Keep Experts on Tap, Not on Top

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Among the many qualities that distinguish successful leaders from millions of less-successful executives in the world is an awareness of the limits of their knowledge. They know what they know, they appreciate what they don't know, and they have a healthy respect for what they don't know they don't know. In short, they have great meta-knowledge.

Meta-knowledge can be thought of as a lack of hubris, an intellectual humility of sorts. Those who see the world probabilistically seem to better navigate volatile environments because they are wired to embrace uncertainty. They understand that they don't know anything with 100% certainty and are therefore open to ideas different from their own.

The psychologists Daniel Kahneman and Amos Tversky demonstrated quite convincingly that we human beings are not the model-optimizing "rational" actors that many economists historically believed we are. One of their key findings was that humans are consistently overconfident, suggesting that we generally have poor meta-knowledge. We tend to think we know more than we actually know. A corollary of this result is that we also tend not to know what we do not know.

In my experience, experts are among the least successful predictors in times of massive uncertainty. This is not to suggest that experts don't have significant and valuable knowledge; quite the opposite, they likely do. Rather, it implies that they think they know more than they actually do and therefore exhibit more confidence than is warranted. The result: a significant number of very visible expert predictions have gone embarrassingly wrong.

Consider for instance, two books that made it to the top of the bestseller lists: The Population Bomb and The Great Depression of 1990. The first, by Stanford biologist Paul Ehrlich, noted in 1968 that "the battle to feed all of humanity is over...in the 1970s, the world will undergo famines — hundreds of millions of people will starve to death...." Ehrlich failed to appreciate the possibilities of the "Green Revolution" which dramatically increased agriculture's productivity. Incidentally, the green revolution was already underway when Ehrlich wrote his book, he just didn't grasp the potential impact. The Great Depression of 1990, by Southern Methodist University economist Ravi Batra (which stayed on the bestseller list for 10 months in hardcover and over 19 months as a paperback), totally missed the technological developments that made the 1990s among the most productive decades ever.

Lest we conclude it's only doomsday experts that miss the mark, it's worth highlighting that Yale economist Irving Fisher noted on October 17, 1929 that "stocks prices have reached what appears to be a permanently high plateau," a mere days before the Great Crash welcomed the Great Depression. And of course, there's James Glassmann and Kevin Haskett's Dow 36,000, published in 1999, mere months before the Dow Jones Industrial Average began a slow, long, and painful decline.

Many of these "experts" adopted single-discipline approaches to developing insights; they were, to use the language of my prior HBR blog post, "specialists." They were truly knowledgeable within their domain, but it was often developments outside of their domain that derailed their predictions. They failed, it seems, to have a broad enough perspective.

Generalists, on the other hand, are those who have broad knowledge but lack deep domain expertise. Most generalists do not claim to be expert at anything, making them psychologically more receptive to ideas distant or different from their own. They are, it seems, more aware of what they do not know and understand that there is a large body of information that they do not know they do not know.

Why does this matter? When facing massive uncertainty, as exists in today's highly interconnected global economy, it is essential to appreciate both what one does know as well as what one does not know. Such logic is not shocking, but it has significant ramifications for how one should manage his or her career, and how organizations should manage their human resources. Specifically, the best decision-makers (i.e. leaders) in times of uncertainty are likely to be those who possess above-average skepticism and intellectual humility. Individuals should therefore seek career paths that constantly put them in unfamiliar roles and through which they can learn what they don't know. The feedback one receives through these roles will likely improve one's intellectual self-awareness.

Another interesting implication is that specialists and experts should be seen as resources to tap into when needed. They have a very valuable role to play; it just may not be as a leader. (Of course, the ideal would be to develop expertise in dozens of domains en route to becoming a leader, but that may make for a very long career trajectory.) My friend Michael W. Sonnenfeldt, founder of Tiger21, a peer-to-peer education group for high-net worth individuals, has eloquently observed a key insight: "Many of us have learned it's best to keep experts on tap, not on top."

More blog posts by Vikram Mansharamani

Vikram Mansharamani is a lecturer at Yale University, a Tiger21 Scholar, and author of Boombustology: Spotting Financial Bubbles Before They Burst (Wiley, 2011). Follow him on Twitter @mansharamani.

All Hail the Generalist

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We have become a society of specialists. Business thinkers point to "domain expertise" as an enduring source of advantage in today's competitive environment. The logic is straightforward: learn more about your function, acquire "expert" status, and you'll go further in your career.

