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How The World Chooses To Be Incompetent - The Peter Principle - FutureIQ

9,727 views Wait, is this logic right? • Mar 15, 2025
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Slog Reference: Understanding Incompetence: The Peter Principle

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In this episode, we talk about how sometimes people get promoted to jobs they're not good at. It’s called the Peter Principle, and it happens when someone is really good at their current job but gets promoted to a higher role where they struggle. We also discuss how many businesses end up with people who aren’t really good at their jobs because of this. It might sound funny, but it happens a lot! We’ll explain how promotions can go wrong and why sometimes people stay in jobs they’re not ready for. Don’t worry, we also share some funny ideas on how to fix it!

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The Peter Principle:
Wikipedia: https://en.wikipedia.org/wiki/Peter_principle
Book: https://www.amazon.in/Peter-Principle-Things-Always-Wrong/dp/0062092065
Illusion of Validity: https://en.wikipedia.org/wiki/Illusion_of_validity
Sturgeon's Law: https://en.wikipedia.org/wiki/Sturgeon%27s_law
Gell-Mann amnesia effect: https://en.wikipedia.org/wiki/Michael_Crichton#Gell-Mann_amnesia_effect
O-Ring Theory: https://www.youtube.com/watch?v=CKkOmIW9bjg

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Transcript

do you feel like there is so much incompetence in the world what if I told you that the business world has been structured in such a way to maximize the incompetence you don't actually believe you if you don't believe me just check out these examples of just random signs that I have collected I mean some of these signs are really funny how how do you have a door which says do not enter like what's the point of the door then if it is do not enter that is because the world is designed to maximize incompetence okay what do you mean the world is designed to maximize incompetence let me tell you a story imagine a midsize company or a big
company any company right and people are working there hopefully and the ones who are doing a good job at what they do what happens to them they get promoted they get raises they get promoted are they doing the same job now after promotion no they're doing a different job yeah yeah now suppose they do a good job of the new role okay then what happens promote it again right so every time they get a new role correct and they're doing a good job and they get promoted correct now let's say that they land up in a role that they are no good at right they don't get promoted then they're going to stay in that job for
the rest of their career yeah unless they move companies of course right whereas the people who are doing a good job quickly get promoted out of rules that they are good at correct correct so just think of what the equilibrium is going to be in the long term everyone is going to be doing jobs that they're incompetent at see logically it makes perfect sense it does and it bothers me this is called the Peter principal okay Peter huh the guy who came up with this idea has written an entire book on it and the principal itself is called in a hierarchy every employee tends to rise to his level of incompetence right okay in time every post tends to
be occupied by an employee who's incompetent to carry out the duties right yes and this happens even in smaller places right imagine like there is a garage where you take your car right this is what Peter first noticed H and there was a mechanic who was an excellent mechanic okay so at some point he got promoted to be a supervisor of other mechanics right okay so now he's no longer doing the actual mechanical work that he is extremely good at yes and he's supervising other mechanics which requires different set of skills yes and he was terrible at that job right and then just everything got worse yeah so you've lost a good mechanic and you've gained a very bad supervisor
right yeah same thing happened at Microsoft right in the early 2000s yeah Bill Gates retired yes Bill Gates had taken Microsoft to Heights right it had become the most powerful company in the world it had he retired at that time Steve Balmer was the COO of Microsoft excellent salesperson yes right it was the gates and Balmer team yeah that brought Microsoft where it was right yeah except that Balmer turned out to be a pretty bad CEO right legendarily bad CEO for the next 10 years Microsoft did pretty badly right they missed the mobile Revolution they missed the cloud Revolution and only after Satya nadela took over did Microsoft recover right yeah true that is that is very very true
what an example yeah all right but it seems to me like these are two isolated examples that you've given as proof yes so what we do here on this channel yeah is that we don't look at just isolated examples we want data and in 2018 there was research across 214 American businesses okay and they looked at how promotions were done and what were the results and what it showed was that across the board employees were promoted based on their success in the current role makes sense and not based on potential in the new role okay okay this this sounds completely normal to us but think about it it is not normal right not just that but the data also showed
that they are more likely to perform poorly in the new role and that this leads to considerable costs to the business okay and this is simply because you know you cannot evaluate somebody based on how they will perform in the new role aha you can evaluate them you can give them an evaluation about how they would perform in the new role well that doesn't really work okay this is covered in Peter Principle the book okay and what they point out is one is that either you can do aptitude tests okay right yeah um but here is the problem right usually when a person comes in and if there's a kind of company that does aptitude tests right they they will
directly put the person in the role that they have the most aptitude for and from this point the person has nowhere to go but roles they have less aptitude for right where can you go but more importantly huh usually they don't do tests like this right the evaluation is done by managers and other senior people in the company correct and usually these are people who are already incompetent because of the Peter Principle okay most importantly the most important skills in a business cannot be tested right Stress Management decision making Under Pressure decision making with incomplete data yes grit and determination right there is a famous U study by Daniel kanaman who won the Nobel Prize right uh it is called the
