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People tend to think they can achieve more than they can or believe they can do it faster than possible. The result is that they do not achieve their so-called SMART goals!
People tend to think they can achieve more than they can or believe they can do it faster than possible. The result is that they do not achieve their so-called SMART goals!

Are you too optimistic about the future of your business?

Looking on the bright side of life is pleasant. GRAHAM JONES explains how unrealistic positivity can harm your business.

Not too long ago, a student popped into my office for an interesting chat. The student was a little nervous about her impending assessment, but I tried to be reassuring.

After speaking for a few minutes, she said, “I always enjoy coming to speak with you. You are always so positive.”

I hope I did not show it; however, that comment slightly worried me because I had just been reading some research that made a rather negative connection between positivity and cognitive ability.

"If we do not think deeply enough, we tend to be over-optimistic. So how can you prevent the ‘optimism bias’ from affecting your work and business?"

Research from the University of Bath has found a link between unrealistic optimism and cognitive skills. The report suggested that the most optimistic people tend to have lower cognitive skills, such as analytical thinking.

The study looked at people’s financial predictions. Those who made the most optimistic forecasts had lower cognitive skills than those who were ‘realistic’ or pessimistic. In other words, it looks like optimists do not think as deeply as those who are realistic.

This is not news in psychology. The ‘optimism bias’ is well established. Indeed, it is easily visible in the workplace when you use ‘SMART’ goal setting. These are specific, measurable, achievable, relevant, and time-bound goals.

In fact, it is anything but SMART, and there is a vast body of evidence that shows that such goal-setting just doesn’t work. One reason is the optimism bias I mentioned earlier.

People tend to think they can achieve more than they can or believe they can do it faster than possible. The result is that they do not achieve their so-called SMART goals!

Part of the reason for an optimism bias is thought to be our desire to control our own lives. Pessimistic thinking makes us realise we are not in control. Lack of control is frightening for us because it could mean a potential threat to our survival.

Bias in action

Consider the following example in a retail environment. A salesperson offers you jewellery and asks if you would like it to be covered with insurance, and you decline.

If you accept the insurance, you are pessimistic as you will accept that something could go wrong. Instead, your survival instinct kicks in, telling you that you are in control and nothing will break, so you don’t need the insurance. You reassure yourself by thinking that other people probably need insurance - but it’s not for the likes of you!

The need for our brain to convince us we are in control forces us to be optimistic. As a result, we stop thinking. The study from the University of Bath shows that people who do not analyse things deeply make the most optimistic predictions.

Their brains have fallen into the ‘everything is going to be okay’ frame of mind. That’s the territory inhabited by many politicians right now. “I’m not going to lose my seat in an election next year; it’s the other MPs who need to worry.”

Indeed, many Western politicians may now be concerned about their optimism bias and lack of depth of thought about the war in Ukraine. Right at the start, Vladimir Putin said that the West would eventually give up supporting Ukraine, allowing him to waltz right in. Nobody believed him.

Indeed, we had Western politicians lining up to say the war would be over in weeks. Their lack of analytical thinking back at the start of 2022 did not prepare them for Putin's patience.

Remember at the beginning of 2020 when we were told that the COVID pandemic would be over in a matter of weeks? Pundits predicted we’d only need three weeks of lockdowns, and then life would return to normal.

Once again, the optimism bias kicked in and did not allow for adequate critical analysis of the situation.

How can we avoid the trap?

Depth of thought and other associated cognitive skills appear to be linked to our ability to be realistic. If we do not think deeply enough, we tend to be over-optimistic. So, how can you prevent the ‘optimism bias’ from affecting your work and your business?

One thing that helps is to start with the assumption that whatever task or project you are working on has failed. Then, you try to consider all the reasons it could have failed. This allows you to work out the potential pitfalls in advance, thereby having a more realistic idea of what is possible.

The trick here is not to start looking forward. You need to start your thinking at the end of the project when it ‘has failed’. Think about that happening and what caused it.

Another way of dealing with the optimism bias is to consider the ‘availability heuristic’. A heuristic is a shortcut way of thinking. The availability heuristic suggests that if we can easily recall something because it is easily available to our brain, then it must occur more often.

This means we tend to believe something is more likely to happen because we can more easily recall similar events. For example, it is easy to recall news stories of plane crashes because they are so dramatic.

Hence, when we get on a plane, we tend to worry about it crashing because we can recall an example of that happening. Our ability to remember something is disproportionate to the actual risk.

In the office, this means analysing things based on availability heuristics. Do we think something is likely to occur simply because we can easily recall an instance? Considering this, we can avoid the optimism that such thinking leads to.

Techniques like this can help you avoid the optimism bias in the workplace. They encourage deeper thinking and taking a more analytical approach.

As the research at the University of Bath shows, without this level of analysis, we could end up being more optimistic than is healthy for our business.

It’s a common problem that can be avoided with just a little extra thought. When your brain tries to come up with an answer and signals to you, it’s time to stop thinking; that’s the danger point leading to excessive optimism.

Don’t let your brain fool you into avoiding extra thought.

That’s the way that many men go when thinking about buying Christmas presents. Their optimism bias suggests ‘it will be fine’ to leave the shopping until the afternoon of Christmas Eve – and we all know how that usually ends!

What are you missing?

Excessive optimism is an issue that’s closely related to another problem that business owners routinely face – wilful ignorance.

Indeed, in a recent analysis involving more than 30,000 people, researchers from the University of Amsterdam have discovered that four out of ten people will set aside troublesome information.

These people were even prepared to pay money to remain ignorant of information that would mean their decisions would cause harm to others.

This is all related to our survival instincts and many aspects of our behaviour. Dealing with issues that could affect others can lead to conflict.

We do not want confrontation; we try to avoid it. That’s because the conflict can lead to a threat to us. Conflicts could get out of hand, so we avoid arguments to prevent any potential danger.

This means we must be ignorant of certain information; otherwise, it will lead to conflict.

There’s another reason for remaining wilfully ignorant – selfishness. Knowing that a decision you take could affect other people means you may not make that choice.

So, how can we avoid the problems created by the natural tendency to be wilfully ignorant in business? One way is to think like a scientist – always assume there is an alternative answer to any question.

Another way is to create a culture of acceptance of ‘being wrong’. Allow staff to be wrong, to share with each other that they were wrong about something they did.

Perhaps you can have a weekly ‘I made a mistake’ session where people openly admit their errors.

In that way, you create a culture that accepts that decisions and choices have consequences.

It becomes ‘acceptable’ to be wrong. In that culture, people will be less willing to be wilfully ignorant as they know it won’t be a problem if they make a mistake.

More reading:
The keys to word-of-mouth marketing: Part I
Simple and effective ways to boost your word-of-mouth referrals
Word-of-mouth isn’t what it used to be
Key marketing and PR predictions for the year ahead
How to turn bad reviews into good business



Graham Jones

Contributor •

Graham Jones studies online behaviour and consumer psychology to help businesses improve website success. Visit: grahamjones.co.uk

SAMS Group Australia

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