The Optimist vs. Pessimist Divide

Optimists vs. pessimists.  It’s a topic that people in business communities are pretty interested in these days.  We frugalists will now weigh in on it.

A few weeks ago, John A. Davis of The Harvard Business School wrote an essay on the relative merits of the two personality traits as applies to business and leadership.  It struck a bit of a nerve and has been bandied about on business websites.  Yet, Davis didn’t say anything very controversial.  He just looked at ways in which optimism could be beneficial in some cases, and ways in which pessimism could.

First, for definitions.  Davis conceives of a pessimist as someone who craves, due to her pessimism, safety, ways out of the dangers ahead.  An optimist, rather than trying to minimize damage, will look for ways to make improvements and innovations.  He uses this information to suggest that a pessimist is a great person to have in your rank and file, since she’ll keep the house in order anticipating rough stuff ahead, and will be good and fixing problems before they bloom.  The optimist is the one to occupy the executive suite.

While Davis is arguing in favor of harnessing the power of each polarized personality type, he also privileges the optimist.  It’s easy to privilege the optimist, and people seem to conflate the trait with others such as friendliness, kindliness, generosity.  Optimists have many more facebook friends than pessimists.

Shane Snow, author of Smartcuts: How Hackers, Innovators, and Icons Accelerate Success has a different perspective on the issue.  First of all, she feels that it isn’t the axis of optimism to pessimism that is most useful, at least not by itself.  We also need to look at the axis of credulity to skepticism.  Optimism and pessimism are both applicable, in the truest sense of the words, only to predictions about the future, while we need to look at how people evaluate known quantities.  When a person exhibits credulity, belief and trust, people may confuse that person with an optimist, whereas they’re not the same thing.  A person exhibiting skepticism can be called pessimistic.

But what Snow is interested in is charting how these work together.  Credulous optimists become gamblers and otherwise get into trouble for obvious reasons.  Credulous pessimists are paranoid and could be prone to buying into conspiracy theories.  Skeptical pessimists aren’t particularly dangerous to themselves or other, but neither are they happy.  Here, Snow is mostly agreeing with Davis, though she might find the skeptical pessimist to depressed to be a good middle manager.

Where Snow thinks we hit paydirt is with the skeptical optimist.  This person isn’t easily convinced while forming positive predictions or while seeing possibilities for the future.  Snow feels that in this category we will find “breakthrough-innovators and change makers” alongside “good journalists” and “hackers.”

Here at frugalentrepreneur, we give tips on how to maximize startup cash and how to be smart about money.  We also value innovation and out-of-the-box thinking.  While what Snow says about the skeptical optimist fits in with a lot of what we champion around here, we find that the optimism-pessimism paradigm may be a bit overrated.  It probably doesn’t matter so much whether you’re optimistic or credulous-pessimistic-vegetarian.  Or, to put it another way, there are steps to take to do your best to succeed, and these are done in the service of business, not in reflecting your personality type.  Being tight with your budge doesn’t mean pessimistically expecting the worst.  Expecting the best and still having the discipline to be tight is just smart.  We advocate frugal innovation.