Learning from the Best: Strategic Thinking or Strategic Overconfidence?

Mahjong, a game of skill, strategy, and luck, dating back to the 19th-century Qing Dynasty. Photo by Mick Haupt on Unsplash

Almost every bad driver seems to share one fascinating belief: the problem is everyone else. Traffic is full of idiots, yet almost nobody thinks they are one of them.

About 90% of drivers believe they are better than average. Statistically, that is impossible. Psychologically, it makes perfect sense.

Overconfidence usually doesn’t seem irrational. Usually, it arrives after a long streak of being right.

People who make the costliest mistakes are often not confused or inexperienced.

They are usually seasoned and have been right many times before:

• An investor who goes “all-in” because they were right a few times.

• A founder who stops listening to market signals because early success confirmed the model.

• Established leadership teams often fall into this trap: their past wins make them less curious about whether their approach still fits today’s world.

After enough success, confidence can start to feel like good judgment.

No one says out loud that they have stopped questioning their assumptions. It just happens slowly, masked beneath ongoing success.

China: The Longest Case Study in Overconfidence

Six hundred years ago, if you were looking for quality, technology, and well-run cities, you looked to the East.

While Europe was recovering from the Black Death and its kingdoms were fighting over tiny pieces of land, China’s Ming Dynasty was building the Forbidden City and managing cities with a million people. In the 15th century, Beijing had about 1 million residents, while London and Paris together had only about 250,000. Back then, “Made in China” meant the best quality you could find. Europe paid huge amounts of silver for Chinese silk, porcelain, and gunpowder, and most of that silver stayed in China because China did not really need anything Europe offered.

The government wasn’t just planning for the next quarter; they were thinking in centuries. They had every reason to be proud of what they’d built — their confidence wasn’t unearned.

But over time, almost without noticing, China stopped feeling the need to compete.

Over the next centuries, natural disasters, silver shortages, and peasant revolts weakened the empire. Yet this internal certainty made it even harder to adapt.

At the time, this thinking made sense. Why change when you are already the best? Why look outside when your civilization has lasted longer than any other? European countries had to keep innovating because they faced constant competition. China didn’t have that pressure. Over the years, this quiet certainty grew until it became a kind of blindness to change.

By the 19th century, during the Opium Wars, the gap had become disastrous. China realized it was far behind in military technology. This led to a century of humiliation, which China still remembers as a deep part of its national story.

The challenge was not that the confidence was unfounded. In many ways, it was earned over time. The problem was how hard it became to recognize when the environment had changed.

The Chinese Mind: A Personal Note

I spent several years working with the world’s largest bank by assets, a Chinese institution. This experience gave me a reasonably long immersion in how Chinese professionals actually think — not the stereotype, but the texture of it up close.

Here are a few things that have stayed with me.

Chinese professionals think in timelines that make most Western business talks seem short-term. Even junior employees might talk about a ten-year plan as if it were normal. Long-term relationships, or guanxi, are not just networking. They are the foundation of how things work. Trust is built slowly and carefully, with the idea that it will grow over decades.

Hierarchy is real and has real effects. Saving face, which means avoiding public conflict or embarrassment, shapes how people communicate. Outsiders might not notice this until something goes wrong and they realize a disagreement has quietly existed for months.

Confidence in China’s long history does not show up as arrogance, at least not in the way Westerners might expect. It is quieter, simply taken for granted, like assuming water flows downhill. Of course, China is important. It always has been, and the facts back this up.

More than confidence, it felt like a deeply internalized assumption of continuity.

How Overconfidence Really Works

There are three main patterns of overconfidence, and each one feels very different when you experience it.

Overestimation means thinking you are better at something than you really are. Fitness enthusiasts sometimes exaggerate their results. Investors often overestimate their forecasts by 20% to 50%. Founders think they have more time than they do. Marketers often overlook campaign risks.

Overplacement is the belief that you are better than others. This means not just thinking “I am good,” but “I am better than the person next to me.” This is the competitive side of overconfidence, and it is common among high achievers who have real reasons to feel confident. That is exactly what makes it hard to judge accurately.

Overprecision means being too certain about your own judgments. This is not just about being confident. This is being so sure you are right that new information is unlikely to change your mind. You pay a high price, especially in business). We’ve all seen the CEO who dismisses valid criticism as “not getting the vision,” or the board that views every new challenge through the lens of a decade-old success story.

China’s historical shift followed this exact pattern. There was overestimation of its own stability, overplacement compared to competitors, and overprecision — the belief that what had always worked would keep working. This made the growing gap invisible until it was too late to fix.

The Gap

The overconfidence gap is not about what you know versus what you do not know. It is about the difference between how sure you feel and how sure you should be, based on real evidence.

The people and organizations that handle this well are not those without confidence. The difference is that they have systems in place to encourage challenge. They reward people for disagreeing, compare themselves to others, and treat updated opinions as a sign of intelligence rather than weakness.

Without these checks, certainty builds up. The gap between reality and perception widens, and usually, you only realize it once the bill comes due.

China was truly remarkable at its peak, and its confidence was deserved. But then the world changed in ways that confidence made harder to notice.

It is worth keeping this in mind the next time your own conviction feels completely unquestionable.

Yours truly,
Irina

This article was initially published in E³ — Entertain Enlighten Empower on Medium.