So I'm reading the Business Week1 edition of August 24 & 31 2009 which has the headline "The Case for Optimism (Is the Worst Over?)" and I’m surprised that the series of articles does not include the concept of a “self-fulfilling prophecy”. I’ve been preaching the self-fulfilling prophecy concept since March 2009 when, as the optimist as I am, I believed that the stock market truly bottomed out (yes, I really did and moved some cash into the market).
Why mope around like Winnie-the-Pooh’s Eeyore that everything is awful and that we are never going to be happy again when we KNOW everything is going to better sooner or later? The turnaround is never as soon as we want but moping around is never the answer. Why not push it along so that we can get through our mini-depression a little quicker?
Why am I surprised about the non-reference in the Business Week article? The concept of self-fulfilling prophecy is clearly a part of the optimist’s toolkit.
Okay let’s make sure that we have a handle on the concept. Of course we have to go to the highest authority of explainers, Wikipedia, for the answer. What does Wikipedia say? 2 “A self-fulfilling prophecy is a prediction that directly or indirectly causes itself to become true, by the very terms of the prophecy itself, due to positive feedback between belief and behavior.” Am I missing something? When we hit the doldrums of the bottom we have to believe that things will get better and then they will. Yes, I understand that you immediately respond…..that a self-fulfilling prophecy can work on the flip-side as well. If you predict a disaster and you believe it to be true it can cause a disaster. Yes this is true, but, the context here is why this concept is key on the upside and, further, why I believe it to be important.
The concept has been attributed to the economist Robert K. Merton who, in his 1968 book “Social Theory and Social Structure” discussed it within his Thomas theorem. Unfortunately one of the better examples Merton cites is the downside, how a run on the bank can get started. The counter is that we all remember from Management classes the “Hawthorne effect” where, when the workers knew they were being studied and watched, the factory workers worked harder.
For the past five months I have made a point to tell everyone that the economy is on the upswing so that, perhaps, we could start a viral message and provide that impetus for the economy could, in fact, be on an upswing. Where is the tipping point? Who knows? Isn’t it worth a try?
One could argue that the concept is a must for the tool-kit of an entrepreneur. A successful entrepreneur has to be an optimist; otherwise against all odds they have no chance of success. Of course the entrepreneur cannot not simply wish for something to happen they have to take all actions to make it happen.
Join me in the optimist’s crusade…… our self-fulfilling prophecy, and let’s get the economy rolling again.
David A. Fogel, CPA Coordinating Committee for the MIT Sloan CFO Summit
Principal, Swifton CFOs
Email: dfogel@swiftoncfos.com Twitter: @swifton
Notes: 1Business Week August 24 & 31 2009 "The Case for Optimism (Is the Worst Over?)" http://www.businessweek.com/magazine/content/09_34/b4144040812940.htm 2Wikipedia Self-fulfilling prophecy http://en.wikipedia.org/wiki/Self-fulfilling_prophecy