Managing the Family Business: Are Optimists or Pessimists
In
general, optimists are best suited to lead family-run
entrepreneurial organizations. At least until disaster strikes.
John
A. Davis explains
why both perspectives are so valuable.
Editor's
note: This is part of a series of occasional columns on managing
the family business written by Senior Lecturer John A. Davis.
Optimism
and pessimism are strong, stable traits that reflect our coping
strategies. We live in an uncertain world. To cope with
uncertainty, most people basically assume that things will either
turn out well (the optimists) or turn out badly (the pessimists).
So
here's a question to ponder: Is it better to have an optimist or a
pessimist leading your family organization? As I'll show below,
both have their own unique traits that can benefit a business. But
they will do it in different ways, with different goals.
Which
are you? Here's a quick test. I plunk down two magazines in front
of you. One, Time,
has Warren Buffet on the cover, under the headline "The
Optimist." The other publication is ThePessimist.com,
whose tagline is "Expecting the worst. Never disappointed."
Which do you pick up first?
It's
probably a good thing for us that so-called rationalists (tagline:
"Why so emotional?") are in the minority, because studies
show that without optimism or pessimism people don't accomplish as
much. These natural traits motivate people to take action-different
actions, but at least action.
ARE YOU A PESSIMIST?
If
you're a pessimist, you tend to focus on safety and security.
Pessimism drives you to seek and find safe havens, establish clear
advantages, and protect resources. When pessimistic about needed
economic recovery, for instance, families save money and companies
build war chests. When the news is bad and likely to get worse, a
pessimist is your best ally because pessimists thrive on fixing
errors.
To
get the most out of the pessimist in your family-owned company,
researchers say, you need to provide "targeted negative
feedback" from a trusted authority. Pointing out what has gone
wrong or what's less than perfect will motivate the pessimist to
innovate products, improve plans, andsolve
problems.
For this reason, pessimists can make good operational leaders. But
pessimists in the corner office or leading the family are less
likely to foster a culture of growth, risk taking, and wealth
creation.
According
to Jeremy Dean, a researcher at University College London,
optimists prefer to think about how they and others can advance and
grow. Optimists also have larger social networks, solve problems
cooperatively, and are more likely to seek help in difficult
situations. They make good spouses. People with optimistic spouses
were healthier in a 2014 study by researchers at the University of
Michigan.1 To
energize an optimist, positive feedback is absolutely essential,
because the optimist builds on incremental achievements and a sense
of positive movement.
Choose
optimists to lead growth activities in your family organization.
Entrepreneurs, for example, are much more likely to be optimists.
But if you choose an optimistic business leader, you should
probably pair them with "reality testers," not
necessarily authority figures, advises University of Pennsylvania
professor Martin Seligman, the father of positive psychology.
For
decades, scientists regarded optimism and pessimism as fixed traits
we are born with. But last year, researchers at a German University
reported that 18-39 year-olds were more optimistic than people
40-64, and far more than people 65 and older.2 For
reasons we don't fully understand but can appreciate, life
experience turns some people into pessimists. By the way, the same
study of 40,000 people also found that grumpy people live longer.
Their caregivers? You guessed it: Optimists.
USE THE POWER OF BOTH TRAITS
Leaders,
whatever their orientation, need to learn to harness the power of
both traits. "In a striking turnaround," writes Annie
Murphy Paul in Psychology Today, "science now sees optimism
and pessimism not as good or bad outlooks you're born with but as
mindsets to adopt as situations demand."
When
testing strategic plans, deploy defensive pessimism, imagining all
the things that can go wrong in the future. But when the task
requires flexibility and had work toward uncertain goals, build
teams with optimists.
As
a determined optimist who has grown a bit more pessimistic during
my life, I do want to share one important finding from my 35 years
of field research: Effective long-term planning and investment
requires an optimistic approach, with contingency planning by
pessimists—because things never go exactly as you want them to.
Footnotes:
1.
Kim et al., Journal of Psychosomatic Research, 2014. Vol. 76 Issue
6.2. Lang et al., Psychology and Aging 2013. Vol. 28, No. 1.
BY
John A. Davis, a
senior lecturer at Harvard Business School where he teaches and
researches in the family business, family wealth, and life planning
fields.
http://hbswk.hbs.edu/item/7513.html
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