Jose Palomino

Strategic Perspectives: Why You Need Both Optimism and Pessimism to Grow Your Business

August 7, 2012

How do you see the glass?

Is the glass half full or half empty, and does it matter to your business?

I think it does matter, but maybe not in the way you’d initially think.

As an entrepreneur, my default is optimism. Optimism is an essential part of an entrepreneur’s “DNA” – how else are we supposed to persevere despite the many forces that push back against our ideas? I have persevered again and again. I have dreamt new dreams and tried them – I have taken risks, I have started new businesses, I have succeeded and sometimes failed – more than once. So how do I deal with losses and see them as becoming contributors to future wins?

And the secret ingredient? Pesky, persistent, never-say-die optimism.

But it takes more than a hopeless, reckless abandon to an optimist’s spirit to build a successful business. In fact, it takes a mix of both optimism and pessimism to guard against the many possible pitfalls that new endeavors will surely face.

I didn’t expect to write it this way. When I started researching for this post, it was with an “ALL-OPTIMISM-OR-NOTHING” approach, but the research says differently. And I realized that in actuality, I was living in the mix of optimism/pessimism – some would call it realism. Maybe you are, too.

Labels Limit Us

As human beings, we often like to label things – ourselves, others, etc. We say we’re an extrovert, even when we relish an evening in with a book. We label that person as a pessimist, even if we don’t know their whole story. We label because it makes things easier, neater, quicker to digest in our brains. But people are complex, and labeling ourselves (or others) as “one thing or the other” limits potential all around the room.

But really, it’s not about labeling. It’s about perspective. The glass is neither half full nor half empty. It’s both, or neither, depending on the day, the situation, and what happened just before. I liked what Brian Solis had to say about this idea. He says it all depends on whether you just poured into the cup or just drank from the cup (pretty brilliant).

In short, an optimistic approach is certainly needed to start a new business. You need the optimistic spirit to take that first leap. But pessimism comes in when you’re writing your plan – when you need to be pragmatic about what steps must be taken in order to be proactive about almost all potential outcomes. So it’s not about choosing only one or the other – optimism or pessimism – it’s about choosing one or the other for different purposes.

What the Research Shows

Alright. So where exactly am I getting these ideas?

Originally, I was inspired because I started seeing all of these optimism-heavy articles popping up around the internet. But after doing a little digging, I found (surprisingly) that it’s not only optimism that can help us, as I initially thought. Yes, there is research to support that optimists are more likely to get hired and promoted than their pessimistic colleagues. And research has also found that, “optimists outperform pessimists on the job by as much as 50 percent.”

So optimism is a good quality to have, for sure.

But that’s not where the research ends. Pessimism has a big part to play, too.

In her book, The Positive Power of Negative Thinking: Using Defensive Pessimism to Harness Anxiety and Perform at Your Peak, psychologist Julie Norem uses both personal research and case studies to show that there are some powerful benefits to utilizing pessimism. According to Norem, pessimism has helped people to control their anxieties/fears in order to work more efficiently and at their fullest potential.

B. Cade Massey, assistant professor of organizational behavior at the Yale School of Management, conducted research that was published in an article in Psychology Today. He found that pessimism can actually be a great motivator when used in the right context. The article reports, “When we’ve been successful before and have a realistic expectation of being successful again, we may be lulled into laziness and overconfidence. Pessimism can give us the push that we need to try our best.”

Pessimism is also good when thinking in terms of having a proactive plan. If you are overly optimistic in your forecasts, (i.e. Netflix CEO Reed Hastings thinking that his customer base wouldn’t flinch at a price increase or a brand-new business model) it could be a disaster (as I just said: reference Netflix). If, instead, you already have a plan for potentially difficult situations – then yes, maybe you’re thinking like a pessimist, but you’ve got a plan and you’re prepared.

Wouldn’t you rather be prepared than caught off guard?

The Value of Strategic Perspectives in Business

I’m not saying that we need to do away with optimism, or that we need to dwell in the doom and gloom of pessimism. I’m just saying that maybe we need to take note of this research and think strategically about how we use both perspectives to our business advantage.

I’d like to call this having a “Strategic Perspective”.

As Psychology Today says, “It’s simply not the case that optimism is “good” and pessimism is “bad”—although that’s how we’ve been encouraged to think about them. Rather, both are functional. And both have value.”

The reality is that you’ve probably already been conducting business this way without realizing it. You could be just like me – an entrepreneur who labeled himself as an optimist while using this “strategic perspectives” approach when making decisions. But the great advantage now is recognizing that you have both perspectives at your disposal, and wielding them to greater effectiveness.

Solis also says, “The key for you however, is to package what it is you feel and translate it into a set of relatable and relevant objectives, pragmatic steps in how to achieve them, and defined metrics that demonstrate progress and performance.”

So take your unlabeled, optimistic/pessimistic self to the next meeting and think pragmatically and hopefully about your next business move. The research shows that it will do your business a whole lot of good.

  • Have you thought of yourself as an optimist or pessimist? How has this affected your work?
  • How have you seen labels hurt the potential of yourself or your business?
  • Have you already been utilizing a “strategic perspectives” approach? Did this come naturally, and how have you seen it affect your business?

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