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Feeling under-valued? Become an optimist

February 16, 2012


This may not surprise you: Business leaders tend to be optimists – and in many cases over-optimistic.

An article by Daniel Kahneman highlights this tendency and also the negative consequences that often come from this optimistic outlook. In particular, there is a tendency to overlook or discount risks, an over-confidence in the ability to secure a successful outcome.

Many in the world of contracts will not be surprised by these findings. We often struggle with the realities of the deals that our executives promote. But this optimism has specific bi-products for those in the world of contracting. One is that the reluctance to consider risks leads to incomplete analysis of them. It also leads to a mentality that ‘we can fix problems when they arise’, which goes a long way to explaining why requirements and scope are frequently incomplete or poorly defined.

Looking for precision or completeness, wanting to discuss risk issues – these are seen as ‘negativity’ or being unduly worried. And a direct consequence of this, according to Kahneman: “people and companies reward the providers of misleading information more than they reward truth tellers. An unbiased appreciation of uncertainty is a cornerstone of rationality — but it isn’t what organizations want. Acting on pretended knowledge is often the preferred approach.  People and companies reward the providers of misleading information more than they reward truth tellers’.

A further result of this preference for optimism is that optimists tend to stick together – or at least, ‘the inner circle’ is formed of those who do not challenge this rosy view of the world. People who raise uncomfortable questions are generally excluded from the team or the conversation.

None of this will come as a great surprise to many in the contracts, commercial or legal space. We often think of this in the sense of feeling under-valued or under-appreciated. So is there nothing we can do about it? Does the nature of our role – as responsible advisers, people who tell the truth – mean that we are condemned to be at the margins?

I don’t think so. I believe it is a matter of how well we communicate and how selective we are in doing it. Certainly it is a bad idea to always be connected with failure, bad news or negative issues. So one thing is to focus on delivering positive messages – approach situations with solutions, not problems. Another is to be selective. Do not weigh people down with a laundry-list of issues – just highlight the things that really matter. And take responsibility and ownership. Team players are those who are ready to work on finding a fix to the problems, not simply  putting them on the table and walking away.

Despite the conclusions of this thought-provoking article, there are many in the contracts and commercial community who do become valued advisers to senior management. If you are not among them, you should first look at yourself – and maybe a bit more optimism about your own contribution and potential would not be a bad place to start!

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