Characteristics of Leadership: Hubris

Self-belief is essential for success in business, but it exists on a spectrum from positive to destructive. It is beneficial in the form of confidence and authentic pride built on competence, effort, and an openness to feedback, but confidence becomes dangerous when it spirals away. Healthy confidence facilitates bold, calculated risk-taking and collaborative leadership; however, when confidence becomes detached from reality, fueled by past success and power, it morphs into an exaggerated, often contemptuous, sense of infallibility.

Finding that sweet spot between confidence and overconfidence in businesses, a high-risk and high-reward environment, is not easy.

Hubris in Alaska

Alaska is a unique business market with high costs, challenging logistics, extreme seasonality, and limited access to financial and human capital. Hubris in Alaska often manifests as a failure to listen to market changes and emerging economic data and trends, often leading to severe financial and community consequences. Evidence of this overconfidence can be seen in the historic unwarranted belief in inexhaustible resource wealth, epitomized by the mid-‘80s oil boom spending without careful risk assessment and economic diversification.

Overreach by Alaska firms, inflated by previous success and making massive debt-fueled acquisitions or investments far outside their core competencies, can have lasting effects. This overconfidence may have contributed to the financial implosion and subsequent liquidation of major seafood processors like Peter Pan Seafoods, resulting in hundreds of unpaid creditors, severe economic distress in dependent local communities, and significant losses to public funds like the Alaska Permanent Fund.

The thoughtful and community-minded approach, essential for long-term sustainability in Alaska’s economy, is undermined by unhealthy hubris.

Balancing Confidence with Humility

You can’t pivot fast when you’re convinced your first idea was flawless. The modern business landscape demands agility, and if a leader is overly confident, they can cause organizational friction and a performance bottleneck.

How did an accomplished Alaskan executive avoid this leadership trap over a four-decade career? Joe Schierhorn, recently retired as chairman of Northrim Bank, shares his perspective:

Q: We all know that leadership requires a significant degree of self-belief. Before we dive into the deep end, could you share how you avoided becoming isolated, operating with too much confidence and losing perspective?

Schierhorn: Really from the very beginning of the bank, our philosophy was to empower our employees, to give them both the responsibility and the tools to address customer issues. My role as a leader is to hire, train, and empower employees, building a culture that is flexible, responsive, and customer focused.

I recognize that I don’t have all the answers, and even if I did, the field keeps changing. As a leader you have to be welcoming to all sorts of expertise, and the only way you can attract and retain great people is with a team-focused and learning culture.

Q: After a significant victory, how do you, as a leader, test and determine whether the win was due to sound, replicable core competence versus a potentially unrepeatable stroke of luck or personal exceptionalism?

Schierhorn: There is a certain amount of luck and timing that goes into any business venture. When I first started at Northrim Bank as a loan officer, it was just a pair of trailers in a Midtown parking lot. The bank was a small group of twenty-five employees in the beginning. It now has twenty branches across the state. We started with $8 million in assets, and now we’re at over $3 billion, but the corporate culture when Marc Langland and Arnold Espe started the bank in 1990 is the same today: customer-first service supported by local expertise.

Back then, there was a heavy reliance on individual contributions and personal connections. Now that we’re at over 350 employees, we have policies, procedures, and teams. We have different challenges. It’s easy for policies to replace everything, but our culture—our core value of customer-first service—has to be front and center. All within our regulatory environment, of course.

What we have to focus on at this scale is how can we replicate our past successes and keep learning. From our past, we are committed to developing and maintaining long-standing customer relationships. From our current situation, we have to continue to attract talent, manage that talent to the benefit of our customers, train to that, and reward to it.

Q: Success can sometimes lead to insularity. To stay grounded and constantly learn and avoid blind spots, what are your “humility triggers”—sources of information or advisors you rely on to get raw, unfiltered truth about your business, even when it’s hard to hear?

Schierhorn: I take constant inspiration from Northrim’s founder Marc Langland and my father Mort Schierhorn—they were both very humble and extremely hard-working individuals with a great way of communicating with people. I try to model myself after both of them.

Information and advisors are at all levels of the business, and a big part of leadership is being a good listener—not just to the words but picking up on the emotions behind the words. Understanding what is driving people.

This sort of active listening takes a lot of work and a whole lot of energy. This is how you build long-time authentic business relationships—constantly checking in with friends, customers, and employees on a casual basis. The short little bits of business—these are the important bits.

You have to be willing to put yourself out there and be vulnerable. Be open and listen. Solicit that feedback in an honest way.

Measuring and Taming Unhealthy Hubris

Overconfidence can be hard to measure. The terms “blinding effect” or “bias blind spot” describe leaders who are unable to recognize the impact of their cognitive biases on their own judgment while being perfectly capable of recognizing and pointing out those same biases in others.

How do leaders avoid this classic problem? The fix starts with actionable humility and a relentless pursuit for the unvarnished truth:

• Watch for red flags. Classic signs include ignoring dissent, flooding the zone with just your views, avoiding conflict, and pointing fingers instead of owning failures.
• Practice regular self-reflection. Schedule dedicated time to journal and ask probing questions: What decision did I make that had a negative impact this week? How did my reaction affect the team’s morale? What assumptions am I making?
• Seek out feedback genuinely. Actively solicit critical input from direct reports, peers, mentors, and even former employees—sources who will not just confirm your existing beliefs.
• Understand your biases. This requires building a culture of radical openness where constructive criticism is the standard. This culture includes strategically delegating to amplify team perspectives and expertise over your own.

The hubris trap is real. When leadership’s arrogance overrides data and feedback, decisions are less than informed, leading to damaged organizational reputation and shareholder value. Ultimately, the best defense against it is transforming your fear of being wrong into a genuine hunger to learn from everyone around you.

Join us next month as we explore rigidity.