How Optimism Can Kill Your Business

 

Apparently, we as humans, suffer from this little thing called ‘Cognitive Illusion’ – in fact, it affects almost 80% of the population! What is this and how does it affect me and my business?

Simply put, it means we are pre-disposed to ‘Overestimate the likely hood of a good event and underestimate the likely hood of a bad event’….

Based on research done by Dr Tali Sharot, we are far more ‘optimistic’ than we are ‘realistic’….and to make matters worse,we are totally OBLIVIOUS to it!

When questioning newly married couples, they were asked how many of them believed that they would stay married forever…every one said that they would even though statistically 3 out of every 5 marriages in the western world end in divorce! This level of optimism continued when asking an individual who smoked what he thought his chances of getting cancer were – he said 10% when in fact his chances were more like 30%, after getting this new information he was asked the same question, he changed his answer to, yes you guessed it, 13%!!

 

So what does this have to do with business?

For fun, I thought I would try this with a room full of business owners (ok I am  not suggesting this was an empirical scientific study but it did show how we can be blinded).

37 business owners in a room. We separated out those that had been in business more than 10 years which left a total of 28. We then asked them ‘how many of you will still be in business 10 years from now’?.  Everyone put their hands up. I told them that statistically, over 90% of businesses fail in the first 10 years..I asked the same question and all the hands went up.

In the 10 years since we opened our business I know of 187 business that no longer exist who were in their first 3 years of operation when first opened ours…I let them know this and asked the same question with the same result!

Even in the face of  ‘reality’ we choose to keep our optimism high. Business owners especially are prone to this because they may have been successful doing what they do for someone else, they believe that they can be more successful doing it but for themselves – they allow ‘optimism’ to cloud the realty that being good at the technical work is a recipe for success when in fact it is far from the truth. Facing ‘reality’ and allowing yourself to admit to your flaws and then seeking the help you need to overcome them is how you ‘increase’ your chances of success.

So, am I saying don’t be optimistic, of course not!

What I am saying is keep it in check! Being overly optimistic in the face of reality will almost certainly lead to disaster.

James & Angela.

 

 

 

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