The Dunning-Kruger Effect in Leadership: Decision-Making Challenges in a VUCA World

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization. 

By Mauricio Covarrubias
March 14, 2025

Leadership has traditionally been understood as the ability to guide an organization toward achieving common goals that benefit society. However, in today’s world—characterized by volatility, uncertainty, complexity and ambiguity, the pillars of the VUCA concept—leaders must adapt to unprecedented challenges. The problems they face require a new approach to decision-making that not only acknowledges their skills but also their limitations. This is where the psychological phenomenon known as the Dunning-Kruger effect becomes particularly relevant, influencing how leaders perceive their abilities and, consequently, the decisions they make.

The Dunning-Kruger effect, described by psychologists David Dunning and Justin Kruger in 1999, explains the tendency of individuals with limited expertise in a particular area to overestimate their knowledge and competence. This cognitive bias can be especially damaging in leadership roles, where decisions can have broad societal implications. Leaders affected by this bias may make choices that are not only wrong but also harmful to those they serve. Rather than recognizing the need for continued learning and growth, these individuals may feel overly confident in their judgment and experience.

In a VUCA world, this overestimation of abilities becomes even more detrimental. Organizations face challenges that demand complex, well-founded decisions—decisions that affect public trust and well-being. Effective leadership requires not only expertise in a specific area but also the ability to recognize when one lacks the necessary information to make informed decisions. The Dunning-Kruger effect may cause leaders to underestimate the complexity of a situation, leading them to overestimate their ability to manage it, which often results in hasty and poorly informed decisions.

Successful leadership in such an environment requires intellectual humility, a quality that allows leaders to acknowledge their limits. Edgar H. Schein (2010) argues that effective leaders possess “professional humility,” enabling them to admit when they don’t have all the answers and seek expert advice. This ability to recognize limitations should not be seen as a weakness but as a strength, fostering more thoughtful decision-making and creating a culture of continuous learning and improvement within the organization.

In this context, leadership is not just about making the right decisions, but about fostering a culture that values learning, growth, and collaboration. Bass and Avolio (1994) highlight that effective leaders not only possess a clear vision but also inspire their teams to reach higher levels of performance through collaboration, knowledge sharing and collective decision-making. They understand that solutions to complex challenges require the contribution of diverse perspectives, and decisions should not be made in isolation.

As organizations face constant change—whether in the form of political shifts, technological advancements, or evolving societal demands—leaders must be able to adapt quickly. The theory of adaptive leadership, proposed by Ronald A. Heifetz (1994), suggests that successful leaders do more than react to change; they anticipate it and respond proactively. Intellectual humility, combined with a willingness to change and adapt, enables leaders to navigate the challenges of the modern world with agility, ensuring they remain effective even in uncertain times.

The Dunning-Kruger effect poses a significant obstacle to adaptive leadership. As Kruger and Dunning explain, those who are most prone to errors due to a lack of knowledge are, paradoxically, the least likely to recognize their incompetence. This can lead to decisions based on misplaced confidence, resulting in strategic errors and ineffective governance, undermining public trust.

For example, a leader who overestimates their ability to understand the complexities of digital transformation may make decisions without consulting technology experts, leading to costly failures. In contrast, a leader who acknowledges their lack of expertise and seeks advice from specialists is more likely to make informed, effective decisions.

The Dunning-Kruger effect also underscores the importance of feedback in the decision-making process. As Stone, Patton, and Heen (2010) argue, leaders must be open to receiving constructive criticism and questioning their own assumptions. Rather than seeing feedback as a threat, leaders should view it as an opportunity to improve, adjusting their decisions based on the best available information. This openness to feedback is essential for building trust and ensuring that leadership decisions are transparent, accountable and in the public interest.

In conclusion, the Dunning-Kruger effect serves as a reminder that blind confidence in one’s abilities can be as dangerous as excessive doubt. Leaders must find a balance between trusting their capabilities and being willing to learn, adapt, and seek external advice when necessary. Ultimately, effective leadership in a VUCA world depends on recognizing both strengths and limitations and using that awareness to make decisions that benefit the well-being of those they serve.

---

Author: Mauricio Covarrubias is Professor at the National Institute of Public Administration in Mexico.  He is co-founder of the International Academy of Political-Administrative Sciences (IAPAS).  He is the founder and Editor of the International Journal of Studies on Educational Systems (RIESED). Member of the National System of Researchers of CONAHCYT.  He received his Ph.D. from the National Autonomous University of Mexico.  He can be reached at [email protected] and followed on Twitter @OMCovarrubias

(5 votes, average: 5.00 out of 5)
Loading...