Optimism is easy in a bull market, but it is an even more important and impactful choice for leaders when it’s fashionable to be fearful and the path feels less certain.
By Sebastian Buck for Fast Company
In this year’s version of its annual CEO Survey, PwC showed the 4,400 CEOs interviewed to be a pessimistic bunch: 73% believe global economic growth will decline, only 42% are confident in their own company’s prospects for the next year, and 40% don’t think their companies will be economically viable in a decade, if they continue on their current path.
One way of reading these results is to marvel at the CEO herd mentality as last year, the results were completely different, with 77% believing in global growth. Perhaps the CEOs were overly optimistic last year, and overly pessimistic this year. Another way of reading the pessimism is as a self-fulfilling prophecy: Leaders’ attention turns to reducing operating costs, raising prices, reducing staff, and implementing hiring freezes—all of which reduces team morale and economic activity, and so realizes the pessimistic fears.
Is pessimism productive, and if not, how can we transcend it? At Enso, the future design company I help lead, we often see leaders wrestling between “pragmatic pessimism” and a desire to move—or leap—forward. So how should we think about navigating that tension?
Does all this pessimism serve those CEOs, their companies, and us as a society? And if not, what might make them more optimistic?
WHY CHOOSE OPTIMISM?
Clearly, we are living through challenging times, and many people struggle for the basic life stability that is conducive to an optimistic outlook. After years of pandemic, inequality, war, inflation, stress, and division, perhaps it’s only fair to be a pessimist? And given the widespread hubris of Silicon Valley’s “change the world” mantra, has optimism been fundamentally discredited? Adopting a pessimistic mindset, especially today, might feel like “good stewardship,” “a pragmatic approach,” and “addressing issues rather than ignoring them.”
But while learning about what’s broken is important, we risk taking pessimism too far. As news producers and social media algorithms know, we are wired to pay attention to negative stories more than positive, so the average sentiment of popular news articles has become significantly more negative. We are susceptible to an availability heuristic, where we estimate the probability of an event based on the ease with which examples come to mind — for instance, the news of layoffs at a prominent company (say, 10,000 at Microsoft) may stick in CEOs’ minds and affect their decision-making more than the underlying data of historically strong job creation (over 10 million American jobs added in the past couple of years). As the Nobel-winning psychologist Daniel Kahneman says, “People tend to assess the relative importance of issues by the ease with which they are retrieved from memory — and this is largely determined by the extent of coverage in the media.”
As a result, humans are significantly more pessimistic when assessing the state of the world than when assessing their own experience: 85% of Americans are satisfied with their own lives, but only 17% are satisfied with how things are going in America. CEOs are surely prone to this same perception gap; but given the consequences of their decisions, it’s important they transcend the availability heuristic and make more objective decisions when determining the future of their companies and their employees. The livelihoods of millions of people depend upon it.
Optimism, or a hopefulness and confidence about the future, or specific future outcomes, is a powerful thing. Optimists typically experience better well-being, are more proactive with their health, have stronger immune systems, and live longer; they are more resilient and persistent in education. They have higher job performance and satisfaction, achieve higher incomes, are more likely to get promotions, and have been shown to sell 57% more than pessimists—optimism is a lucrative investment. Optimists seek challenges and take risks; it’s a core trait of entrepreneurs. Daniel Kahneman describes optimism as “the engine of capitalism” because it’s required to attempt success when faced with long odds.
While optimism doesn’t guarantee success, it at least creates space for magic. Rather than focusing on surviving or managing around the challenges, we can focus on moving forward. The legendary designer Bruce Mau sees optimism as fundamental to the design process: “Pessimism engenders a cynicism that closes the mind; only through optimism does opportunity become visible.”
Optimism is easy in a bull market, but it is an even more important and impactful choice for leaders when it’s fashionable to be fearful and the path feels less certain. When President Kennedy set America on course for the Moon, imploring the nation to “set sail on this new sea . . . for the progress of all people,” the path was not clear, easy, or obvious; the Soviet Union had already achieved a significant lead with Sputnik and Yuri Gagarin reaching space.
But Kennedy recognized that pessimism in that instance was to concede the future. We know that emotions are contagious; as a leader in precarious times, Kennedy could have sparked a contagion of fear, or of optimism. Choosing optimism led to one of America’s finest moments, including an enormous scientific and economic dividend, and the ripple effect of confidence in new possibilities.
Today, many think we are once again at the dawn of an age of technological optimism, with technologies like mRNA, generative artificial intelligence, and zero-carbon nuclear fusion just on the horizon. Leaders must not concede the future. But how?
HOW TO CREATE FROM OPTIMISM
Becoming aware of the heuristics that lead us to negativity can be a powerful shift: Once we observe them at work, we are then more free to choose whether our negative emotional reaction is valid, or not. For those CEOs who felt optimistic last year, but pessimistic this year, it’s possible that conditions around their businesses dramatically changed, or they may have been susceptible to the availability heuristic that clouded a more objective view. It’s curious that Meta, Amazon, Microsoft, and Google all chose to lay off 10,000 to 12,000 workers; maybe an objective analysis for these complex companies operating in different markets led to the exact same prescription for each business, or perhaps we can see the power of suggestion and a pessimistic herd mentality at play.
A core theme in Kahneman and other leadership professors’ advice to overcoming systemic bias (whether optimism or pessimism) could be distilled as: “Look more broadly, more critically.” They encourage leaders to have an expansive mindset about objectives (rather than settling for a few specific default goals); explore multiple potential futures rather than one; seek broader, long-run data to overcome the availability heuristic; and seek advice and external perspectives. “As a rule of thumb, it’s good to anticipate three possible futures, establish three key objectives, and generate three viable options for each decision scenario.”
As individuals, the most important optimism shift available is the power of cultivating our own mindset. We can choose to view current market and societal conditions as opportunities for progress, and we can look for what is working rather than focusing only on what is not. We can avoid asking “why is this happening to me?” (adopting a mentality of suffering), but rather ask, “why is this happening for me, and how can I learn and grow from it?” Choosing optimism can be difficult. In my own recent experience of navigating cancer treatment, the choice became vividly apparent: Dwell on all the negative outcomes possible, or focus on the learning opportunities available and the range of available positive outcomes.
Leaders facing challenging circumstances today can dwell on negative projections, likely depleting energy from their organizations, or they can choose to allocate their energy to, and inspire their organizations around, the possibilities ahead. Doing this requires letting go of the preconception that pessimism is “responsible stewardship”: The likelihood is that whatever innovation and success a company has had thus far was fueled by optimism, and effective stewardship may be to continue optimistically.
Of course, this may still involve making tough decisions, but those choices are made with a more constructive filter and plan in mind than just contracting for fear of a downturn. The future design process we use to move beyond the default future is to design multiple scenarios for the future of the company, ranging from more attainable to more ambitious, and use the freedom of that exploration to seek new ways of looking at the business.
One way forward is not to accept the apparently default future. It starts with asking the right questions, exploring what’s possible, and then developing a blueprint for the path ahead. Unlike spreadsheet-based, analytical forecasting, this process is not about extrapolating current trends, but discovering and designing leaps driven by optimism.
If CEOs’ mindsets become self-fulfilling prophecies, and if their emotions are contagious, maybe they owe it to their companies, and to society, to do all they can to move beyond the allure of pessimism, and to define a positive path forward. We can default into a future determined by fear, or we can design our way to a brighter future.