The Dunning-Kruger Effect on Organizational Agility

Abstract

Designing organizations to quickly adapt to changing conditions, agility, has become a key dynamic capability for success in the 21st century. The Dunning-Kruger effect suggests that people overestimate their ability and that of the organization because they are ignorant of unknown, unkowns. Said another way, people tend to overestimate their ability because they do not know what they do not know. Conversely, executives tend to underestimate the ability of subordinates in the organization. This research project used the Performance Triangle model and accompanying diagnostic instrument to analyze the difference in perceptions between executives and workers in 374 organizations to identify possible disconnects in important capabilities of organizational agility: success, leadership, systems, culture, people, and resilience, along with 27 underlying individual elements. The results show that executives consistently, and significantly, overestimate the ability of themselves and their organization to adapt a change while underestimating the capabilities of workers. Executives were significantly overconfident in the dimensions of success, culture, people, and resilience. Differences in trust emerged as the single most statistically significant element that drives organizational agility. The authors conclude with a discussion of the managerial implications on how this condition influences the ability of organizations to quickly adapt to changing conditions …agility.