illusion of validity okay in Israeli military they studied there was a two we very intense boot camp uh for soldiers to decide who are officer material okay and then much later they looked at how these people did in their actual career as officers right and there was no correlation what okay so forget a 1 hour interview or a 2hour test a two we intense 24hour army boot camp wasn't good enough to tell who is going to be a good leader and who is not okay it and there is lots of data similar data from say Google which has looked at uh various things uh in a candidate uh at the time of coming into Google and then
how they performed a few years later inside Google again very little correlation between the candidates qualities and uh their actual performance so there is a problem this reminded me of actually something that I read in a book called grit the author is Angela Duckworth and she ran a similar study but on in West Point Academy for Marines so uh that book is very interesting I'm not going to give you any spoilers but do go read that book but here is my question the person who wants to get promoted or the the person who's capable of handling that new role they themselves know their qualities right so they can upskill and they can probably get good at it well I mean
let's take it in two parts right okay one is before they are they start the role they don't even know what is really required in that new role true okay true but that's not the real problem right like you said after they start doing the role 6 months later if they realize that they are incompetent at this role they should get out of that role I think that's what you're saying uh kind of uh doesn't work no because of the Dunning Krueger effect right the people who are incompetent at their role do not know that they are incompetent right yeah they do realize that something is wrong like everything sucks yeah more than it used to suck before they took over yeah
how do they explain this they blame someone else absolutely they think the organization has changed because of the income competence of all the new people coming in right just think of everyone blaming jenzi for the problems of the company and the world and the country and all of that right you're going to piss off a lot of managers in this episode and I am here for it I'm loving it see a different question you could have asked is why doesn't somebody help them become more competent right that is what I was going to say yeah who's going to help them that person is also incompetent at that and in competence plus incompetence equals incompetence uh right yes I mean they
have risen to the level of incompetence but here is what I was also thinking that they might be on the growth path so they might actually be competent at the job but overall what it seems to me is probabilistically they are more likely to be incompetent than competent uh but can we avoid this by say refusing the promotion I probably know I'm not going to be good at it like for example I know you are an individual contributor you haven't gone into management in I did go into management and after 6 months I said you know what I'm not good at this I'm not enjoying this and I went back to being an individual contributor there
you go yeah so the question is can everybody do this well this is a bad idea okay because one is of course that you do need people at the higher levels and if everyone refuses promotions the only people who don't refuse promotion will be the even more incompetent people right so you do need to do this but the other bigger problem H is that this is a very bad idea for your career okay okay because if you do this it signals a lack of ambition so you risk being sidelined forever right and how are you going to grow I mean this is also a financial disadvantage and the book actually says this do not do this if you are
married okay yeah that's he's it's right the book is absolutely right he's right if you're married you need to keep growing and you need to keep increasing that P pay packet because marriage comes with a lot of expenses fans I mean reach your level of incompetence and then draw that salary for the rest of your career become Furniture in that incompetence role yeah so the overall result of this conversation so far seems like you as in me are doomed to work in a job that you're are incompetent at in a role that you're incompetent at well not necessary okay okay uh what you could do is try to look for indirect hints you are not
doing a good job right if you're always stressed right or if you're always talking about the good old days right this could mean that you're incompetent at this current role and you should do something about it move sideways or something like that right at an organizational level it's a little more difficult right there is one company which has an interesting approach to it which probably works what company and what approach this is can see the big consulting company okay and the approach is called up or out up or out right you get into a role in mckeny huh right within 2 three years if you don't get promoted right then you get kicked out of the company because you are
incompetent at that level correct so you're definitely not going to grow further yeah we I mean you didn't get promoted above correct so you didn't go up right but then that means you're incompetent at this job and you're going to stick around there better that you get kicked out and somebody else gets comes in there right up or out the the thing is that because McKenzie is such a sought after company this works for them correct but the out guys need to find a job somewhere else right all everybody in the world does this it won't really work right so people who have started their own consulting firms after getting out of McKenzie they say something about
them not you them all right uh but here's the thing even if you're incompetent you can still get promoted I'm saying this from personal experience incompetent people do get promoted this is proof against the Peta principle well so this is the argument that Scott Adams made in his book The Dilbert principal also right and yeah Peter has actually responded to that he has two points he makes right okay one is that yes there are some examples of incompetent people being promoted but look around you this is not the most common form right most companies are not so bad that incompetent people keep getting promoted second is that even in cases where incompetent people are getting promoted
