Why Optimism Matters

We live in tough times. Daily, we’re faced with the specter of terrorism, war, political polarization, economic fragility, and marketplace upheaval. It’s easy to become cynical and pessimistic. That’s precisely why nowadays more than ever, we need business and government leaders who shine with optimism.

There is clear empirical evidence that people resonate to positive messages. This impulse appears to reside somewhere deep in our human wiring. Unsurprisingly, people will choose to follow a leader with a can-do, optimistic message rather than one with visions of doom and gloom.

Optimistic leaders are “unreasonable”, and they have “unreasonable” expectations of what they can achieve. They fully acknowledge the barriers and challenges before them, but they also feel a confidence that they can hurdle over them. They overestimate their skills and their capacity to influence events, even when times are tough. Winston Churchill once observed, “Success is measured by your ability to maintain enthusiasm between failures.”

Let me tell you how important optimism is in the private sector. Personally, I believe that people aren’t just “born” leaders, they can learn to be leaders. But my research suggests that some people come to the table with certain attributes that make it easier for them to learn. One of those attributes is optimism. If you’re not an optimistic person yourself, it is very difficult to create a collective tone of hope and confidence that is so necessary to achieving sustained competitive success.

For employees to strive for extraordinary goals, they must feel a sense of hope and confidence. The leader is essential in setting that tone. As motivational speaker Keith Harrell notes, “a dead battery can’t charge another battery.” When Katharine Graham ran the Washington Post, she was well-known not only for her can-do optimism, but also for urging the Post staff to get on with it and “don’t tell me never.”

As I noted in my last blog, hope and optimism are vital parts of a healthy organizational tone because there are so many forces of resistance to any actions that violate habit and conventional wisdom. I want to repeat Ex-GE chief Jack Welch's sentiment. He says this issue is so critical that one of the most important things a leader must do is to constantly resist “the gravitational pull of negativity.”

Today more than ever, we need optimistic leaders who can inspire people to do what pessimistic leaders warn is impossible. Which kind of leader are you?

Your Organization's Tone

What’s the “tone” in your company? New York City mayor Michael Bloomberg, in explaining how he grew his dominating Bloomberg LP financial-data empire, states that one of the most important things that a CEO or mayor does is to “set a tone.”

What exactly is a tone? Well, it’s the climate, the “vibe”, the mood, the value set, the persona, the spirit and soul of the place. These are abstract concepts, but they’re real, and I submit that just like our health is better with well-toned body muscles, a company would be wise to build a strong, vibrant tone rather than be satisfied with a weak, flabby one. While I can’t read Bloomberg’s mind about his definition of tone in his company, let me suggest some elements of strong, vibrant tones in other organizations that I’m pretty sure he’d approve of.

First, a strong tone permeates boldness. Organizations with strong tones strive to carve new unchartered paths . In other words, they avoid reactive mimicry. When Stephen Privett came on board as the new President of the University of San Francisco in 2000, the local press asked him about “the competition”. His response: “We compete against our own standards. Nobody imitates their way to greatness.” That non-reactive tone he instigated has helped galvanize USF to develop uniquely new programs in professional schools and fresh new approaches to liberal arts pedagogy. These initiatives helped propel the university to several national “top 100” lists in both undergraduate and graduate education for the first time.

Second, a strong tone is offensive. Defensive tones focus peoples’ attention primarily on protecting the company’s product line and defending its market share from competitors. That’s fine to an extent, but as former HUD Secretary Henry Cisneros points out, managers in both the public or private sector can no longer be content in “managing for steady state” because the incessant changes in the market will no longer allow steady-state success. That is why offensive tones are so powerful; they concentrate peoples’ attention on creating new products and markets, and attracting new kinds of customers. Forbes publisher Rich Karlgaard summarizes why talent and buzz is flowing towards Google at the expense of Microsoft: “At Google one works to change the world; at Microsoft one works to protect the Windows and Office profit margins. Which mission do you think (the most talented) people prefer?”

Third, a strong tone is marked by collective impatience and urgency. Ed Catmull, the President of Pixar Animation Studios, constantly warns his people about the dangers of complacency: “The success of Toy Story can make you think that you’re good at everything…It’s easy to fool yourself.” The “vibe” at Pixar is a constant hum of dissatisfaction with current results and a visceral resolve to make quantum improvements. Says executive vice President John Lasseter: “Every single one of our films has been the worst thing you’ve ever seen…” until brutally honest working sessions catapult the product to new heights.

Finally, a strong tone marked by hope and optimism. For people to strive for extraordinary goals, they must feel a confidence that it’s all possible, and desirable, and wonderful. Hope and optimism are essential parts of a healthy organizational tone because there are so many forces of resistance to anything that violates conventional wisdom. Ex-GE chief Jack Welch says this issue is so critical that one of the most important things a leader must do is to constantly resist “the gravitational pull of negativity.”

There are many reasons why companies succeed or fail, but their “tone” is certainly one of them. How does your company stack up?

Here’s a Risk Brew for You

Strategy guru Gary Hamel has noted that strategy is “easy” only if you copy someone else’s, but as he would agree, that’s potentially the riskiest strategy of all. Imitators play catch up. Yet despite all our affection for talking about innovation and entrepreneurship, we are often helplessly risk-averse, even when we’re dissatisfied with the status quo. We fear the negative consequences of risk, even as we ignore the even more negative consequences of staying the course.

