your theory first before fully implementing it
Let’s say you want to enter a new area of business but you have limited expertise in that field. Instead of investing all your money in the new venture, acquire one small company that’s already in that field and then work on building it up. If it succeeds, then invest more money or acquire a larger company in that field. If it fails, then at least you haven’t wasted too much money on the venture.

Make and then evaluate predictions about the potential success of a decision
For example, call a meeting for your sales team and ask everyone to give their prediction of the likelihood and size of a sales deal. After the actual sales results are in, gather the team again and evaluate the predictions that everyone made. This will show each team member the extent of their overconfidence, thus leading to more realistic evaluations in the future.

Improve your awareness and respect for those with a different mindset
Let’s say you’re a manager with a very argumentative communication style. Since you tend to get your way, you become overconfident in your decisions even when you’re wrong. To avoid this, imagine what it feels like to be someone who hates arguments and shuts down during disagreements. Put yourself in the shoes of those with a different mindset. This will help you engage more effectively with colleagues who have different but better ideas than you but are intimidated by your communication style.

Make it a policy to consult people with the opposite perspective before implementing a decision
For example, if you’re an optimist, make it a policy to always run your ideas through a pessimist so that they can show you the blind spots in your plan. If you’re a pessimist, always consult an optimist about your plans so that they can highlight any potential benefits you may be overlooking.