The dangerous allure of confidence: The spectacular downfall of Eike Batista (and his believers)

Eike Batista

Eike Batista, flamboyant Brazilian entrepreneur and Chairman of the conglomerate EBX group went from being the 8th richest man in the world (worth $30 billion) in 2012, to 200 million (or even a negative net worth according to Bloomberg) in 2014. He has now topped the charts of a few worst CEOs of 2013 lists. The "hindsight" critics have been quick to jump into the fray, pointing out some unmistakable signs that were missed. Batista was unabashedly ostentatious - he parked his luxury car in his living room, proclaimed he would be the richest man in the world by 2015, didn't really have the managerial expertise to run his business empire, and always made his huge announcements about new oil finds conveniently before trying to raise funds. 

Batista was the poster boy of the surging  Brazilian economy; admired as a role model by his country men (his twitter account had over a million followers), and backed by global investors. His 2011 book (in Portugese) titled  Batista's X-factor - all his companies have X in their names indicating the multiplication of wealth- lists some simple rules to become a billionaire. These include -  believe in your intuition, aim for success rather than perfection, build businesses with maximum accuracy and minimum risk, a good seller must also be a good listener and the importance of being a maker rather than just a dreamer. Clearly, at least at this point, it appears that none of these rules applied to him. Batista has now withdrawn from the public eye and is licking his wounds, although he vows to make a comeback. He has promised to repay all his creditors, but recent filings with the courts indicate that the time frame could be over twenty years - if at all.

Batista kept his Mercedes -Benz SLR in his living room.

Batista's personal failings as a leader are clear, but he couldn't have amassed his 30 billion alone. People believed in him, and believed big. He consistently bagged some of most prestigious contracts from the Brazilian government, and was favored by big investors globally. One single factor  attributed to his ability to influence others over the years is his extreme confidence. He was after all primarily a -salesman - since he started his career as an insurance salesman.

 The Batista case illustrates the dangerous allure of confidence on others, and more importantly how susceptible we are to certain outward manifestations of confidence. The old adage of judging a book by its cover unfortunately holds true. We expect leaders to be impeccably dressed, exude supreme confidence in their strut and manner of speaking - the bolder and louder the better. Business schools focus on style than content -  on perfectly formatted documents, stylish presentations, and superb delivery. In fact, Batista's detractors comment that he is the only one besides Bill Gates to make billions through PowerPoint. This stereotypical image of a successful leader gets propagated with the increasing outreach of the media.  

It's time to look beyond the external manifestation of confidence, and focus on improving the self-efficacy of leaders. One of the influential researchers on self-efficacy, Albert Bandura ,defines self-efficacy as a person's belief about their capabilities to perform certain tasks and  their ability to influence the events in their life. In other words, self-efficacy is the result of a realistic analysis of one's capabilities. Those with high self-efficacy are therefore intrinsically motivated - Batista on the other hand seemed to be motivated by the thrill of becoming the richest man in the world. Those with a high level of self-efficacy are not discouraged by failures and persevere. They attribute failure to deficiencies which can be learnt, rather than as a personal failure.

In Bandura's own words, self -efficacy differs from confidence as follows.

"It should be noted that the construct of self-efficacy differs from the colloquial term "confidence." Confidence is a nondescript term that refers to strength of belief but does not necessarily specify what the certainty is about. I can be supremely confident that I will fail at an endeavor. Perceived self-efficacy refers to belief in one's agentive capabilities, that one can produce given levels of attainment. A self -efficacy assessment, therefore, includes both an affirmation of a capability level and the strength of that belief. Confidence is a catchword rather than a construct embedded in a theoretical system. Advances in a field are best achieved by constructs that fully reflect the phenomena of interest and are rooted in a theory that specifies their determinants, mediating processes, and multiple effects. Theory-based constructs pay dividends in understanding and operational guidance. The terms used to characterize personal agency, therefore, represent more than merely lexical preferences." (Self-efficacy: The exercise of control, 1997, page 382).

A strong sense of self-efficacy leads to confidence, but not necessarily only in a physical sense as we have become accustomed to. Confidence should be reflected in actions than in mere words. Batista,  salesman that he was - sold dreams than reality. And his investors bought it because they mistook the external signs of confidence for self-efficacy. As we become globalized it would be helpful to look closely at the values like humility held dear by other successful cultures to break out of our stereotypes. For example a common proverb in the Chinese culture is that " a full pot never splashes".   

It's too early to write Batista off, but hopefully his story will reinforce the need to break away from the cookie- cutter approach to training and evaluating leaders.  

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