Continuing the conversation on Optimism, we now flip the topic to talking about the negative aspects of being overly optimistic in business. As always, please give us your questions and stories: [email protected]
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Christy Mori (00:23):
Welcome to Gears, Action, Growth, shifting business cultures, one conversation at a time. My name’s Christy Mori and I’m joining Dr. Josephine Palermo, whose superpower is to create business cultures that transform organizations team by team. Today, we’ll be continuing the conversation on optimism in life and business and focusing on the negative aspects. Hope you get value from it.
How’s it going, Jo? Good morning.
Dr Josephine Palermo (00:36):
Good morning, Christy. Hi. How are you?
Christy Mori (00:38):
I’m doing well. I’m doing well. Yep. Just finishing off the week and yeah, I’m going to visit my mother-in-law today. Haven’t seen her in a while, so yeah, yeah. How about yourself?
Dr Josephine Palermo (00:50):
Oh, I’ve had a massive week this week. So just lots going on in all the businesses and it’s you know, I, I, I thought the start of January was a bit of a slower pace, but it’s just, hasn’t been that way. It’s just been, go, go, go. So, but that’s good. It’s good. Right. So there’s lots of energy around lots to do lots, lots happening to mainly around kind of getting pipeline into the businesses. So lots of people at the moment, looking at what they’re going to do for the rest of the year and where they want to spend their money. So it’s important to, to be energetic in at the start of the year because a lot of other people had that energy too. So, but, but it just means I’ve been pretty busy.
Christy Mori (01:36):
Yeah, that’s right. That’s right. It’s a good, good optimistic outlook. So everybody, as you know, we’ve had that optimism in business last week, and now we’re actually gonna talk about the downfalls of optimism and particularly we’ll be focusing on why we would even think that optimism could be a bad thing. Talk about some cases and experiences where opposites has consequences. I’m having trouble saying optimism, actually,… evaluate ourselves realistically to make sure we’re not blindly optimistic. Okay. So let’s start off with, if being optimistic makes success more likely then why would we even worry about being optimistic, Jo?
How Optimism Could Be A Bad Thing?
Dr Josephine Palermo (02:23):
Yeah. Yeah. And look, I think, and it’s a good question because because we, you know, last, last time we did in the, in the episode previous, we did talk about all the benefits of optimism. So it’s a good question, right? It’s like, well, why worry about it? You know, surely you can be too optimistic and it’s a good thing, you know, too much of a good thing. Right? But I think that that is the problem. Because we, we did talk about optimism as being the process by which we analyze our environment. We kind of analyze reality and we, we look for the opportunities. We have more positive thoughts about the future than negative thoughts. And, and we choose to have more positive thoughts about either the present or the future. And, and even the past to a certain degree, but what can happen if that’s, if there’s no balance there, if we’re actually tipped over in terms of those positive thoughts, then what we can do is skew our perception of reality.
Dr Josephine Palermo (03:25):
And, and often that means that we are maybe making decisions that are based on sort of information or data that is skewed. And this is the problem because really when you think about it in life, in business, we’re making decisions every day. And what we’re trying to do is read the environment and make the right decision. And what being overly optimistic does, is it skews you in terms of making decisions about data sources that are biased towards positivity. And that’s fine if other things are underpin that if there’s foundations that underpin that that’s fine. And that can be great. And actually what we see is that overly optimistic people kind of do eventually get there. But what that over optimism does is actually stop the planning for those things that could go wrong, or you don’t, when you’re overly optimistic, you might not be thinking about the barriers in place and how you’re going to overcome them in a realistic way.
Dr Josephine Palermo (04:35):
So you get, for example, you get people who are overconfident sometimes when they start a business. And we know from all of the statistics on startups and business particularly in small business in Australia, that businesses fail because they just don’t have the capital. So they fail because they they often don’t end up with cashflow situations that enable them to go through some of the maybe tough times they expect to start and then just grow and the money will come. Whereas and this is my tip for anyone starting a business, you actually have to have some money behind you, you have to have some capital behind you because they will always be on a ramp up period. Or sometimes, sometimes you, you may start strong and then there’s always some kind of plateau. It’s just the way the business cycle works.
