Malcom Gladwell: Why 'overconfidence is more dangerous than incompetence'

Malcolm Gladwell on how to deal with a toxic, overconfident boss

"Overconfidence is more dangerous than incompetence," Malcolm Gladwell tells CNBC Make It.

That's because "overconfidence is a disease of experts" and "incompetence is a disease of idiots," he says. And while Idiots "don't get that far in the world," experts "rise to positions of leadership."

Overconfident leaders often "have an estimation of their abilities that is greater than their actual abilities. That's a very serious problem and that leads to mistakes every bit as consequential, if not more consequential than the mistakes of incompetence," says Gladwell, a best-selling author and host of the popular podcast, "Revisionist History."

Malcolm Gladwell attends the 'David and Goliath' book signing at the Barnes and Noble Union Square in New York City
Lars Niki | Getty Images

And "the more dangerous overconfidence gets ... the less likely [a leader] is to listen to anyone," Gladwell says. "It's ... very, very toxic." 

Billionaire financier and entrepreneur Ray Dalio has said himself that he very nearly wiped out his company, Bridgewater Associates, due to overconfidence — but he was able to learn from the experience. 

In 1982, Dalio was convinced the global economy was going to go into a depression. "I was dead wrong. ... The stock market began a big bull run, and over the next eighteen years the U.S. economy enjoyed the greatest noninflationary growth period in its history," he wrote in his book "Principles: Life and Work." 

Dalio lost so much money due to being "so stupidly arrogant," as he wrote in a 2019 Reddit AMA, that had to let go of his employees and borrow $4,000 from his father just to get by.

Today, partly because of that experience, Dalio's hedge fund operates with a policy of "idea meritocracy" where everyone is encouraged to share their perspectives honestly. 

And that is the way to defend against an overconfident leader, according to Gladwell.

"The best thing to do about that is just to make sure that companies, organizations have systems where people get feedback," Gladwell says. The goal should be "a diverse group of voices making decisions. That's the best way to safeguard" against overconfidence run amok, he says.

Organizationally, you want to aim for a democracy, not a dictatorship, Gladwell says.

"It's a lot harder to be overconfident when I have to sit down with a group of people who come, who have very different perspectives and justify what I'm doing," Gladwell says.

See also:

Malcolm Gladwell: You can't know someone in 10 seconds or on social media, and it's dangerous to try

Golden State Warriors co-owner: Job interview question filters out 'box-checkers,' finds 'genius'

What it was like to tell my kids I lost my job: 'Aren't you important' Mom?

Malcolm Gladwell: How curiosity can change the world we're living in