Managing the Family Business: Are Optimists or
Pessimists Better Leaders?
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.
by John A. Davis
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, and solve 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
