The power of humility and The Greater Fool Theory

There is a very interesting behavioural economic theory called The Greater Fool Theory. When you hold an investment, and you think, you cannot make any more money out of it, you look for a greater fool to sell your investment. Someone buys the asset from you, thinking, that they can perhaps make more money than you did. 

The investment keeps changing hands, with higher valuation, till the last person, who cannot make money from the investment. That person is the greatest fool. Usually the cycle never stops. Someone always figures a way out. That is the underlying spirit of intellectual competitiveness that drives market forces. You feel you know something that others do not know. You feel you are better than everyone else. 

We are now witness to the emergence of universal competitiveness. At the unit level, individuals compete against each other for scarce jobs. Teams and functions compete for resources. Companies and businesses compete for market share, tough commercial negotiations and favourable regulatory interventions. Political parties compete to secure electoral and ideological influence. Governments are now overtly competing to secure future resources, geographical dominance and perhaps even religious dominion. Countries have formed Treaties, Groups, Leagues, Councils, Alliances and Unions on the lines of ideology; ranging from terror, currencies, debt, trade blocs & commodities, human movement & migration, speech, human rights and industrial strengths. 

This competitiveness makes for very interesting television viewing and digital dissemination. We are now subject to a barrage of opinions and news. Our feeds and personal opinions are fed into our friends’ feeds and now battles are fought on individual but interactive digital screens. Tweet for a Tweet, Share for Share, Comment for a Comment; we are being saturated by combat. Battle lines are constantly being drawn and redrawn. With battle lines comes polarisation leading to a further deepening of trenches. 

Perhaps the time has come to take a step back from our stated positions.

For many years we seem to be stuck. For that, we need to have the humility to say, that something is broken, and to seek a second opinion. 

Many of you would have seen this little clip go viral. It stars Jeff Daniels who plays the role of Will Mcavoy, a main anchor at a news channel, and he is asked the question, “What Makes America the greatest country in the world”. Watch here what happens.  

The last line is perhaps the most telling, “the first step in solving a problem is recognising that there is one.” Here is the interesting bit, which never went viral. In the first season, Will Mcavoy goes on to reconstruct the entire news philosophy of his channel. He starts by saying that he has been wrong. It speaks of humility. Now watch a small clip from the season finale here.

Jennifer Johnson, sorority girl, lands up at the Mcavoy’s office to apply for an internship. She talks about the greater fool, and how she is driven to become the greater fool. More often than not, it is the perceived greater fool who has the humility to say, let me find someone who knows how to solve the problem. If they can not, well, they learn for the next time. So you will wonder what is the link between the greater fool theory and humility. Let’s explore one of the pioneering minds in the investment world, Sir John Templeton. A billionaire investor and considered to be a pioneer in mutual funds. 

In his book, “The Humble Approach”, he states, “Maybe the earth was designed as a place of hardship because it is the best way to build a soul—the best way to teach spiritual joy versus the bodily ills”. It is fair to say that Templeton, counted humility as a foremost virtue and strength in leaders. This is what he said:

Sir John Templeton

“Humility is not self-deprecation. To believe that you have no worth, or were created somehow flawed or incompetent, can be foolish. Humility represents wisdom. It is knowing you were created with special talents and abilities to share with the world; but it can also be an understanding that you are one of many souls created by God, and each has an important role to play in life. Humility is knowing you are smart, but not all-knowing. It is accepting that you have personal power, but are not omnipotent... Inherent in humility resides an open and receptive mind… it leaves us more open to learn from others and refrains from seeing issues and people only in blacks and whites. The opposite of humility is arrogance— the belief that we are wiser or better than others. Arrogance promotes separation rather than community. It looms like a brick wall between us and those from whom we could learn.

When we think of other leaders, we see obvious paragons of humility. Warren Buffet who continues to live a modest lifestyle. Rahul Dravid, who now coaches the junior Indian Cricket team is another epitome of humility. While we still consider humility as a virtue, we think of it as something “nice to have”. Some even liken it to be the privilege of the rich (I have loans to pay). 

We know instinctively that humility is a virtue worthy of possession and use, but we seem to know very little about it. To that end, the John Templeton foundation has funded studies on humility to the tune of millions of dollars. 

