Cultivating Optimism And Leadership In Your Small Business

(Originally Featured in Forbes.com, July 14 2022)

Most of us have general predispositions, or tendencies, to either see the world as bright and sunny, or dark and gloomy. Especially given these times—amidst persistent Covid, the war in Ukraine, spiraling inflation, and a declining stock market—it is difficult to stay hopeful and positive. There is nothing right or wrong about moods or attitudes, but rather they are largely just inherent human differences. But, for small business leaders, these dispositions are vitally important, as they could make or break your company results. Genetic disposition suggests that your genes, or inherited biological characteristics, are passed down in your family tree and partially dictate how you think and what you do. There are lots of other influences, such as your environment, your education, and societal norms, that play a role. But genes are important. To some degree, your happiness (or lack of it) is derived from your predisposition. Optimism is one trait that is genetically disposed. Optimism is defined as a belief that future outcomes will generally (not always) be positive.1 Conversely, pessimism is more about doubt, and the belief that things will not go in your favor. Theories of positive psychology suggest that what you think and speak will indeed become fact. Optimism is one of those traits which might put you in a better position to succeed. A recent Harvard Business Review article showed that actively encouraging positivity among your team is linked with the capacity to survive turbulence and attain better results in the long-run.2 This is one of numerous studies which show that a healthy dose of optimism can improve your decision quality and overall performance.3 Most of the research on entrepreneurs show propensity for higher capacity for risk-taking.4 Higher risk tolerance is related to a higher likelihood of entrepreneurialism. So, risk, optimism, and new venture-seeking are all related for you as the founder or leader. But, what about your organization? Most people these days are seeing lots of job opportunities, rising wages, and flexible work structures, so they are much more likely today to consider outside options and find a new position. How do we create optimism for our own business outlook within the organization? Optimism can be taught and learned.5 You can cultivate the aspects of your decisions and thoughts that are positive, or you can hire people around you that embrace the traits. To me, the basics of building an optimistic company is to first truly believe that your firm will succeed. If you don’t, then you shouldn’t be there. And, if you do, you should be actively spreading that news to everyone you meet—your employees, customers, and vendors. Optimism produces optimism. Optimistic leaders tend to be good motivators. Motivating your team should be much more than just words and rewards. Building the climate that cares, that empathizes, encourages others, and allows creativity and some personal freedom, is necessary today. Keeping your employees motivated will keep the climate more optimistic. Leaders can also encourage collaborations between different units with your organization. Optimists are usually people-centric, and this boosts a spirit of collaboration. Collaboration tends to yield better results than silos and solos. But the question remains, how do you develop this mindset if you don’t already have it? Well, one great way is to hire a coach to help you. Business coaches work on “you” as much as the company. The key is to learn and embrace a more optimistic mindset, without becoming unrealistic or minimizing serious personal issues. Staying in integrity with your leadership style, meeting your employees where they are, and encouraging a strong belief in your company’s values will create success. Excessive or false optimism, however, can create an exuberance bias in how you make decisions. If you are excessively optimistic in your beliefs, you might take risks that are not prudent or sound and can create a culture of toxic positivity, where your employees feel undervalued. This has been found repeatedly to be a cause of organizational failure.6,7 So to build a better company, learn to be realistically optimistic, and expect the results to follow. References 1 Cambridge Dictionary. Definition of optimism retrieved June 8, 2022. Retrieved from https://dictionary.cambridge.org/us/dictionary/english/optimism 2 Achor S and Gielan M (2020). What Leading with Optimism Really Looks Like. Harvard Business Review. June 4, 2020. Available at https://hbr.org/2020/06/what-leading-with-optimism-really-looks-like. 3 Langabeer J and DelliFraine J (2011). Does CEO optimism affect strategic process? Management Research Review, 34(8):857-868. 4 Hvide HK and Panos GA (2014). Risk tolerance and entrepreneurship. Journal of Financial Economics, 111(1):200-223. 5 Seligman, M. E. P. (2006). Learned optimism: How to change your mind and your life. Vintage. 6 Amore MD, Gaofalo O, and Martin-Sanchez V (2021). Failing to Learn from Failure: How Optimism Impedes Entrepreneurial Innovation. Organization Science 2021 32(4):940-964. 7Sull D., Sull C., Cipolli W., Brighenti C. (2022). Why Every Leader Needs to Worry About Toxic Culture. MIT Sloan Management Review, accessed online at https://sloanreview.mit.edu/article/why-every-leader-needs-to-worry-about-toxic-culture/

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