Is it that we lack courage? Sometimes. But even though courage is necessary, it’s not enough. To our detriment, we can courageously pursue a risky but stupid path. Classic author Evelyn Waugh once noted that “one cannot judge the value of an opinion simply by the amount of courage that is required in holding it.”

I’ve learned that innovative leaders prudently cut their risk by combining courage with preparation. Dallas Mavericks owner Mark Cuban, for example, says he consciously used this mix of courage and preparation in successfully launching high tech companies like MicroSolutions, Broadcast.com, and HDNet. In the Silicon Valley, the successful entrepreneurial start-ups that I’ve seen over the years were launched by leaders who were courageous enough to pursue an unchartered path and prudent enough to develop an operationally disciplined, financially-solid game plan to cut unnecessary risk in execution.

The operative phrase above is “cutting unnecessary risk”. There’s no way to cut all risk if you’re breaking new ground in products, service, marketing or distribution. What all this means, says Ralph Shrader, CEO of consultancy Booz,-Allen & Hamilton, is that “leaders need to become comfortable with imperfect data” when making decisions about which markets to enter, which projects to support, which suppliers to enlist, which acquisitions to make, which assets to unload, and so on. Why? Because “time was, when faced with a decision, the chief executive officer and board of directors could set up a task force to look at the options for a matter of months. Today, failure to decide and act quickly can pre-empt options altogether.”

It’s even more subtle than that. Air Force Colonel “Hoot” Gibson notes that you might think that you’re in great shape if you operate in a zone of rosy 100% certainty. But leaving aside the fact that in life there’s no such zone, the reality is that if you believe you’re in a 100% certain zone, you’re probably in a perilous zone of routine and complacency. Says Gibson: “90% is inside most peoples’ comfort level, and 80% doesn’t induce much sweat.” That means that the closer you try to operate in a near-100% certainty zone, the less breakthrough action you’ll be motivated to take. It sounds odd, but rapid response, imagination, and entrepreneurial initiative happen when leaders sweat a bit as they deliberately go beyond their comfort level.

In short, you’ll never have all the data you need. Excellent management is a rolling process of intelligence and action: fast, conscientious intelligence-gathering followed by disciplined tries, experiments, pilots, project interventions, betas, and the like, all of which provide yet more data for the next round of action.

I want to add one more ingredient to the cocktail: love. Even before he mixes his shot of preparation and courage, Mark Cuban starts the potion this way: “First, I ask myself if this is something that I would enjoy doing. Find something you love to do.” He’s right. If you love what you do, you’re more likely to make it successful, and if you fail, then as Cuban says, “at least you love going to work.”

So there’s your risk brew: courage, preparation, beyond-comfort sweat, discipline and love. Are you willing to imbibe?

A Question for Mr. Alito

Harriet Miers is out and Sam Alito has been nominated by the President to be the next Supreme Court justice. It’s going to get hot and heavy in the old Senate Judiciary committee. The political pundits are predicting that he’ll be probed relentlessly on issues relating to privacy, terrorism, environmentalism, equal rights, and so on. That’s all well and good, but unfortunately, I haven’t yet seen any prediction that he’ll be grilled on what I consider a travesty of justice that occurred last June. I refer to the decision of the Supreme Court to uphold the notion that a city or state government can seize private property for private use.

I wonder why Senators aren’t putting this issue near the forefront of their concerns. In the past, eminent domain has been a means by which a state or local government would force a property owner to sell at some arbitrarily determined “fair market value” in order to use the land for some pressing and unavoidable public need, like a bridge or a school or a highway. Eminent domain was rarely used, for good reason, since the whole notion of a government seizing private property smacks of totalitarianism.

Not any more. The 5-4 Supreme Court ruling now allows governments to confiscate private property in the name of economic development, even when your property is transferred to another private party. Can you visualize the potential malfeasance? A developer offers a local government a good deal because he wants to build on the “useless, undeveloped” piece of property you happen to own. Because he dangles a fat check and the promise of “jobs!!!” in front of local politicos, they decide to force you to sell out. To justify their move, they speak in glowing terms of revitalization and urban development. But the bottom line is that politicians colluding with purveyors of big bucks, rather than market forces, can now decide the best use for the property you own—ostensibly for the “public good”. No wonder many city and state officials are salivating. The central planners of the old Soviet Union would be proud.

Yes, I’m totally biased, but I happen to believe that one of the main reasons for this country’s vigor is the healthy interplay between democracy and free markets. That interplay, in turn, is due to two fundamental precepts: the right to vote and the right to own private property. Messing around with the right to private property is as dangerous as messing around with the right to vote. Can you imagine someone suggesting that the vote of a poor person with a limited education should be transferred to an educated wealthy individual in the name of some noble cause? I don’t see a difference in taking someone’s vote and taking someone’s property. If you want my vote, give me a compelling reason to vote your way. If you want my property, give me a compelling reason—and price—to “vote” your way. But don’t take either from me by force.

I’d like to know how Mr. Alito feels about that!