Leadership

Why "Good Enough" is Better than "Best"

By Kimberly Weisul

Updated on: March 3, 2011 / 11:58 AM EST / MoneyWatch

Do these statements describe you?

"No matter what I do, I have the highest standards for myself."

"I never settle."

People who are very likely to agree with these and other similar statements are known as maximizers-they're always looking for the best possible outcomes to a given situation. These are the folks who swing for the fences. People who disagree are known as satisficers. They're happy with an outcome that is "good enough"--in other words, a base hit. The irony: New research shows that in situations where the outcome is particularly difficult to forsee, such as the movement of stock markets or the outcome of sports events, the person who tries for the base hit will do a better job of "seeing the future" than the one who swings for the fences.

Betting on the World Cup
J. Neil Bearden and Allan Filipowicz, both professors at INSEAD, and Kriti Jain, a Ph.D. candidate at the school, asked 1,110 people to rate the probabilities of each of 20 teams making it to round 16 (the round just before the quarterfinals) of the 2010 FIFA World Cup. An additional 511 people were asked to make hypothetical bets on the fortunes of each of 10 teams. All the participants were also asked to fill out a questionnaire to determine if they were satisficers or maximizers.

When asked how well they would compare to others in the study, pretty much everyone thought they would do better than average. This was not a surprise. Some 93% of U.S. drivers put themselves in the top 50% of drivers, a phenomenon that has been dubbed the "better than average" effect.

The problem was the worst for the maximizers. Maximizers predicted that they would do better than average, but as a group, they actually did relatively worse.

In the betting test, each participant could make up to $1,000. On average, the satisficers made more.

The worst satisficer made about $460.
The worst maximizer made about $360.
For both groups, the best performance was about the same, at about $675.

Maximizers had wider variability in their answers, which accounted for a big part of why they did poorly. When asked what a team's chances were of making it to round 16, maximizers would answer anywhere from 0% to 100%, which meant that if they were particularly unlucky they could be wildly wrong almost all the time. Satisficers' answers tended to be clumped together, making it more likely they would be right at least occasionally. (This is similar, for example, to always answering "B" on a multiple-choice test where every question has four choices. The odds are good that B will be the correct answer about 25% of the time, so you're unlikely to get every single question wrong).

Who tends to get ahead at your company? The folks who swing for the fences or those who deliver base hits?

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Photo courtesy flickr user jpellgen
Kimberly Weisul is a freelance writer, editor, and consultant. Follow her on twitter at www.twitter.com/weisul