Precursors of Confidence

Drill Science developed Performance DNA to detail the precursors of confidence in engineering leadership. Confidence is the crowning mindset and performance control. The concept of “confidence” is commonly misrepresented, superficially assessed and misunderstood in prevalent cultures. Confidence must be diligently assessed and measured and kept between the extremes of underconfidence and overconfidence. Because of it’s primary importance, we must diligently think through, understand and know the concept of confidence. Confidence is too often misunderstood as “the absence of uncertainty”. Considering “confidence” as being “certain” of success is false. The reality is that confidence only exists within “uncertainty”. The origin of the word “confidence” comes from the latin root ‘fidere’, which means “faith”. The concept of faith requires one to perform tasks toward objectives yet with an uncertain outcome. Confidence is not required at all if the outcome is assured, yet “certainty” is suggested by many coaches and “leaders” as the only acceptable mindset. This misunderstanding and misuse of confidence is absolutely detrimental to the focus and effort necessary for highest performance, improvement and learning. Doubt is the most efficient fuel of diligent searches and research for better ideas, understanding, knowledge, and competence. Focusing on the details and specifics of every new task until the new task patterns become automatic performance leads to competence. In fact, this is the purpose of learning and practicing - focusing on improving competency by increasing depth of knowledge. The problem arises when this type of focus occurs during complex operations. For example, after hesitating one might start thinking too much about details and specifics. If we start to think about any (or all) of these things while working, it is likely that we will be thinking about too many things to execute the task in the process effectively. Assessments must take into account the impact of “competence” levels on confidence because of distraction from focus and effort or even susceptibility to “expert overconfidence”. Many people are overconfident, prone to place too much faith in their intuitions. The overconfidence effect is a well-established bias in which a person's subjective confidence in his or her judgments is reliably greater than the objective accuracy of those judgments, especially when confidence is relatively high. Overconfidence has been called the most “pervasive and potentially catastrophic” of all the cognitive biases to which human beings fall victim (Scott 1993). It has been blamed for lawsuits, strikes, wars, industrial accidents, and stock market bubbles and crashes. Throughout the research literature, overconfidence has been defined in three distinct ways: (1) overestimation of

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one's actual performance, this is also known as complacency and has been labeled “Victory Disease”, (2) overplacement of one's performance relative to others, and (3) the excessive certainty regarding the accuracy of one's beliefs − called overprecision (Moore 2008). Overprecision is particulary a problem in operations with low incident yet high consequence accidents where success can hide luck that is translated into a belief that current processes are flawless.Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that can be constructed, not by its validity. The definition of validity, in this context, is an environment that is sufficiently regular to be predictable by an “expert” that had an opportunity to learn these regularities through prolonged practice. The ‘opportunity to learn’ requires that decision makers have a chance to get feedback on their judgments, so that they can strengthen them and gain expertise. This requirement of ‘feedback’, makes a profession like drilling oil wells ‘low validity’ when information confirming judgments is all too often buried under miles of layer of earth accessible only by secondary indications of primary conditions. However, it has been proven that if people can construct a simple and coherent story, they will feel confident regardless of how well grounded it is in reality.

"Overconfident professionals sincerely believe they have expertise, act as experts and look like experts. You will have to struggle to remind yourself that they may be in the grip of an illusion” (Kahneman 2011).

They apparently find cognitive effort at least mildly unpleasant and avoid it as much as possible. According to experts on the “overconfidence bias” the best way to avoid expert overconfidence is to effort fully distinguish between “high” and “low” validity environments and focus on using formulas, checklists and algorithms anytime validity is low (Kahneman 2008). The precursors of confidence are easily inferred from the top tier of the the tried and true Performance DNA formula.

