Why New Zealand’s Productivity is Lagging: On the Dunning-Kruger Effect and Ultracrepidarians

Many of you will have heard us speak of New Zealand’s gap in productivity on the rest of the world, most recently around the topic of Frontier Firms in increasing national productivity. If you have not, to recap:

• Unfortunately, the gap is not favourable: we have dropped from number 2 to number 27 in the OECD rankings;
• The root causes include complex macro-economic matters such our lack investment in innovation, our limited access to capital, our distance to market and a host of other hard to change factors;
• But the gap also due to New Zealand lagging in management practices, which are ‘free and easy’. We have made it Productivity People’s mission to improve these for Kiwi organisations. A disclaimer, management practice improvement is neither free (it requires sustained effort and time from the leaders and the organisation, and there is a cost associated with this investment), nor easy, as it invariably involves peoples’ beliefs and attitudes, which are hard to change. And for those of you who have seen our writings on the World Management Survey, you would also remember that contrary to our humble Kiwi attitude, New Zealand organisations typically overestimate their management practice maturity, while the so-called loud and boastful Yanks across the Pacific typically underestimate their management practice maturity. Enter the Dunning-Kruger effect.

I learned about the Dunning-Kruger effect over the Christmas break when listening to a Freakonomics Radio podcast, that also introduced me to Ultracrepidarianism. Both concepts are relevant to our low productivity performance.

The Dunning–Kruger effect is a hypothetical cognitive bias stating that people with low ability at a task overestimate their ability at said task. A person’s confidence of being knowledgeable or competent at a task increases dramatically with a little knowledge, only to drop away equally fast once a person learns more about a topic. For example, teenagers are pretty good at giving you advice on how to drive until they find themselves behind the wheel and realise that it is harder than it looks. You rapidly ascent ‘Mount Stupid’ to end up in the ‘Valley of Despair’. From this place of humility (or embarrassment?), you will learn gradually along the ‘Slope of Enlightenment’ to the expert status on the ‘Plateau of Sustainability’. Alexander Pope already said it in the 17th century: “A little learning is a dangerous thing. Drink deep or taste not the Pierian Spring; There shallow draughts intoxicate the brain and drinking largely sobers us again.”

Ultracrepidarianism is the habit of giving opinions and advice on matters outside of one’s knowledge. Different from ‘mansplaining’ but equally irritating. The same folks on top of Mount Stupid often proceed to proclaim wisdom which they do not have.

Some examples of combined Dunning–Kruger effect and Ultracrepidarianism: Modern art, Donald Trump, and of course, our favourite: Continuous Improvement Management Practices.

Google it and you’ll have 209 million references: it’s all there for you to read and implement. 5S, tick; One-piece flow, tick; Kanban, tick! How hard can it be? Well, pretty bl**dy hard! The road to successful Lean transformations is paved with unsuccessful programs. Unless you have lived through the transformation of an organisation from low to high management practice maturity – equivalent to the ‘slope of enlightenment’ – you will not fully appreciate the difficulty of implementing and sustaining Lean thinking and methods.

Do not be fooled by the ultracrepidarian productivity improvement ‘experts’ who have some exposure to process improvement but don’t know how to implement or sustain this, the ones who arrived late in world-class organisations but don’t know how to overcome the initial inertia, and especially the ones who just googled ‘productivity improvement’.

Now for some final self-awareness: was this article an example of my own Dunning–Kruger effect and ultracrepidarianism? I’ll let you be the judge of that.

About the author: Geerten Lengkeek is the Managing Director of Productivity People and Co-founder of the Global Lean Alliance