This, Too, Shall Pass

An idealist believes the short run doesn't count. A cynic believes the long run doesn't matter. A realist believes that what is done or left undone in the short run determines the long run.
–Sydney J. Harris

In order to be a realist you must believe in miracles.
–Henry Christopher Bailey

The leader has to be practical and a realist, yet must talk the language of the visionary and idealist.
–Eric Hoffer

 

By nature, optimism has to be the default mode for any great leader. A top leader envisions a better future and shares it with her followers. No one will follow a leader who promises, "With my leadership, things will get much worse." While some leaders are put into a position of admitting a situation will get worse in the short term, they will quickly add that, after the short term pain, there will be a much brighter future.

Yet, many leaders take optimism to an extreme. They want to believe in themselves, their teams and their organizations so much that they presume ultimate success, no matter what the obstacles. They may be blind to the power of their competitors; believe that the economy will continue to grow forever; expect that their technology is so superior no one can leapfrog them; price their products too high; tell their customers what they should buy rather than listen to what they want to buy; or, refuse to consider alternative strategies. When it comes to people, overly optimistic people may hire someone who is not that excited to join the organization, thinking "I can change them and get them excited." Or, they may hold on to a poor performer too long, expecting that "I can turn the person around."

What happens when an overly optimistic leader leads an organization? During good times, massive growth plans are developed and implemented, substantially increasing risk. When bad times hit, corrective actions are delayed, as the leader can't shift out of his optimism. When the situation finally demands action, the organization has to go through gut-wrenching changes, often overreacting late in the down cycle, and being unprepared for an upturn.

Non-profit organizations are particularly prone to overly optimistic leaders and expectations. Having served on a number of non-profit Boards and worked closely with non-profit leaders, I can attest that non-profit leadership is the most challenging leadership in the world. Non-profits don't have the money, resources, incentives, bonuses and infrastructure of for-profit companies. Non-profits depend primarily on presenting a very compelling vision and an extremely optimistic outlook about the organization's impact. This mindset often carries through the entire non-profit organization and can particularly infect financial projections. Massive building campaigns take place under the assumption attendance will grow and donors will make good on pledges. Leaders hire more and higher-level staff counting on donations to increase. When the expected growth fails to occur, many non-profits either go bankrupt or have to substantially downsize their operations and impact.

Top 1% or surpassing leaders are "realistic optimists." They absolutely believe in their people and organizations, and the ability to make a difference in society. They project growth and a brighter future. But, they also understand business cycles, and the need to plan counter cyclically. During boom times, they don't overexpand. They pay down debt and build a cash reserve. They bring on temporary workers and move slowly when adding new buildings and equipment, ensuring that they have sustainable market demand. They maintain discipline in hiring headquarters staff, outsourcing work where possible to keep costs more variable. When lean times come, they reduce their variable costs, without impacting customer service. They may expand then, taking advantage of lower construction and equipment costs. They focus on capturing market share, while their competitors struggle. And, when the boom times return, they take a preeminent position in their industry.

A key phrase that captures the thought process of a realistic optimist is "This, too, shall pass." Attributed to a Persian poet, Attar of Nishapur, and quoted by Lincoln, the phrase describes a universal truth about all situations: Neither good times nor bad times last forever. During good times, the realistic optimist enjoys the benefits, but recognizes the cycle will change, and prepares accordingly. During challenging times, she encourages her followers with the assurance that things will get better, and prepares for the upswing.

With this balanced, thoughtful approach, the surpassing leader sets herself and her organization apart from the rash optimist or the demoralizing pessimist.

Action Points
• On a scale of Most Pessimistic to Most Optimistic, where do you typically rank?
• Do your followers accuse you of being too optimistic? Do you demonstrate any of the behaviors of a leader who is unrealistically optimistic?
• Where are you in your business cycle today? Have you overreacted, either positively or negatively, to your current situation?
• Who can you talk to that will help ensure you are being a realistic optimist?

Payoff
Being fully prepared for both ups and downs, leading steadily in all situations

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