Focus Effort Competence

Overconfidence also arrives in the form of the delusion of "what you see is all there is" (Kahneman 2008), that is the antithesis of diligence, communication and performance safety.  Another cause of overconfidence is that it is ubiquitously rewarded in the financial markets that supply funding for our projects. This encourages unaware engineering managers, using MBA style performance metrics, to wrongly consider illusory focus on consequential cost targets as “leadership” and “management”. Checks and

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balances must be enacted to limit the influence of overconfidence, and attain realistic conceptions and estimates of "confidence" that keep levels within rationally determined bounds. Overconfidence all too often causes one to overvalue one’s own opinion over that of others. This fosters a tendency to marginalize people who disagree with them at meetings. There’s too much intolerance for challenge that is exacerbated in cultures of moderate to high levels of power distance (PDI) and inequality (Hofstede 1984).

"Confidence” monitoring, assessment and control, is essential in the management of the engineering process and this “control” is attained through focus on the “precursors of consequence”. These precursors include: the right efforts, diligence and focus at the interface of stress, critical strains and yield on our structures. These precursors do not include the misguided focus on lagging indicators of consequence and probability that traditional “risk theorists” turn to for guidance (RISK = PROBABILITY

X CONSEQUENCE). The precursors of consequence are the tactics, stratagem and plans, and the stresses, strains and structures that are carefully measured in terms of their impact on the future state of the system they act on or within and as we previously discussed in low validity environments expert intuition must be managed with criterion, checklists, formulae and algorithm. Similarly in psychological terms humans operating controls and directing procedures and structures of organizations and teams have vulnerabilities exposed to stress and energy. These precursors of consequence as well can be measured and managed within the enveloping boundary of strain and yield only if the focus is correctly directed.   So how do we measure “right efforts” and “diligence” and direct “focus” at this interface to ensure we maintain separation between stress/energy and yield?"  That is the focus of how to exert our efforts and direct our diligence and the answer is less important than the focus and effort in asking the questions that seek the answers.

There is no work without stress-energy and classical physics clearly states that Work = Stress-Energy X Area X Displacement of the structure subjected to the stress-energy yet this work must be kept within boundaries of yield. Stress-energy on people and on the teams we work within and build is how we accomplish work in the first place yet it must be managed within diligently measured limits as well. These are the precursors of consequence and keeping the stress/energy strain of our work safely separated from the extreme “yield” strain is the location our conscious effort and focus must be applied. Stress on structures moves them and strains them and is the nature of our work. In terms of engineering as long as the strain is within the elastic yield envelope it is good strain yet as soon as it exceeds these bounds the structure fails. In general the only distinction between good and bad engineering is always measured in terms of the stress and energy

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that our tasks add to our structures and how diligently we keep them within the bounds of their structural strength and so our focus in engineering must be on these bounds and the precursors of consequence: stress/energy, structure and strain. Traditional risk formulas are insufficient in leading engineering focus on the precursors of consequence and yet serve only to distract and mislead. Focus on “likelihood” and “consequences” is like a “magicians trick” suggesting “all that was, will be”. Random statistics can distract us from inputs of direction, effort and focus of hard working individuals. The correct criterion and focus guides our gauge of confidence and keeps our constructions well within bounds of non yielding strain. There is no room for usage of statistical randomness in either thought or concept in engineering since it distracts focus from the emergence of hazards within the interstice of stress and yield. Exposure to stress and energy must be measured and managed with the same diligence as vulnerabilities to them at their precursory levels.

An example of “criterion” and “Algorithms” we introduce is "separation stability" that is a function of the direction and rate of change along a task “load path”, and its angle normal to the boundary during operations. A few 'tweaks' of engineering design programs and their 'Design Limits' envelopes with "arrows" as data point markers pointing to the next logical data point to denote direction tasks move in time illustrates this.   The concept that these loads move along “paths” in time and therefore some moments are more critical than others is lost or ignored by many operators in many operations. Another example of improvements in due diligence and due process that ensures confidence levels are within the bounds of reason is the Drill Science concept of “Safety Critical Moments” (SCM). Safety Critical Elements (SCE) have been talked about in the safety industry before yet SCM is a new concept that acknowledges that hazard levels are a function of the task timeline and that certain “moments” are more

hazardous than others and should be “noted” and “red flagged” and this is basis of Drill Science Corp’s DOWNCAST barrier assessment and management and BROADCAST system that assesses dynamic hazard levels as a function of the project timeline and BROADCASTS a color code ubiquitously adding heightened awareness of SCM. This allows competency, supervisory, redundancy, QAQC and alertness levels to be heightened during “elevated” (yellow and red) SCM and relaxed during low hazard moments to guard against alarm “fatigue”, “desensitivity”

