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Keep an Optimism Thermometer Where It Will Do the Most Good

Mar 15, 2008
Organizations have patterns of optimism and pessimism that can be used as indicators in helping to understand what is going on. Corporate controllers have known this for years, and some will secretly keep records of the accuracy and inaccuracy of the forecasts they receive from different people in the enterprise.

New forecasts are then adjusted to reflect these historic patterns by business area. Done over time, you'll find that the levels of optimism wax and wane.

Where can overoptimism lead to big mistakes?

Based on learning about which irresistible forces are the ones that matter for you, you should next analyze where those forces come to bear on your organization's decisions. That's where it is critical to watch out for overoptimism stalls. If an irresistible force affects demand for your products, then anything you do to develop new products, adapt existing ones, produce or deliver these products, and make money while you do so will be at risk.

Here's an example. In the 1960s, Heublein, the vodka giant, decided that its liquor marketing expertise could easily be translated into the beer industry. Hamm's was purchased, proved to be a big disaster, and was later divested in the 1970s for a trifle. Heublein could grow Hamm's sales, but Heublein lost money on the increased volume because its costs were high due to small-scale facilities and a low market share.

The challenge that organizations face is that many of these product opportunities require planning against a moving target in the future, a moving target whose location will shift with the irresistible force.

How can the harm from overoptimistic-based mistakes be limited or reduced?

One good way is to seek more flexibility in how you deal with irresistible forces. You want to be more flexible so that what you have been doing can be quickly adapted to better fit the irresistible forces affecting product or service demand.

For example, you might always plan to have 40 percent of your new products manufactured by others who are effective and much larger than you are, so that you can quickly reduce or expand capacity if your forecasts turn out to be wrong. Also, if you're in a fashion business, you might always have some work going on in alternative fashion areas should the direction you're following be received coolly.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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