Dr Josephine Palermo (05:33):
And so often people are overly optimistic and entre- entrepreneurs anticipate that things are going to be, you know, great, great, great. We’re going to do it. I’ve got the capability, I’ll be right. But actually when things go wrong, they’re not prepared. So that’s, that’s the thing about being, I guess, having a little bit of balance and we’re not being too optimistic is that you also need to be prepared when for the things that might not go right. It doesn’t mean that you need to shrink your goal or your vision, or you know, not start a business or not start that venture or not start, you know, that new goal around health or whatever that is, but you need to be realistic about the plan to get there. And it also means that that you’re anticipating that sometimes you may need to practice more. You may need to put the hours in, you may need to work harder. You may need to, for example, build a relationship with someone to ensure that that relationship has a really strong foundation to see you through the tough times. And that’s particularly important if you’re going into business with other people, you need to make sure that, that the, the foundations are there. So there might be some things you miss, if you’re overly optimistic, because you’re not looking for those things that could derail you basically
The Flip-side for Being Overly Optimistic
Christy Mori (06:54):
So yeah, those are great points to start with. So now we can sort of lean in and talk about the experiences of the consequences, actually not experiences of being overly optimistic. And I know we were reading some case studies and we’ll link some on the description below here, but is there any specific scenario that you want to talk about today?
Dr Josephine Palermo (07:19):
Yeah, I was because I was thinking about an experience that happened to me and and I think this is a really good experience that taught me a lot. I actually learned a lot about my own optimism bias because I am very much on the kind of end of the continuum around optimism. I am highly extroverted, highly optimistic, and this experience taught me a lot about the kinds of people I need around me and the things I need to pay attention to make sure that I’m managing that. So what happened? I was I was responsible for developing a leadership program for you know, 450 leaders. So this was a three-day event and it was you know, going to happen in a major venue in the city of Melbourne. People were flying in from everywhere to attend it. And I was responsible for the whole program and the event management.
Dr Josephine Palermo (08:22):
And I partnered with a great event management company as well and they looked after all the production side of things, but everything else was my responsibility. And I was working with a great team of people to make that happen. And so going into that, I was very excited and I was very optimistic and I’m, you know, whenever I particularly start a project, I have very high energy around the start of a project. That’s kind of my superpower in a way I can galvanize everyone. I can you know, I can, you know, influence them in some ways I can, you know, get their energy up. I can convince them that we can all do this together. And, you know, we get there and we,
Dr Josephine Palermo (09:05):
Yeah, and, you know, in the past it’s been fine, but particularly for this particular event we had some issues with the venue and I hadn’t anticipated any of that. I hadn’t anticipated that we would have issues with the venue because they, for example, they had told us that we had a certain amount of time to pay for you know, to secure the booking in terms of the financial securing of the booking. We had the booking in place, but we needed to get money to them. And I was working in a in an organization with an organization that had, that was very bureaucratic. So the client was very bureaucratic. And so it took longer than I had anticipated to get those, those financial details sorted. And because I have this optimism bias, I was thinking about all of the things that I was putting in place in terms of planning the speakers and then planning the experiences that they simulators were going to have and getting my team kind of galvanized around that.
Dr Josephine Palermo (10:10):
But I wasn’t, I didn’t have the detail. I didn’t have my mind on the detail. I didn’t have my mind on maybe making sure that we were looking at the details about, you know, kind of planning, basically paying the supplier, which is the venue and it’s, you know, tens of thousands of dollars that they were owed. And so it came right up to the wire with that in terms of, we nearly, we nearly lost the booking. So they had another person that, that, that they were going to book the venue out to. And that would have been an absolute disaster because, you know particularly at that time it was very difficult to secure venues. You had to have a load of, you know, long period of time to, to, in, to secure that venue. You can’t just, you know, look for a venue a week in, you know, with and expect to get one
Christy Mori (11:00):
Because your event was a bit bigger than just like…
Dr Josephine Palermo (11:04):
It was huge, yeah. It was a huge event. And it included booking hotel rooms for people who are flying in.
Christy Mori (11:09):
Right. Yeah. Lots of logistics.