A good place is to start with the roots of the word humility. Humus means earth or ground. Humilis means “on the ground”. That is why we use the phrase, down-to-earth, being grounded, a grassroots person. Aristotle called it the golden mean between arrogance and lack of self-esteem. Humility is about seeing the self and others as worthy of equal dignity, and sharing human strengths and limitations. It is the way you can describe yourself without positive or negative exaggeration. It is when you can make an accurate assessment of yourself and have the ability to non-defensively acknowledge that perhaps you do hold some limitations, imperfections, and knowledge gaps. 

When people who are at the pinnacle of achievement in their field, they want to get even better. Think of how musicians, sportsmen and business leaders evolve? They have the humility to understand that there are frontiers that they can breach. They always remember the principle of trial and error. It is a process of learning. 

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At a business level, humility is a process where decisions are made by those with knowledge rather than grade and entitlement. With the support of the John Templeton Foundation; Sonja Lyubomirsky and Elliot Kruse, Joseph Chancellor and Peter Ruberton have done some stellar research.

They propose that humility has five hallmarks:

First, a secure and accepting self-identity, where you are aware of your own values and beliefs; Second, freedom from distortion about one’s strengths and weaknesses, knowledge gaps and imperfections; Third, openness to new information about oneself and the world. Fourth, high focus on others relative to the self; keeping their achievements and capabilities in the perspective of the world and that one is part of a universe; Fifth, a belief that other people are equally worthy, and that everyone can contribute. 

The opposite of humility is high self-focus. An exaggerated positive view, could actually be signs of arrogance or narcissism. An exaggerated negative view would lead to depression or low self-esteem. 

The authors developed a Brief Humility Scale, which is reproduced below. Please answer these questions based on how you feel at this moment:

(1 = strongly disagree; 4 = neither agree nor disagree; 7 = strongly agree)

1. I feel that, overall, I am no better or worse than the average person.

2. I feel that I have both many strengths and flaws.

3. I feel that I do not deserve more respect than other people.

* 4. To be completely honest, I feel that I am better than most people.

* 5. I feel that I deserve more respect than everyone else.

* 6. I feel that I do not have very many weaknesses.

* Items 4-6 are reverse-scored.

The humility stakes are worthy of our studied consideration: 

Humility and charity: In their study, they found that people, who scored high on humility, were more likely to give to charity and help others.

Humility and academic performance: Students who demonstrate humility perform better at academics. How was that? 

•  Students, who were more humble, could accurately estimate the time they would need to study for a particular test and then put in the necessary effort. 
•  They would develop strong role models and attempt to learn from them. 
•  If they received poor test scores or feedback, they were quicker to take action for the next test, than their less humble friends. 

Students who were humble reported higher scores, general mental ability, conscientiousness, and self-belief. Research even showed that students with lower mental ability but higher humility, compensated with higher effort.  

Humility and Doctor – Patient relationships: Even doctors and patients had better outcomes. Humble physicians were rated as more effective at communicating with patients than their less-humble counterparts (Ruberton et al., in press). Their communication skills were closely associated with better patient outcomes (Ong, de Haes, Hoos, & Lammes, 1995; Stewart, 1995). 

Humility also has an impact in the business world: For too long, we have attributed the leader to know and do everything for us. We see the leader to be a dominant and aggressive person. Phrases like “nice guys finish last” have pushed humility into the background. 

• Humble employees, when they are praised, want to become better at their work. They deploy more effort and challenge themselves even more. 
•  Research shows that employees who were better at estimating their strengths and weaknesses received better supervisor ratings during their performance appraisals. 
•  Followers of humble CEO leaders felt more empowered. 
• Some research also shows a significantly higher proportion of wildly successful companies have a humble leader at the very top. 

How does that happen? 

When leaders have the humility to acknowledge areas of ignorance and inexperience, they were able to foster learning and adaptation. As mentioned earlier, humility is letting the person who has the best perspective and knowledge make the decision. Many call centers have given the Customer Service Agent the full authority to resolve a customer issue. Many organisations now leave the hiring and remuneration decision to the hiring manager. In part, it is humility that drives the process. 

Recall a cross-functional project. You would have enjoyed the project, not only for the outcome, but if your strengths were accurately acknowledged and put to work, either by the leader or your peers, their humility to defer to you led to you enjoying the project and you acting in line with their enhanced but accurate expectations from you delivered a superior outcome. 

