How Positive Thinking Can Kill Your Business

By Steve Houston

EnronYou may remember Kenneth Lay, former chairman and CEO of Enron, the high-flying energy trading company that crashed and burned back in late 2001. 

That epic meltdown caused billions of dollars of investors’ money to disappear literally overnight and threw thousands of employees out on the street.  It led to the demise of the venerable 89 year-old accounting firm Arthur Andersen.  It also sent a serious shiver through our national economy just when it was trying to shake off the recession caused by the recent implosion.

Lay was famous during the glory days of Enron for being a fervent practitioner of the power of positive thinking ala Dr. Norman Vincent Peale, the leader of the positive thinking movement.  There was no problem so critical, no situation so dire that Ken couldn’t find the silver lining in it.

What he didn’t understand, though, was that no amount of positive (or wishful) thinking on his part could make all those questionable business decisions and illegal accounting practices sustainable for long.

Too many people today fall victim to the same siren song of the “power” of positive thinking.  Local bookstore shelves are crammed full with “feel good” books claiming that successful can be yours if you only dwell on positive thoughts and maintain a positive outlook.

Listen, I personally  believe in positive thinking.  Being positive is good for a number of reasons.  A positive attitude can provide much-needed encouragement.  Positive reinforcement is something we all need from time to time.  From a physiological standpoint, a positive frame of mind can even help release beneficial hormones called endorphins that lower blood pressure and act as natural painkillers.

The problem, though, is that an unwavering cheery outlook can prevent you from clearly seeing the truth.  Lay’s insistence on spinning everything in a positive light blinded him to the problems plaguing his company. 

In the end, his unfailing optimism became his undoing as reality finally outran optimism.  Convicted of conspiracy to commit securities and wire fraud in 2006, he died before he could be sentenced.

It’s a sad story but I think an instructive one.  We business owners and entrepreneurs can be particularly susceptible to the hucksters and con artists out there who prey on our sometimes starry-eyed optimism.  Even we can be our own worst enemies at times.

If you want your business to not only survive but thrive, here are some common-sense precautions you can take to prepare for the adversity that always lurks on our horizons:

  • Assume your best current source for new customers / clients / patients dries up and disappears without notice.  Take steps now to diversify your income streams and eliminate this fatal single point of failure.
  • Assume your customer’s / client’s / patient’s buying cycle is going to get longer, not shorter. Find creative ways to shorten it and make it frictionless for them to choose you to do business with.
  • Assume your top 3 business plans will fail, and have Plans D, E & F ready to implement at a moment’s notice.
  • Assume that a large unbudgeted capital expenditure, financial setback or legal challenge will unexpectedly pop up.
  • Assume that your operating cash flow will ebb more than flow and build in safeguards to keep the lights on and the employees paid.

Stop viewing sales and marketing expenses as a drain on your budget and focus on strategies that actually return a positive ROI.  View them instead as important investments a growing company must make.

Once you’ve anticipated these possibilities and made plans to handle them, only then can you feel comfortable looking forward, with true optimism, to achieving great success.