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and “flood”, as known in signal detection theory (SDT), and benefits decision making, under conditions of uncertainty, on the rig and in the office via its BROADCAST. This is another example of the basis of an effective engineering measurement algorithm that uses diligent weighing of steps in order to remain within an operational envelope of pre-yield strain, corrosive influences and “fatigue” resistance, and a concept and algorithm to couple confidence with the reality of the current and dynamic hazard level that actually exists at any “moment” on the project timeline, yet the due diligence must continue through scope and detail in both physical and human factors and their operational envelopes to limit the influence of baseless “overconfidence”.

Algorithms also eliminate “false” and define “valid” confidence levels in an environment of collective blindness and a good example of this is the “pre-

mortem” based on research (Mitchell et. al. 1989) that found imagining that an event has already occurred increases the ability to correctly identify precursors of future consequences by 30%. This “prospective hindsight” device presents the worst case as having already happened and the team is asked to generate plausible reasons for the project’s failure. This method subtly discovers uncertainty hidden or avoided and brings true

precursors of consequence to focus so that the project can be improved rather than autopsied.

Why isn't this level of diligence already applied? Social psychology suggests the CEO that is honest would be considered ridiculous to report a wide interval of confidence (for example returns between -10% and 30%) in fact because markets trust the CEO that reports a tight interval despite the clear uncertainty. Confidence within tighter than honest limits is highly valued for its stability in obtaining funding and for the positive moral and optimism that pushes a team towards risks decisively and in low incident operational failures this leads more often than not to lucky successes that are admired and hailed as major achievements by the unknowing superficial assessments that naturally surround these teams of experts.  When action is needed, optimism, even of the mildly delusional variety, is useful because it encourages persistence in the face of obstacles yet persistence can be costly if this optimism isn't coupled with equal diligence and persistence to mitigate uncertainty and known hazards.  The idea of adopting the "outside view" never occurs to cultures with the lowest uncertainty avoidance index (Hofstede 1980) for various reasons availed to contemplation. A December 2009 survey of 463 readers of McKinsley Quarterly underscored the degree to which senior executives sometimes exhibit greater confidence than those further down in the organization. In response to

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the question “Does management admit mistakes and kill unsuccessful initiatives in a timely manner?” 80 percent of C-level executives said yes. In contrast, only

49 percent of non-C-level executives agreed with the same statement. By the time executives get to high levels, they are good at making others feel confident in their judgment, even if there’s no strong basis for the judgment. There is a bias in the selection process of leaders for organizations to favor lucky risk takers rather that the wise. Beyond that, lucky risk takers use hindsight to reinforce their feeling that their gut is very wise. Hindsight also reinforces others’ trust in that

individual’s gut. That’s one of the real dangers of leader selection in many organizations: leaders are selected for overconfidence. We associate leadership with decisiveness. That perception of leadership pushes people to make decisions fairly quickly, lest they be seen as dithering and indecisive (Kahneman 2010). There are instances in which competition among experts and among organizations create powerful forces that favor a collective blindness to risk and uncertainty and inadequate appreciation of the uncertainty of the environment inevitably leads engineers to take on risks they should avoid (Taleb 2007). However optimism is highly valued both socially and among firms and the market rewards the providers of dangerously misleading positive information more than they reward truth tellers. An “expert” worthy of the name is expected to display high confidence and the most overconfident experts are the most likely to be invited to strut their stuff on news shows and this has tangible market value. Even so organizations that utilize the overconfident estimations of experts can expect costly consequences. Engineers in charge of the most challenging projects that encounter the most risk that might affect the lives of others are respected and admired for having faced and tackled such challenges in the past, and they have been lucky as well, almost certainly more lucky than they care to acknowledge.  These influential people are rather sanguine in their estimations of their achievements and their ability to control events even though it is an “illusion of control”.  This overconfidence is reinforced by the admiration of others.  This leads to a hypothesis that those with the most influence tend to be over confident and accept more risks than they realize and this is most prevalent in cultures with low uncertainty avoidance characteristics that allow and nurture the influence of these overconfident individuals.

