The Importance of Self-Efficacy and Learned Helplessness

Back when I was studying Entrepreneurship at the University of Tehran's graduate school, we were taught how entrepreneurs and the process of entrepreneurship can be studied through multiple lenses and aspects. There's the business environment, which refers to the macro and micro economic environment surrounding a business. We're all familiar with this one. Famously during the covid lockdowns, the games industry was met with a boom due to rising demand from people staying in their homes, stimulus from governments around the world, and low interest rates making borrowing and investing money cheaper. Environmental factors. Then there's the opportunity, which is at the core of entrepreneurship. An opportunity in the academic sense is defined as any gap in the market which can often be described as the gap between people's needs and what is currently available. It's the thing that is then exploited. There're other aspects and lenses too, but perhaps one of my least favorite at the time was the entrepreneur's characteristics. This aspect of the field studies the social, psychological, and economic characteristics of the entrepreneur, the person driving the process forward. It's the kind of thing that pop culture and pop science loves to focus on. It's what becomes the thematic basis for biopics. It was also a mandatory course that we had to take. At one of the classes in the course we were taught about the concept of this post: self-efficacy.

What is Self-Efficacy?

Self-efficacy is the belief one has in their ability to get things done. Not to be confused with the related yet more commonly understood concept of self-esteem. Self-efficacy specifically is about how much of a can-do attitude one has. Someone with high self-efficacy believes they can do things much more confidently and affirmatively than someone with low self-efficacy.

Study after study have shown that self-efficacy is good! That people with higher levels tend to perform better at new tasks, and especially when it comes to entrepreneurship, it is a strong predictor of someone even being and becoming an entrepreneur in the first place. That's not much of a surprise, but there are many counter forces embedded in our contemporary society that push people towards the opposite direction. We are taught to be humble, to not be overconfident, to be aware of our privileges. And don't get me wrong, I absolutely agree with all of those. Those are all good things too! But it's not hard to see how these can push one's mental model away from one with high self efficacy.

The actual Dunning-Kruger effect

There's also the famous Dunning Kruger study which has entered the popular language and understanding of people by now. No one wants to be an example of the Dunning-Kruger effect. Meanwhile anecdotally speaking I have observed a much higher discussion of the Dunning-Kruger effect than self-efficacy. This is not without reason of course. Overconfidence is a real issue, especially with people who are inexperienced or wield an outsized influence.

What is commonly referred to as the Dunning-Kruger effect

We can see the effects of these counter forces. Talented people with imposter syndrome always doubting if they even have any achievements. And those are the good-case scenarios, the worse case scenario is when low self efficacy turns into learned helplessness.

Learned Helplessness

Considered a psychological state, learned helplessness is pretty much definitionally a lack of self-efficacy, the exact opposite of having it. It's when people think there's nothing they can do. A great sense of powerlessness that kills motivation.

But as the name implies learned helplessness is a learned behavior. That means we have the neuroplasticity to change it. We can break out of it. I have encountered many dear friends who have struggled with it and it's always difficult coaching them on improving when every suggestion is met with justifications and excuses on why the effort is futile.

It's great that in our politics we speak of systemic issues, but on a personal level, none of us have the privilege of changing society. All we can change is ourselves and our surroundings. It doesn't matter how unfair the system is, or why and how the system is stacked against us. We can't change those, therefore expending valuable mental real estate on them is pointless. In fact, it is not just mental energy and time spent on things out of our control, it is actively harming us by reducing our self-efficacy even further and pushing us more towards the state of learned helplessness.

Improving Self-Efficacy is Key

When it comes to someone being in a rut, improving their self-efficacy is probably one of the root issues that must be solved. It is the first step on the road to improvement. We are all entrepreneurs. We might not all be creating new businesses, but every individual is living and managing their own unique life wherein they are the protagonist of their story.

In the 2021 film Don't Look Up, people ignored an incoming asteroid until it was too late

We can yell at the clouds, or we can actually try to improve our circumstances. Action takes motivation, and motivation requires a mental basis and belief foundation to build upon. You won't have motivation when you don't believe in your own abilities and capabilities.

It's what any good therapist will typically focus on first when dealing with people who feel stuck. We can use any sort of systems thinking analysis to break down problems to tackle root issues, but any good root cause analysis will also see the psychological barriers present.

Awareness is not Enough

I am writing this as someone who has suffered a great deal of damage to her sense of self-efficacy recently. In 2024 the project I was leading, Ephemeral Light, got canceled. I shoulder the majority of the responsibility for that. I made mistakes that I only realized either too late in the project, or in hindsight later looking back.

That personal failure has very understandably hit my sense of self-efficacy. Neuroplasticity, remember; it works both ways. Then over time I fell into more of a slump. I felt helpless looking for a new job after moving to Canada. The games industry had already gone through its worst years of layoffs, making it one of the toughest jobs markets it's ever had, and I had neither the connections nor the AAA experience that would give me an edge. I was rationalizing why I was failing, and that in turn dropped me into a state of ever increasing learned helplessness.

A lack of awareness wasn't an issue here either as I had become well aware of my self-efficacy issues very quickly in fact. I would complain to close ones about how I don't believe in myself anymore. But no action. And things would just get worse.

However, there is a way out, and it's not really all that complicated. It's pretty straightforward in fact. Create, celebrate, and continue small wins, and then build up to bigger wins. Neuroplasticity to the rescue this time. And slowly over the months I've started regaining my self-efficacy. Perhaps it's still not where it should be, but it's at a much healthier state.

Entrepreneurship taught me that outcomes are never determined by one variable alone. Environment matters. Opportunity matters. Circumstances matter.

But none of those matter if the person at the center of it all stops believing they can act. Self-efficacy is not confidence for confidence's sake. It is the belief that effort can still produce change. And sometimes that belief is the first thing that needs rebuilding.