Humility is also known to play a key role in providing customer care. Ever seen a haughty or arrogant shop assistant? On the other hand, leaders with high levels of narcissism were more prone to commit white-collar crimes. 

What are the types of humility: 

A team of Psychologists recently published a paper titled “Distinguishing intellectual humility and general humility”. They propose that General Humility is an accurate view of the self and ability to control your egocentrism to cultivate a perspective of the other.

People who have a need for power, have a desire to win in every situation. When faced with dissent of angry faces, their response is to establish dominance. They respond to anger with anger. Escalation is an obvious outcome. People who are more humble would temporarily tone down their own message and try and take control of the situation by bringing in calm and sanity. 

People who are power hungry, encourage groupthink and work only within closed circles or cliques and coteries. Leaders who are more inclined to humility would reach out for more information before they make a judgement. They strive for deliberation, critique, diversity of thought and collective intelligence. 

Image credit: Poetry and Picture from Prathap Suthan

This is a poetry written by Prathap Suthan. I thought it is a pretty good example of humility. There is a fine balance of their assessment, of their impact and capability. There is an acknowledgement that there are writers better than him. There is awareness that he can still make a difference to make words happy within themselves. 

Why is intellectual humility needed? 

We often overestimate our strengths and under-estimate our weaknesses. I still have to come across a performance appraisal, where an employee started by saying that their performance did not deserve the highest rating. When presented with data, we tend to go with the reports we first receive and discount the news you get later on. If you love a hotel or a brand, you will refuse to hear any news that negates your opinion. That is why news channels start with the big news first. They are aware that the more news that they give you, there are lesser chance of retention. 

I know many board members who would say that they needed more time to process the data. They had no qualms of indicating that they were only human. We would think that it was procrastination. Looking back, perhaps they were being human and practising intellectual humility. 

Therefore you need to have the humility to move beyond the first couple of data points that are presented, and overcome our own biases. Intellectual humility is correlated to forgiveness, helpfulness and a log of aggression. Intellectual humility leads to higher and faster learning and personal growth and better relationships. 

What humility is not? 

It is not about being below, as much as it is about not being above someone. Humility is not about being the proverbial doormat, sucker, nice guy, weakling, and spineless. It is not about being a procrastinator or indecisive. It is not about avoiding conflict to appear being the nice guy. It is most certainly not about suppressing your own emotions. 

Humility is about being grounded and remaining neutral, even when your own people want you to be “on their side”. Humility is a nutrient. It is when you move ahead with quiet purpose and resolve and carry the diversity with you. It is about not operating from a competitive reflex. 

There is an unsaid story in field sales. We would fight it out in the market and ever retail outlet. In the evening, competitors would sit down and get drunk and curse our bosses. Now I am beginning to learn that value. Humility is about operating through a response, which moves the learning and results forward. 

Why is humility difficult? 

It is just our reflex. When someone talks about their new home. You want to immediately show them your home ideas. You want to help them with your expertise, however unsolicited it may be. It is that person who will always align the painting. When someone is learning something new, you do not simply hear the person, but you want to jump in to direct them to the best teacher. You need to be aware, are you doing this to demonstrate your own knowledge and prowess? Interestingly, the higher your influence and position of power, the more you are likely to want to use it. Not necessarily in designation though. I have seen many humble senior people with equally arrogant receptionists and assistants. 

So how do you build humility so that you are not the last greater fool? 

Lyubomirsky and her colleagues propose three strategies:

1) Self-Affirmation: 

Think about some deeply held values. Say capital punishment, dowry, arranged marriage, abortion, food preferences, alcohol or smoking. The theory states that individuals who reflect on closely held values they are less likely to feel distress and more open to accepting information, which contradicts their sense of self. It could even be your habits. For example, if you like playing the guitar or drinking coffee. To promote self-affirmation, select one strength or value that you want to explore. Now write an essay on how your strength is portrayed in your life. Maybe you value your strength of, say, courage. Now think back on how you built the strength of courage. When did you realise courage was important to you. Now list down the ways you have shown courage. 

