Page 93 - Benjamin Franklin\'s The Way to Wealth: A 52 brilliant ideas interpretation - PDFDrive.com

42 DON’T GET TOO COCKY

There’s a fine line between confidence and arrogance in business. Or, as
Franklin put it, ‘Great estates may venture more, But little boats should
keep near shore.’

Confidence often provides the ‘get up and go’ that is essential to success,
but if it tips over into arrogance it is likely to lead to bad judgement,
taking on more than you are truly capable of and overestimating your
abilities.

DEFINING IDEA…
Action and reaction, ebb and flow, trial and error, change—this is
the rhythm of living. Out of our overconfidence, fear; out of our
fear, clearer vision, fresh hope. And out of hope, progress.
~ BRUCE BARTON, AMERICAN AUTHOR, ADVERTISING EXECUTIVE AND

POLITICIAN

A recent study by the University of Leicester and the Economic and Social
Research Council found that those business people most confident of their
ability were also the most likely to fail. Dr. Pulford, from the University’s
School of Psychology, said, ‘When success depended on skill,
overconfidence tended to cause excess entry into a marketplace…market-
entry decisions tend to be over-optimistic, with the inevitable result that new
business start-ups tend to exceed market capacity, and many new businesses
fail within a few years.’

The commonest reason for this was that the overconfidence led them to leap
into new ventures without sufficient research or respect for the opposition
and the hurdles to be overcome. In particular, they overestimated the
capacity of a market to support a new player, and the attraction that their
novelty would have for existing customers.

Overconfidence is more common than you think. Consider these figures
from investment advisors The Motley Fool: