Leaders have an arsenal of tools to throw at employees, markets, investors and other stakeholders. Which one should you choose? Which one pushes the organizations forward? Which one is self-propelling? Fear? Excitement? Dr Melodena Stephens Balakrishnan explores and answers these questions for Entrepreneur.com.
A study of leaders in high technology startups and established firms found that the traits of hope, optimism, and resiliency had a direct impact on transformational leadership, which directly impacted firm performance. A study of employees found that these three characteristics positively affected satisfaction and work happiness, but only hope and resilience impacted organizational commitment. So the question then arises: are these traits transferable from a leader to an employee? A 30-year review of studies indicated that the answer is yes, but one can also watch movies like Enron: The Smartest Guys in the Room or The Wolf of Wall Street to know that leaders can also quickly create a negative culture that leads to spectacular downfalls.
The Hope Theory, which was tested in the early 1990s, finds that hope can play a dual role– working positively before the appearance of a problem, as well as after a problem has appeared. Hope impacts “pathways thinking,” the process that signals a person’s capabilities and will to find a route that will lead you to the goal. Simply said, it’s the faith that you can achieve your goal. And this can be reinforced by positive affirmation. Hopeful thinking leads to better divergent thinking (thinking out of the box, with higher quality ideas and more details). And we know startups need to be creative in finding solutions with low investment costs. Hope is what Fadi Ghandour has in the youth of the Arab world and he shows this with his investments and projects in startups that disrupt markets. This has a multiplier effect attracting more investors and raising the confidence in the youth to be more entrepreneurial. Hope also seems to be a winner for leaders. A pity more leaders don’t use this trait. Keep in mind the premise of Obama’s 2008 campaign was “Hope” and “Change,” which was then followed by the 2012 campaign “Forward.” I can’t even remember this year’s election candidates’ promises– but I do know it involves lots of doom and gloom and mud slinging.
Next, take the leadership tool of optimism. As a leader, you can use strategic optimism, which is setting high expectations, feeling calm, and avoiding reflecting. Though research shows hope trumps optimism for performance, both are needed for satisfaction, which we know is critical for employee retention. Keep in mind that optimism should not be confused with the entrepreneurial tendency to expect positive results, even when such expectations are not justified rationally. Optimism is Elon Musk selling most of his stock to invest in his belief that Tesla and SpaceX had a role to play in the future. It is like his gamble to take a decision to buy Solar City when profits are still eluding him. Founded in 2011, Gaza Sky Geeks is the first accelerator in Gaza, and since their inception, they have just launched 16 startups. It is one of the most difficult markets to work in, and their optimism for change is heartwarming. They have a wall of dreams where entrepreneurs post messages to the question “What would you do if you were not afraid?” Optimism is the ability to think beyond a war they have little control over. Recently, Gaza Sky Greeks co-launched a campaign with some 40 other companies targeted at PayPal to also allow transactions in Palestine, as PayPal works in the Israeli settlements of West Bank. This is trending on Twitter as #PayPal4Palestine. Optimism is the belief that despite the odds, you can make a difference.
But it’s important to note here that there is a fine line between managing hope and optimism, against the reality of a situation. Christopher Schroeder recently gave an interesting interview on the Steve Blank show, where he says, “You create a reality distortion field, and the power of your narrative is to be able to believe what you’re doing, get the people around you to believe what you’re doing, and to get employees passionately dedicated to work it. But there’s a very fine line between believing your own spin and taking a dispassionate view of what you’re doing, and not getting lost in your own narratives. You must find ways –without getting caught in 360 degrees of advice– to check those realities, because you can get trapped by naysayers who say it can’t happen, or it’s a bad idea. But on the other hand, you can believe in things so deeply and just sort of get trapped in believing in your own idea.”
This brings me to the last factor, resiliency, which lies lower than hope and optimism in terms of importance, but it is still a critical factor. What is resiliency? It is the capacity for response to fast and possibly disruptive changes by resisting, absorbing, responding, even reinventing if required, to reduce the negative effects of that change. This is a trait that is valued in complex organizations like the military. As a leader and a founder of a startup, change is your constant companion and employees by nature will not like their routines, roles and targets to constantly evolve. H.H. Sheikh Mohammed bin Rashid Al Maktoum said in his book, Flashes of Thought, “An easy life does not make men, nor does it build nations. Challenges make men, and it is these men who build nations.” Every entrepreneur is a nation builder and has the capacity to create an organization with revenues and employees larger than GDPs and populations of countries. How disruptive is that?