02 May 2019 20:46 IST

Hallmark of the ‘all is well’ leader

Leaders must learn the important difference between complacent optimism and conditional optimism

In the last column in this series, we had reflected on how winners are different from other types of leaders, who could be waiters, weasels or whiners. Another important quality that distinguishes the winner leader is consistent optimism — an ability to see things positively even when the chips are down. But there is a difference in the type of optimism that a winner leader shows.

Economist, Paul Romer distinguishes between complacent optimism — a child waiting excitedly but passively for his birthday gift, and conditional optimism — a child who wants a paper boat to play with in the rain and knows that he needs to get a piece of paper, figure out the right folds, perhaps add wax to make it waterproof. Maybe he gets his siblings to help and only then gets to enjoy floating the boat in the puddles. Winner leaders practice conditional optimism.

Reality vs illusion

In the 1960 version of the movie The Magnificent Seven, Steve McQueen’s (Vin Tanner) character is about a man back home, who fell off a ten-storey building. As he was falling, people heard him say, “So far, so good.” This is the story of a complacent optimism leader.

A leader who practices conditional optimism is able to seek out the truth and see it in the problem, the constraints, the resources. There is a compelling drive for facts versus just gut instinct. This leader is always incisive in her questions, she digs below the surface, she wants to uncover what the real picture is.

A complacent optimism leader, on the other hand, is quick to dismiss a risk, embraces good news without question and is keener on appearances rather than reality.

One of the best examples of this refusal to see reality and falling victim to illusion was last year’s most notorious start-up failure — Theranos. The hype around it demonstrates the point. Before it officially flamed out, it was set to be the subject of a book, a documentary and a feature film starring Jennifer Lawrence as founder Elizabeth Holmes. It had a $10-billion valuation at its peak. This means that investors, management, employees, the business press bought into the imaginary rosy picture — each of them in some way fell prey to complacent optimism. At her company’s 2011 Christmas party, Holmes is said to have described the planned miniLab device as the most important thing humanity has ever built.” This kind of hyperbole is typical of leaders with the complacent optimism streak.

The financial collapse was constructed on complacent optimism — from bankers to customers — everybody bought the illusion and ignored the reality. From failed start-ups to projects that go massively overbudget to non-performers who are allowed to stay on and destroy an organisation, leaders have failed to move from complacent optimism to the conditional version.

A bias for action

Conditional optimism demands action. A leader is willing to demonstrate a ‘get-my-sleeves-rolled-up’ attitude. Complacent optimists often mistake wishes for plans. As the old saying goes, “If wishes were horses, beggars would ride.” They mistake busyness for action. They prefer endless analysis and debate over getting on with the job. One of our top IT majors has an interesting contrast between its current CEO, who is rarely in the press, to its earlier one, who was always being written about and quoted. To a company that prized predictability of results, the current leadership is preferred over the previous one. The perception is clearly one of action over talk.

In many industries and especially in the outsourcing one, which I come from, one of a client’s terrors is hearing the complacently optimistic, ‘Don’t worry, it will be done by tomorrow,’ from their project manager or team leader, on a task or project line item that is complex and has multiple variables with no specific action plan to comfort the client that it will actually get done.

Many start-ups fall so much in love with their business plans and pitch presentation, that they lovingly spend hours and days adding a new slide or re-working an Excel calculation to throw up a new scenario. As I often would tell my teams, “One ounce of action is worth ten pounds of planning.” This does not mean that the conditional optimist does not plan, but she abhors sitting back passively and watching events unfold. She is either anticipating them with proactive action, fending off a risk, implementing a solution or rolling out a pilot to test an opportunity. Rarely do the best laid plans survive reality, so a conditional optimist is always keen to get it out there — a product, a marketing strategy, a new hire. Action provides the best feedback.

Marshalling resources

A former CEO once told us, when we were contemplating a mega-deal well beyond our then-size, “Let’s not have the eyes of the tiger while having the stomach of a chicken.” Leaders need to assesswhat resources are required to make the dream, reality — whether it is solving a problem or harnessing an opportunity. Do we have the capabilities as a team to pull this off? Do we have, or can we create, the complementary set of skills needed to make this happen?

Most successful start-ups have leadership teams that bring different capabilities to the business and therefore increase its chances of success. Poor teams usually have a set of clones. Start-ups often run out of funding because they underestimate the resources that their idea really needs. The conditional optimist leader always looks at what resources are needed. This does not mean she always has all the resources. But she knows what is needed and can, therefore, pace the action plans with the resource pool. She stretches, but not to the point where a resource gap can destroy the assignment.

Leadership by its very nature is optimistic, but as leaders we must learn the important differences between complacent optimism and conditional optimism. We must make a habit of checking ourselves and our teams to ensure that we always test our optimism for truth, propel our optimism with action and put together the resources that will actually give our optimism the fuel it needs for success.