there's a high chance that even the new role that they got they're still incompetent at that uh role so the the fundamental fact that most people are stuck doing incompetent work still sort of remains true so Peter Principle clearly works even when Dilbert and his office colleagues are in the picture is there no good news for us well there is good news okay there is incompetence a lot of it but not everybody is incompetent okay 90% incompetence but there are still Pockets 10% of competence right 90% well so think about it right in some areas 90% of stuff is crap right daily soap operas on TV 90% of them are crap 90% of YouTube channels
are crap not this one not this one 90% of social media 90% of engineering colleges are crap right 90% of phds are useless 90% of patents are useless ask me I have 18 of those uh so 90% of research papers are crap right this is just called sturgeons law okay which says that 90% of some area that you feel is crap is because 90% of everything is crap right it's just that areas that you understand well you notice that this is crap in areas that you don't understand you don't realize that this is crap right this is called the Gman Amnesia effect ah I remember now doctors watching doctor shows on TV hit them correct but you're not a doctor
you love those shows yeah and we think those doctors are very very smart yeah yeah right so yeah when I watch audio producers doing something I'm immediately able to point out okay this is where they should have changed this little bit in the edit and whatnot but when I'm looking at visuals or video or anything else even rocket science for example I'm like wow what a brilliant job yeah while a rocket scientist would probably look at that and say that is not how it should be done yeah you're right Gil Man Amnesia effect but here's the thing from what I know and I'm not being kind to them but 90% of people are not idiots right so
that's a very good question right how can 90% of everything be crap if only say 10% of people are idiots and 90% of people are good people right so a different Theory explains that it's called the oring theory okay the basic idea oring as in the uh in the Challenger space shuttle right everything in the space shuttle was really high quality stuff correct except like one oing which was bad and that caused the whole shuttle to blow up right so imagine a company right where the final output is produced in 10 stages correct right and you have 10 different people working on each of the stages nine of them are very competent people and one is an idiot right the
final product ends up being crap because of that one idiot right the weakest link Theory correct you are only as strong as your weakest link exactly so when groups of people have to get something done chances are 90% that it will be crap even if 90% of those people are actually good competent people because at one 10% person correct yeah ends up causing issues oh plus Peter principal says that even smart people we end up giving them finding work that they are bad at and giving them that work to do so true true is please tell me there is a way to fix this because I in theory Maybe okay there is a research paper which claims
that the best way to promote people is randomly like just pick up someone from the organization and promote no no no no no more specific than that pick up the best people and the worst people in a particular role and then toss a coin and pick one of them to promote right what is going to happen it is possible that the worst person who was incompetent here is competent at the higher level that's a good point right Sometimes the best person could be very good even in this right but basically they have done sort of a simulation and shown that this is actually better than whatever it is that we are currently doing right and of
course if you are running a small organization you should consider the up and out uh yeah I was actually mentally evaluating both the coin toss and the up and out and I keep leaning towards the up and down because leaving it to a Coos feels very scary by the way a very serious proposal to fix the problems with the je and iits in India from a person who's been in that system and understands this whole thing is that have a some basic cut off of competence right and then everybody who clears that basic cut off within that just have a lottery to decide who goes to which I and for what right and that might well of course it'll get rid of
all the stress because you can't study for a lottery and it will not produce any worse outcomes because think about it right just because you're good at the J doesn't necessarily mean you'll be good at studying engineering and if you're good at it doesn't mean you are going to be good at the work in the workforce so it's using the same Randomness principle I we we need to go deeper in this because there is so much that needs to be discussed here because we can't go very much deeper because some of these are just politically impossible to implement and so they're just going to be theoretical things we discussed no the reason I was thinking of this was
because uh the lottery system actually uh is in a way Equitable because it gives opportunities to those uh who haven't had the other privilege to get to that level in a way but at the same time it is also a lottery so uh deserve in candidates will probably feel cheated if they don't get through the lottery and there there's a whole lot of political and sociological and sociopolitical impact of that that is com just to overall summarize we have organized the whole world around a very sensible seeming principle that promote the good performers it makes us feel good in our heart to do that but if you follow it through to the logical conclusion it means that we are all
doing things we are incompetent at right yeah and it's not an easy to fix right at an organizational level you could do up and out you could do some Randomness but these are difficult to do in our current culture right at a personal level you could maybe do something about it okay look for hints that you are incompetent at your job and then either try to learn and fix it or do something else step back like you back into IC we should not lose hope right if you look at the world around you m just there being only 10% of competence in the world is still enough to keep the world afloat to keep it you know getting
better every year we have done an episode about this about how the world is getting better check it out yeah the world is getting better and we are going to try and make it even more better I know that's grammatically incorrect but I will stand by it I'm not incompetent at grammar because I'm not n future IQ