In Case of Change: Try Optimistic Realism

The Tale of Two CEOs: A Fable of Optimism and Pessimism

Once upon a time, in the bustling city of Enterpriseville, there were two CEOs who led rival technology firms: Thomas Grey of GreyTech and Olivia Bright of Bright Innovations. Both companies faced the same storm: a sudden market downturn caused by the emergence of a new disruptive AI technology. Investors panicked, employees worried, and uncertainty loomed.

Thomas Grey, ever the pessimist, viewed the crisis as a catastrophe. "This is the end," he muttered. "Our competitors have outpaced us, and nothing we do will matter." He called an emergency meeting where he spoke in dire tones, forecasting mass layoffs and an almost inevitable decline. His executives, sensing his hopelessness, began making defensive decisions—cutting budgets, freezing innovation, and focusing only on damage control. Fear spread across GreyTech like wildfire, and soon, top talent started leaving for more stable opportunities. Productivity plummeted, and so did morale.

On the other side of town, Olivia Bright saw the crisis as a challenge, not a disaster. "This is tough," she admitted, "but it's temporary. We can adapt and find a way forward." She gathered her leadership team and encouraged them to think creatively. "What can we learn from this disruption? How can we evolve?" She invited employees to share ideas, fostering a culture of collaboration and innovation. Her optimism was contagious, and rather than retreating, Bright Innovations pivoted—investing in new research, upskilling employees, and forming strategic partnerships.

Months passed. GreyTech, trapped in fear, became stagnant. Their best employees had moved on, their innovation pipeline had dried up, and their customers lost faith. Meanwhile, Bright Innovations emerged stronger. Their employees felt empowered, their innovations kept them relevant, and their customers admired their resilience.

As the dust settled, investors looked at both companies. One had shrunk in fear; the other had grown through adaptation. When asked about her leadership philosophy, Olivia Bright simply said, "Optimism isn’t about ignoring problems. It’s about believing in solutions."

Let’s dig a bit deeper…. are you an optimist or a pessimist?

Your answer, if reflected in how you approach your work and your life, may influence your health (Carver et al., 1999), your performance (Gavin & Mason, 2004), and your career success (Seligman, 2006). The research is clear: optimism is more likely to contribute to better health, performance and career outcomes. Optimism will help you be more resilient when bad things happen.

Is your leadership optimistic or pessimistic?

As I write, much like our fable above, the arrival of Chinese AI ‘DeepSeek’ appears to have superseeded the western ChatGPT and has caused a substantial fall in the value of western tech stock. How ChatGPT and others like them will respond in the coming weeks, months and years will be critical for their survival and for value creation in the west.

Will the leaders of those organisations be optimistic or pessimistic? Their response will impact on organisational resilience – and possibility their survival.

What do we mean by optimism and pessimism?

The father of positive psychology, Martin Seligman, a clinical psychologist, described the difference as follows:

‘The defining characteristic of pessimists is that they tend to believe bad events will last a long time, will undermine everything they do and are their own fault. The optimists, who are confronted with the same hard knocks of this world, think about misfortune in the opposite way. They tend to believe that defeat is just a temporary setback, that its causes are confined to just one case. The optimists believe that defeat is not their fault.’ Learned Optimism Seligman, M. 1991

Core to this simple distinction is what psychologists would describe as our ‘explanatory style’, or, how we explain events that have occurred, and how might we view our future response. There are three dimensions of one’s ‘explanatory style’, all contained in Seligman’s definition above – the degree of permanence, the degree of pervasiveness, the degree to which the event is personal to them.

Let's take a worked example

You are on a project and the project is not going well – time, cost and quality are all being compromised.

The pessimist’s response: ‘it's unlikely to get better, this situation will affect the future of the whole project and possibly my career, and I should have done better.

The optimist’s response: this situation is temporary, it can be turned around, it is just a point in time and there are some things than I do not control or influence.

In essence, both are asking themselves these three questions:

• How long will this last? (how permanent is this?)
• Will it affect everything? (how pervasive is this?)
• Is this really just to do with me? (how personally should I take this?)

 The way in which one explains events has a fundamental impact on one’s ability to be resilient and influence the resilience of one’s team and therefore the organisation.

Hang on, I am a realist!

More recent research has looked at the role of realism in approaching difficult situations. Seligman again: ‘The idea that optimism is always good is a caricature. It misses realism, it misses appropriateness, it misses the importance of negative emotion.’ So, while, retaining an optimistic view which helps in adjusting to change, Seligman recommends that optimism be supplemented by reality testing to ensure relevant information is considered.

Take stock and nurture your adaptable team.

So, if you and your team are in a tough spot, take an optimistic review that is wise to all the relevant data – which includes what team members think and feel about the situation as well as what the world outside it telling you – you will be much more likely to invoke a resilient response and adapt appropriately.

These days, we could all be a little bit more like Olivia Bright