But what if this approach is no longer valid? Corporations around the world have come to value expertise, and in so doing, have created a collection of individuals studying bark. There are many who have deeply studied its nooks, grooves, coloration, and texture. Few have developed the understanding that the bark is merely the outermost layer of a tree. Fewer still understand the tree is embedded in a forest.

Approximately 2,700 years ago, the Greek poet Archilochus wrote that "The fox knows many things, but the hedgehog knows one big thing." Isaiah Berlin's 1953 essay "The Fox and the Hedgehog" contrasts hedgehogs that "relate everything to a single, central vision" with foxes who "pursue many ends connected...if at all, only in some de facto way." It's really a story of specialists vs. generalists.

In the six decades since Berlin's essay was published, hedgehogs have come to dominate academia, medicine, finance, law, and many other professional domains. Specialists with deep expertise have ruled the roost, climbing to higher and higher positions. To advance in one's career, it was most efficient to specialize.

For various reasons, though, the specialist era is waning. The future may belong to the generalist. Why's that? To begin, our highly interconnected and global economy means that seemingly unrelated developments can affect each other. Consider the Miami condo market, which has rebounded quite nicely since 2008 on the back of strong demand from Latin American buyers. But perhaps a slowdown in China, which can take away the "bid" for certain industrial commodities, might adversely affect many of the Latin American extraction-based companies, countries, and economies. How many real estate professionals in Miami are closely watching Chinese economic developments?

Secondly, specialists toil within a singular tradition and apply formulaic solutions to situations that are rarely well-defined. This often results in intellectual acrobatics to justify one's perspective in the face of conflicting data. Think about Alan Greenspan's public admission of "finding a flaw" in his worldview. Academics and serious economists were dogmatically dedicated to the efficient market hypothesis — contributing to the inflation of an unprecedented credit bubble between 2001 and 2007.

Finally, there appears to be reasonable and robust data suggesting that generalists are better at navigating uncertainty. Professor Phillip Tetlock conducted a 20+ year study of 284 professional forecasters. He asked them to predict the probability of various occurrences both within and outside of their areas of expertise. Analysis of the 80,000+ forecasts found that experts are less accurate predictors than non-experts in their area of expertise. Tetlock's conclusion: when seeking accuracy of predictions, it is better to turn to those like "Berlin's prototypical fox, those who know many little things, draw from an eclectic array of traditions, and accept ambiguity and contradictions." Ideological reliance on a single perspective appears detrimental to one's ability to successfully navigate vague or poorly-defined situations (which are more prevalent today than ever before).

The future has always been uncertain, but our ability to navigate it has been impaired by an increasing focus on studying bark. The closer you are to the material, the more likely you are to believe it. In psychology jargon, you anchor on your own beliefs and insufficiently adjust from them. In more straightforward language, a man with a hammer is more likely to see nails than one without a hammer. Expertise means being closer to the bark, and less likely to see ways in which your perspective may warrant adjustment. In today's uncertain environment, breadth of perspective trumps depth of knowledge.

The declining returns to expertise have implications at the national, company, and even individual level. A collection of specialists creates a less flexible labor force, one that requires "retraining" with technological developments creating constantly shifting human resource needs. In this regard, the recent emphasis in American education on "job-specific" skills is disturbing. Within a company, employees skilled in numerous functions are more valuable as management can dynamically adjust their roles. Many forward-looking companies are specifically mandating multi-functional experience as a requirement for career progress. Finally, individuals should manage their careers around obtaining a diversity of geographic and functional experiences. Professionals armed with the analytical capabilities (e.g. basic statistical skills, critical reasoning, etc.) developed via these experiences will fare particularly well when competing against others more focused on domain-specific skill development.

The time has come to acknowledge expertise as overvalued. There is no question that expertise and hedgehog logic are appropriate in certain domains (i.e. hard sciences), but they certainly appear less fitting for domains plagued with uncertainty, ambiguity, and poorly-defined dynamics (i.e. social sciences, business, etc.). The time has come for leaders to embrace the power of foxy thinking.

Vikram Mansharamani is a lecturer at Yale University, a Tiger21 Scholar, and author of Boombustology: Spotting Financial Bubbles Before They Burst (Wiley, 2011). Follow him on Twitter @mansharamani.

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