Now, you could even think of a problem in your life, and explore how you might look at the problem through the lens of courage and find a solution. For example, I love coffee. When I explored it, it was actually sitting in a coffee shop and watching the world go by. Many times, my coffee would remain untouched. More than half my breakfast coffee is poured into my drain. Coffee for me, meant connecting to the world. It meant connecting and being present for people. 

There is an interesting angle to this. Suppose you are a heavy smoker or if you love bacon. If you see an article linking bacon or smoking to cancer, you are more likely to absorb the information and act on it, if you were, self-affirmation increases your ability to be open to other people, treat their views with equal respect. This opens you to building some sense of humility. It moves you from being the greater fool to acquiring new knowledge about your ecosystem and resources. 

2) Bringing Awe to your Life:  

Awe is a very fascinating emotion. Think of the last time you felt in awe. I feel awe when I look out at the brilliant colours of the sea. When I visit a religious place where thousands have congregated. Brilliant colours of a glorious sunset or a full moon in a clear night bring out the sense of awe in me. 

First, awe takes place when you witness something either unexpected or vast. It stops you in your tracks beyond the normal. You are captured by that moment. Awe makes you aware, in a positive manner, that you are a small part of the large scheme of the universe. It opens you up to possibilities. The spotlight is taken away from you and into the grand universe. It opens you up. You become aware of how much more you can become. It helps you recognise forces much larger than your own self. You feel that you are part of something large. 

Second, when people experience awe, they open themselves to new experiences. They re-evaluate priorities and challenges and even change their self-beliefs. They become more open to consider what limitations their thoughts and behaviours have put on other people. 

Awe is a knowledge emotion that fosters quiet reflection, exploring possibilities and learning something new about themselves. It is about reaching out to people, in this universe, who know better; before you make the decision, and become the greater fool. Or to have the humility to say, you have been made the greater fool, now can someone help you bring the investment home. It is about discovering new strengths and resources and abandoning old beliefs that bind you down. 

3) Writing a Gratitude Letter 

Robert Emmons defined gratitude as a tendency to first recognise and then emotionally respond with thankfulness after attributing benefits received through benevolence to an external moral agent. 

Gratitude is a sense that you have benefited from the actions to another. Lyubomrisky and her colleagues conducted various experiments and found that Gratitude and Humility were caught in a virtuous cycle. Gratitude works in a very interesting way. When you express gratitude, your focus of attention shifts to the experience of receiving something of value. You feel a sense of optimism that there are people out there, who have helped you in the past. It urges you to reach out and repay the gratitude in a pay-it-forward manner. 

Once participants in the study increased their gratitude, the humility of the participants increased. Later on, the increased humility led to an increase in gratitude. One aided another. 

You could start by writing a letter of thanks to someone. These are the instruction given in a typical gratitude letter. Write a letter or e-mail to someone you appreciate, expressing your gratitude to someone in your life for the positive impact they had on it. Ideally it will be someone who you have not seen in a while, like a high school coach, or an old friend or a family member you’re in sporadic contact with (a grandparent who lives far away, for example). Tell them how they affected your life and why you would not be the same person without their meaningful influence. (You’ll deliver this note in another activity later this week). It is a thoughtful examination of the meaning and pleasure that you derive from the relationship; it includes particular experiences, that provided you as well as shared dreams that are significant. 

THE POWER OF “I DON’T KNOW”: 

Our business operating environments are just too complex for a single person to know everything. Further environments will keep changing, and leaders will have to rely on others to keep them informed about both subtle and seismic shifts. 

Leaders who have the courage to stand up and say, “I don’t know”, will be the leader of the future. “I don’t know” stated from a position of humbleness will trigger responsive, learning, adaptive and innovation processes. 

To conclude, our views are becoming sharper and uncompromising. Right from politics to workplaces to families and individual relationships. You might want to consider that perhaps we could experiment with humility. 

Greater fools will have the ability to tame the competitive reflex of “I” to drive diversity of contradicting and controversial views. Greater fools who have the humility will not be hardened by the strengths and beliefs of the past, but guided by deep inquiry of self and others. They will help those who help people discover their role in the larger tapestry of organisation purpose will lead the process of change. 

We need many greater fools to take us forward, to help us lead more positive lives.

The author is the Founder of The Positivity Company, where he helps business leaders become more positive and productive. Birender can be reached on birender.ahluwalia@gmail.com