There is a cautionary tale from this reference from Proverbs 12:15 for any business which wants to improve its way of working; how competent you think you are is probably not the reality of how competent you actually are.
The worst performers think they are good, and the best think that everyone is like them or better. The effect has Nobel Prize winning roots in Psychology. It is called the Dunning-Kruger effect and we see its impact demonstrated in businesses across the world. Dunning and Kruger found that, for a given skill, incompetent people will:
- Tend to overestimate their own level of skill;
- Fail to recognize genuine skill in others;
- Fail to recognize the extremity of their inadequacy
Meanwhile, they found that people with true ability tended to underestimate their relative competence. In addition, participants who found tasks to be relatively easy erroneously assumed that the tasks must also be easy for others.
There are strong parallels in business. The Customer Framework (TCF) and their partners use a methodology called SCHEMA® to assess and benchmark an organisation’s competency in ‘managing customers’. These assessments are carried out on large companies throughout the world and some SCHEMA® assessors are baffled by a finding from the assessments they carry out; the best companies, those who are most effective and efficient in the way they manage customers, think others are as good or better, and the worst believe they are much better than they are. The best will listen to advice and are hungry to learn.
They will combine external advice with their own thinking and determine how they will improve. The worst are reluctant to accept that they are poor performers, and often there is a culture within management that simply will not accept bad news. The worst companies, using Dunning and Kruger’s terminology, suffer from “illusory superiority, mistakenly rating their ability much higher than average”. You see this too in the way companies view and manage customer feedback. “What are customers talking about, I know my service is good; the research must be flawed”; “The customers’ complaints weren’t valid because that’s our process”.
We have noted another parallel with Dunning and Kruger’s work. They found an improved ability in poor performers to estimate how good they are was achieved after minimal tutoring in the skills they had previously lacked, regardless of the negligible improvement in actual skills.
In the business world, after a short intervention, where a worst performing company is objectively shown its assessment scores and listens to examples of best practice from elsewhere, the ‘light’ turns on even resistant senior management. This is the start of the path forward to improved performance and the delivery of a more profitable customer experience.
Neil Woodcock is Chairman of The Customer Framework and Visiting Executive Professor at Henley Business School.
Neil Woodcock
CEO and Chairman – The Customer Framework
Neil is ‘one of the Europe’s leading experts and authors in Customer Management’ (quote from the IDM). His background in Mobil, Unilever, Accenture and McKinsey has provided him with the knowledge and experience to advise companies, practically, about how to improve bottom line profit through more effective and efficient Customer Management. He has an ability to rapidly understand and identify critical issues in Customer Management. His passion is to encourage CEOs, analysts, economists and stockbrokers to understand the vital role of Customer Management in long-term sustainable corporate performance. His latest research findings show that the step change in Customer Management over the last few years has been significant and he spends most of his time helping large organisations ‘prioritise the possibilities’ offered by near real time customer management, the deployment of insight, the shift in the locus of control of relationships towards the customer, the integration of social and CRM, the need for business agility and the focus on the active management of structured and unstructured data.
Neil co-founded QCi Ltd and CMAT (the world’s leading benchmarking tool) helping steer the company to become one of the leading niche consultancies in the world, operating across the globe. He was Chairman of QCi, bought by the WPP group in 2001. His work with one client resulted in the client saying ‘for me, it was a life changing intervention’ (MD, US listed company, July 2008).
Neil has co-authored 5 books, various reports and numerous articles on Customer Management. He is on the editorial board of leading journals and is an honorary fellow of the IDM. He is a regular speaker at conferences, at home and overseas.