Professor Alex "Sandy" Pentland

Alex "Sandy" Pentland

Reality Mining

Confidence

Great ideas vs. confidence: Which counts more?

Great ideas vs. confidence: Which counts more?

Posted Oct 31, 2009

Granted, it's not always a choice between confidence and a great idea - sometimes you really can have both. But keep those two things in mind as you read about this experiment done with business students at MIT.

 

 

The first experimental twist here is that the group members were not the only ones watching and evaluating the business plan pitches. A specially designed digital device - a sociometer - was also monitoring each presentation. Through measurements such as the amount of variability in their speech, their activity levels, the amount of mimicry shown between the presenter and the listeners, among others, this device wasn't recording what each person said in their pitch but rather how they said it. The sociometer was measuring another channel of communication that works without spoken language: our social sense.

At the end of the meeting, the business executives selected the ideas that they agreed would sell the best. And here comes the second experimental twist: the venture finance experts read the business plans but saw no live presentation. In the end, they had very different opinions of which business plans were most likely to succeed. Why?

When the finance experts read the business plans, this social sense was disconnected from the decision and so they had to evaluate the plans based on rational measures alone. Unfortunately, research has shown that investments made without that "personal connection" are far more likely to fail. This is why venture capital firms normally only invest in companies they can visit regularly iin person, and why many investors pay more attention to face-to-face interaction among the company's founders than they do to the business plan itself.

One of the ongoing aims of this blog will be to explore cutting-edge research about this social channel of communication and its implications. Across many studies in many situations ranging from dating to job interviews, this social channel of communication seems to profoundly influence major decisions in our lives - for better or for worse - even though we are largely unaware of it.

References:

Baker, W., and R. Faulkner, 2004. Social networks and loss of capital. Social Networks 26: 91-111.

Olguin, D., J. Paradiso, and A. Pentland. 2006. Wearable communicator badge: Designing a new platform for revealing organizational dynamics. Proceedings of the tenth International Symposium on Wearable Computing, Montreaux, Switzerland, October 11-14. See http://hd.media.mit.edu

Pentland, A. On the collective nature of human intelligence. Journal of Adaptive Behavior 15(2): 189-198.

Pentland, A. and T. Heibeck. 2008. Honest signals: How they shape our world. Cambridge MA: MIT Press.


For more information see:

Human Dynamics Laboratory, MIT