Dr Josephine Palermo (11:13):
Yeah so in the end it was panic stations. And so we, you know, we, we got it done. We had to escalate this issue. We had to, you know, there were lots of phone calls, it was panic stations. And this is what happens with people who are overly optimistic, you know, in the end I got it done in the end. We, we got a little bit of a you know, extension and we were able to make it happen. And we also got the organization to sort of not really cut corners, but, you know, get their procurement kind of flow going a bit quicker because we, we sort of basically had to sit on top of some people to make that happen, but it didn’t have to be panic stations. It did, I didn’t have to make it come to that. I could have foreseen that and I could have so what I should’ve been doing was building my relationships with the people in finance who were looking after my, my part of the project.
Dr Josephine Palermo (12:13):
I should have been talking to them more often, or I should have at least got somebody in my team to kind of keep an eye on it. I had this sort of idea that it would be okay. And even when we were getting to the wire, I’m thinking, Oh no, surely that it will be okay. And it wasn’t okay. And so that was me taking my, really dropping the ball in a way and taking my eye off the detail. And this is what happens when you have that optimism bias. You’re not looking at the details. So there, there are signs in, in the environment that you’re missing, there’s data, there’s inputs, there’s perceptions that you are skewing towards in some ways what you want it to be. You know, you can easily look at a situation and skew it to a picture that’s much more rosier than it actually is.
Dr Josephine Palermo (13:00):
So that was, that was a really good example. And it was a real learning for me. It was a lesson because, you know, I added so much stress to that project because of that. And it, it, it really made me wake up to the things that you know, I need to work on. And especially in sort of driving a huge, you know, program like, like a, you know, a huge event like that. So there, so there was, there were other examples during that time where I learned you know, a lot of, a lot of issues too. So another example was for example related to we, we needed to create our own wifi for the event. I know it sounds silly, but we, we, there was an the venue was so big. It was like we think about a shed you know, where like where you have to do all the fit out, you have to create the environment. And part of the environment was creating a Wi-Fi network. And and I had talked to the relevant people about creating that wifi network. And then right at the last minute, I had someone from security operations call me and say, we can’t do this because your network isn’t secure enough. And this was like the Thursday. And the event was happening the Monday.
Christy Mori (14:25):
Is this the same event as before? Or is this, Oh, this is a different event. Okay. Okay.
Dr Josephine Palermo (14:32):
I’m not saying that, you know, lessons are learned straight away. I think that you have cumulative learning, but that
Christy Mori (14:38):
It’s difficult to predict, like that seems like a very difficult projection point.
Dr Josephine Palermo (14:45):
It’s difficult to predict. And but again, again, it should have been on my radar. If I had, if I had done the appropriate risk assessment, if I had had a perspective about all the things that could go wrong, let’s list them and then let’s address them just so that we’ve got a really good, robust contingency against anything that could go wrong, then I should have known about it. So, so cause, cause things will go wrong. This is the, the thing that I’m now it’s like a bit of a mantra for me. I’m overly optimistic, but I know that things will and can go wrong. Right, right. But my optimism says, but you know what? I know how to, how to put some things contingencies in place to manage that. That’s what I do now.
Christy Mori (15:40):
Right. So this leads us into our sort of final question here. And it’s like, how can we know when we’re being too optimistic? And how can we check ourselves? So we don’t fall into this trap. So basically what you’ve been saying is I’m linking to one of our articles is that we should still have a positive outlook, but sort of from a realistic, yet optimistic outlook. So we shouldn’t. Yeah. So we shouldn’t be completely blinded by just the positive for the better, just be accurate about the situation.
How to Realistically Evaluate Ourselves
Dr Josephine Palermo (16:17):
And, and, and I think accuracy about the situation comes from multiple perspectives. So that’s why talking to people who had different perspectives is crucial. And, and if you’re in a business and you’re developing your team often, what happens in startups? And we heard Matt talk about this, where you kind of bring people in, who are kind of like you, they have the same worldview as you. They like the same things you like hanging out with them. And that’s why you’re all doing business together. That’s great. But what you need to do is go out and seek people who have a different perspective to you. That diversity is what, what really leads to success. And it it’s how you keep yourself in check. So that could be your accountant. It could be your partner at home. It could be a friend who isn’t part of your business, but they they kind of know you really well.