Two other devices on the list of effective countermeasures to combat expert overconfidence and that is the measure and management of mindset and personality. In essence these two parameters are distinguishing between innate nature and willful motivation that recognizes the need to be clear before we may begin to manage ourselves and others and improve past instinctual “reactions” to wise, understanding and savvy “responses”. First the concept of mindset is inextricably intertwined with the effort necessary to diligently distinguish between needed confidence in results in order to allow focus

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on inputs that are precursors of consequence, and detrimental “overconfidence” as a result of a mindset of superiority and “talent” instead of belief in success as the result of effort and persistence with less basis in the fixed trait of “talent”. It

has been proven in clinical studies that the humble mindset of effort triumphs over the overconfidence and arrogance of a more rigid mindset that believes in innate ability possessed by a superior few (Dweck 2008). There is a long history of research showing that people are overconfident about their abilities. But it turns out that people in general are not overconfident about their abilities;

people with a fixed mindset are overconfident. In her research, Dr. Dweck and Joyce Ehrlinger and showed that people who hold a fixed mindset are way more confident than their performance would warrant, but people with a growth mindset are pretty accurate. In research with David Nussbaum, Dr. Dweck showed that when engineers in training learned that they were deficient in an important area of professional skills, those with a growth mindset took steps to improve. Those with a fixed mindset, however, turned away from their deficiency and chose instead to dwell on things they were already good at. Which type of person would you choose to design a complex and dangerous HTHP deepwater project? Do you let people hiding from deficiencies lead your operations?

Secondly, there is a growing study of personality traits that has been put into place by Equilibria (www.equilibria.com) a coaching organization formed in 2004 by four founders including Co-CEO Lewis Senior, former Manager of HSE of a multinational drilling company. E-Colors were established as a mechanism that helps the understanding of people’s strengths and potential limiters, by simple denomination of four categories of personality in which two predominate and one more so than the others. A body of evidence exists that these classifications may be used to predict and circumvent flawed thinking and judgment in certain situations. Recently Equilibria and FisherIT have integrated the technology of individual personality traits and the general science of Human Performance and their studies reveal some very interesting trends relative to each E-Color tendencies and how they manifest in terms of overconfidence. Their joint technology called E-CHP (E-Colors in Human Performance) has identified that one of these E-Colors in particular, BLUES, appear to be uniquely distinct in propensity to shun overconfidence. In fact they claim to be under-confident and immediately, upon any sign of confidence, assume that to be “overconfident”.

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Conversely, REDS say that they know best, or will do a task without asking for help and GREENS will say that if they have completed the task successfully once, then overconfidence could kick in. To complete the picture, top E-Color YELLOWS will demonstrate overconfidence by seeing the danger and optimistically choosing to overlook it. E-CHP teams are constantly sharing these learnings with clients around the world who in turn benefit from the knowledge of these innate personality traits to mitigate precursory behavior among engineering teams and frontline workers, producing world class performance and results.

In the future we may be able to engineer the personality makeup of our teams, and better measure and manage the key precursors of consequence, in order to balance the needs for focus, diligence, effort, and control of confidence and ensure our engineering designs and operation executions remain safely within limits. The precursor of confidence in a leadership culture is to diligently understand confidence and the influences upon it and ensure it is utilized within its practical limits as an engineering performance control and leadership tool. For more information on Performance DNA, consulting or speaking engagements, contact DrillScience.com’s petroleum engineering leader Michael Davis.

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