How startup culture makes us blindly optimistic

How startup culture makes us blindly optimistic

I once helped to coordinate a large software implementation project involving over 50 team members. Before I joined, the project had already failed twice, leading to a good number of people being demoted or fired.

One thing I noticed after joining the project was that many people didn’t want to work on it. People were tired, stressed, and feared getting fired. That fear proved to be a destabilizing force. I noticed how it made people less prone to reporting bad news, work weekends to try and meet deadlines, and not communicate the true state of affairs.

Management had a feeling that this was happening, so they didn’t always trust the information being reported either. So much so that the Chief Information Officer once took me to lunch to ask about our progress, and if I knew of any unreported difficulties.

The project was eventually completed, but not without pain. We missed many deadlines because of unreported issues, leading to an extension of several months. More importantly, many talented individuals quit the organization. And among those that remained, many lost trust in the leadership.

That was the first time I saw culture directly affect the success of a project. It made a big impact on me.

Throughout the years, I witnessed many more organizations being destroyed by toxic, fearful cultures. Two of my “favorites” include: Target’s misadventure in Canada that led to the loss of $5.4 billion (they’re not going back north anytime soon), and Zenefits’ hyper-growth, followed by an implosion (fingers-crossed, things are changing now).

So when I joined a startup that focused on creating a positive work environment, on being transparent, and on “doing the right thing”, I thought it was the best culture ever.

Unfortunately, I wasn’t 100% right…

Startups are a funny affair. Because a startup’s business model and products are “unproven”, and because we’ve yet to make $1 in profit, team members find confidence in the organization by believing in its future success. In other words, success is anything but guaranteed.

Therefore, to help maintain our confidence in the company, we build a hard shell around our confidence and never question it. We try to never doubt the company’s eventual IPO, and brush off any sign of bad news. This shields us emotionally from the ups and downs of the business, like when our sales numbers exceed our targets one quarter, but are completely missed the next. Without doubting our success, we can continue working hard and stay motivated among the chaos. In other words, we drink the cool-aid to stay sane.

In the words of Andy Grove in High Output Management: “In order to build anything great, you have to be an optimist, because by definition you are trying to do something that most people would consider impossible. Optimists most certainly do not listen to leading indicators of bad news.”

The advantage of such a culture is clear: We get beat down, we get back up, and we keep going.

Yet I believe that there is a danger to being blindly optimistic: We don’t take threats seriously.

I’ve often heard team members’ frustrations and concerns brushed aside, because leadership didn’t see them as serious threats. I’ve also heard managers respond to people’s skepticism with: “Yeah, but we have a really smart team. We’ll figure it out.” I’m still wondering how having a smart group of people allows us to ignore threats to our mission.

Yet fact is, we often don’t take risks seriously until it hits us in the face. The number of preventable accidents in human history is enormous: Titanic crashing into an iceberg, Enron’s accounting scandal, Kodak’s failure to grow its digital camera asset. That’s three that I can easily name off the top of my head!

The first step to combat our blind optimism is recognizing that we suffer from it. Common behaviors of blindly optimistic leaders include:

  • Saying one thing and doing another: e.g. asking for ideas to fix an important issue, but prioritizing all other work instead and putting the fix at the end of our to-do list;
  • Not listening: e.g. asking people for constructive feedback on a project, but not doing anything about concerns people raise;
  • Looking away from the problem: e.g. “I agree that we should address X. Now on the other hand, did you notice how great we’re doing with Y?”

We have to again be aware that startup cultures are naturally optimistic, which in turn can lead to overly optimistic / unrealistic goals, a lack of contingency planning, and the shunning of skeptical voices.

Many startups live in fantasy land where everything is great until a “strategic layoff” occurs. It’s my opinion that many of these layoffs could have been prevented. If VCs weren’t so aggressive in their demand for fast-growth (albeit unlikely to change), and leadership was more honest in assessing the company’s actual situation (takes courageous leaders, but not impossible), outcomes can be very different.

Sadly, strategic layoffs is what it often takes to wake us up, and what forces us take threats seriously. That’s when we value experienced managers so much more and actively seek their advice. That’s when we realize that we are not that special, and that market forces and economic rules apply to us as well. That’s when we pick out the business books on our shelves, reflect on how this happened, and how to prevent it from happening again (after a strategic layoff at our company, one book that had a big effect on me was Competitive Strategy by Michael Porter).

At the end of the day, we’re all going to be fine. If the venture fails, we’ll join another company, or maybe even found a company of our own. Life goes on. But it’s the wasted time, energy, and money that frustrates me. Many teams could have achieved great things, but had to be disbanded and were forced to start from scratch.

I’m a strong believer that if Rome wasn’t sacked thousands of years ago, teleportation would be a thing now. Instead, we went through the dark ages and are still struggling with getting basic education right in our country.

So I wish everyone not luck, but a healthy dose of skepticism as we plan for the future.

Recommended exercise

Let’s think about the challenges that our company is facing for a moment. Is there a particular problem that everyone is aware of, that is actively causing harm, but that nobody is prioritizing? What do the skeptics foresee happening as we don’t do anything? Does it warrant a higher priority?

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