Dr Josephine Palermo (17:17):
And they, they likely to, you know tell you things, even if they’re not palatable to you, you know, in terms of the feedback you need, it could even be a business coach. And this is why a lot of people actually take on business coaches to really help them get that reality check. It could be listening to news trends in places where you normally wouldn’t, wouldn’t go. So because we know actually, maybe some of you don’t know it, but if you’ve watched ‘Social Media’, the Netflix documentary know that it particularly social media news is funneled according to your interests. And so you’re going to get a bias in what you see in terms of news.
Christy Mori (18:01):
So yes, I’ve been noticing that things are popping up on my phone a lot. And I was like, wait a minute. Yeah, yeah, yeah.
Dr Josephine Palermo (18:15):
So what you gotta do is have a a practice in place where your going to sites, you’re going to news sources that are, you know, have a very different perspective to you. So for example, for me that’s Sky News, and then you’ll very quickly understand my political leanings before when I say that if you know anything about Sky News and, and every time I listen to Sky News, it kind of makes me, makes me cringe a little bit because the perspectives are a bit extreme for me, but I know that lots of people listen to Sky News. And so I’m there with an open curious mind thinking, what can I learn from here? What are some, what are some perspectives that are totally on the other side of the continuum to where, where my people are, where my tribe is and what do I need to learn from that? Doesn’t mean you need to take it all in.
Dr Josephine Palermo (19:08):
But you, you always need feedback mechanisms. So that’s really important for any bias, not just optimism bias is to kind of keep yourself in check there. The other way to, to think about it too, is that you could whenever you’re, you’re designing something or making a decision, even a very simple decision, you can always put what we call a black hat on. So you can say if I had a black hat on, how would I be perceiving this and a black hat is that this, the type of thinking that is more pessimistic or that is more aware of the things that can go wrong, right? So you can, you can, you don’t even, you don’t have to adopt that as a persona. You don’t have to be that, but you need to bring in that style of thinking to maybe the decision you’re trying to make, or the design of what you’re trying to do, or even when you think about, you know the kind of business model that you’re looking at when you’re looking at your projections, your financial projections, when you’re looking at even, you know, planning, planning your vision or planning and implementing even just an event like I’m talking about as part of, for a client.
Dr Josephine Palermo (20:25):
So you need to have that black hat, one of the really easy ways that optimism really derails businesses is where you and particularly in a business like mine, like in consulting, I’ll talk about the consulting business. Often consultants will under sell. So they will, a client wants them to do something. They often to write a proposal around how much time and resource that proposal will take. And often consultants will undersell. And it’s not because they don’t value themselves. It’s because they are underestimating the time it takes to do something. And they’re underestimating that because they’re not looking at all the things that can go wrong. So you, so you know, what I do when I put a proposal on is I also put on a black hat and I look at it and I go from a black hat perspective.
Dr Josephine Palermo (21:20):
What does this look like? Have I have I under cooked it? Yeah. Are there things I need to really think about here and then maybe you know, kind of address that risk and, and make sure that I’m adding that to my proposal. And that is actually good for the client, because you don’t want to, you don’t want to undersell a service because what’ll happen is that you might end up achieving that for the client, but you’re going to cut corners in terms of quality somewhere. You have to, to make it, to make that work. So, so it’s not good for anybody. It’s not good for business. It’s not good for the client, either. Same, same goes for businesses where there’s a lot of service and operations. You have to make sure that, that your contract with the customer or the client is adequate to cover some of those contingencies of doing business, because otherwise you’re always going to fall short. And that’s where you then offer you know, you, you offer low quality service rather than high quality service. So black hat thinking is, is kind of the big tips.
Christy Mori (22:31):
So good. Yeah. That’s so good. So everybody thank you very much for listening. We’re going to wrap it up here, but I hope you got some value from it because I sure did. And we definitely hope that you reach out to us and just ask us questions or some of your own experiences about being overly optimistic. And if it doesn’t go well, we love to hear, and obviously just let us know if you want us to change your name or something. If we use it as an example, and we will do our best in that, and we’ll promise you that we will not out to your privacy, if you share a story. So in the meantime, we hope you stay well, and we wish you the best this week and we’ll chat again next week. We might keep going with this optimism series in different ways, but also let us know if you are continually interested in this topic, or we might move on. So everybody will see you next week. And thank you for listening. Take care by everybody! Yeah, yeah, yeah, yeah. I better go. We’ll keep talking later. All right. Thanks Christy. Bye.