The Optimists

The Unfortunate Linkage Between?Positive Attitude & Poor Decision Making

(Originally appeared in the December 21st, 2023 'Across the Board' digital publication, a Board Director, Board Advisor, C-Level, and Business Leader publication reaching 48,000+ exceptional business leaders in over 70 countries with articles focused on leadership, strategy, and governance topics - sign up here )

We have all been in the presence of extremely positive people at multiple points in our lifetime?- and these experiences can be quite exciting. In most scenarios, a wave of charismatic authority washes?over the room and you actually feel better in the presence of these individuals. They can easily attract a loyal following and, as expected,?their social media accounts are bursting with follower affirmations and praises. In the boardroom, these individuals?can easily make their case and get quick buy-in when requesting?a formal vote. What a great working environment!?Others should be so lucky to work with such a great group of?Board Directors!?Everything is as it should be, right? These people seem to have it all and their Boards?are lucky to have them, correct??Why not aim to create an entire Board of smiling and positive?optimists - this will surely make our term serving on this Board most enjoyable!

For most, this is where the story ends with an emphatic "yes!"?due to years of conditioning that optimistic?people are frequently successful, in full control of their destiny, and in turn, in full control of their domain. We should all be so lucky.?Unfortunately, recent?data supports?quite the opposite of this long-held belief.

Let's start by clarifying that numerous global studies do indeed show that optimists (or simply those practicing positive thinking) make up a large percentage of the population in?good health and?extended longevity. For example, in the article,?Cheer Up! Optimists Live Longer , the outcome of a large study found association between positive attitude and extended life span. This study, spanning thousands of people across 3 decades, found that optimistic people live as much as 10.9% to 14.9% longer than pessimists. Simply put, stay positive and live longer!?Clearly another reason?for pessimists to be concerned.

However, not everything is rosy?on the side of the optimists.?Research recently published?from the University of Bath in the United Kingdom, titled?Looking on the (B)right Side of Life: Cognitive Ability and Miscalibrated Financial Expectations ,?shows that?"...excessive optimism is actually associated with lower cognitive skills such as verbal fluency, fluid reasoning, numerical reasoning, and memory.?Whereas those high on cognitive ability tend to be both more realistic and pessimistic in their expectations about the future."

Also according to this?University of Bath study, people who have elevated or?unrealistic optimism are more prone to "excessively risky behavior" and do not act with adequate caution. ?

Unrealistic Optimism or Optimism Bias:?the tendency for individuals to overestimate the chance of favorable outcomes occurring and underestimate the chance of bad (Weinstein N. D. (1980). Unrealistic optimism about future life events. Journal of Personality and Social Psychology, 39(5), 806–820.)

The impact on these traits is felt most when it comes to financial issues, when those with excessive optimism make risky choices,?leading "to poor decision making, with particularly serious implications for people's financial wellbeing."?As?Ayn Rand so famously stated, "you can avoid reality, but you cannot avoid the consequences of avoiding reality."

I intently read this published study multiple times followed by quiet time reflecting on my experiences in the boardroom both as a Board Member as well as a Board consultant / advisor. "How have the optimists'?hopes actually turned out when measured and evaluated," I asked myself? "Are there trends associated with optimistically-positioned proposals and their success or failure?" "Do I feel the need to double check or overly question?a?steadfast?optimist's motions?" On the whole, I must say that those who honestly position the pros and cons of any proposal rate highest on my trust chart. Those taking an unwavering optimistic or steadfast?pessimistic position, without regard for opposing viewpoints, do themselves and their Boards a disservice by advocating for an outcome rather than fostering a discussion for strategic evolution purposes.

In our International Board Director Competency Designation (IBDC.D) education & certification course, we delve into?the?importance of evaluating?personality types of individuals to ensure there is a balance on all Boards as it relates to proper Board Architecture. At its highest level, a well-balanced makeup of 4 types of personalities, or?behavioral predispositions, includes an equal number?of?Analysts, Diplomats, Sentinels and Explorers. Through experience, we have commonly witnessed the Explorer type to?be most closely associated with the optimist trait.?Every Board needs their explorers and their optimists, after all, these are typically the?Directors most closely aligned to the organization's Vision (what the?organization desires?to be or enable in the future). Just ensure that for every Explorer you have a Sentinel balancing the equation!

Personally, I have always been more of a "glass half empty" type of person. I like to ask questions. I prefer the development of a?strong strategy knowing?firsthand that?this makes the governance easier. The goal should?always be to strive for respectful interactions, even when putting proposals through the wringer or outright?disagreeing. Remember,?these differences in thought and perspective?are what make a?Board?extremely?valuable.

After writing this article, I have concluded that as a realist/pessimist?I won't mind giving up a few extra years on the back end of my life?if the quality is higher and the drama is lower during my living years. I'll keep you posted on how that's going...

Are you an?optimist and how do you control your risk?

Reach out ?to learn more?through?our Board Director Education & Certification program , plus?Consulting &?Advisory ?offerings,?and?International Speaking Tour topics.

Mark A. Pfister - Non-Executive Director | Board Director |?CEO |?Chief?Board Consultant?| Corporate?Strategist |?Board Macro-Influencer?| Speaker?| Author | IBDC.D - www.PfisterStrategy.com

About the Author: With a strong focus in Strategy, Governance, and Technology / Cybersecurity, Mark A. Pfister is CEO & Chief Board Consultant of M. A. Pfister Strategy Group, an executive advisory firm that serves as a strategic advisory council for executives and Boards in the public, private, nonprofit, and private equity (PE) sectors. He is also Chairman & CEO of Integral Board Group, a specialized Board services &?consulting company, as well as Founder & CEO of the International Board Director Competency Designation (IBDC.D) education and certification program, a Board Director certification course recognized globally. Mr. Pfister is a 'Board Macro-Influencer' and his success has been repeated across a wide range of business situations and environments. He prides himself on being a coach and mentor to senior executives and Directors. In Board Director circles, Mr. Pfister has earned the nickname 'The Board Architect’..............<< read full bio here >>

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