Optimism on the rise: what does it mean?

A new McKinsey survey of global executives suggests that businesses are growing more hopeful about the economy.

…the share of executives who say their countries’ current economic conditions are better than they were in September 2008 has more than doubled in the last two months, and the proportion who expect conditions to improve by the end of the year now stands at 39 percent.

Of course, these expectations have to be evaluated against some pretty low expectations.

Expectations started out so gloomy, however, that even now, fewer than a third expect an economic upturn this year, and two-thirds expect their nations’ GDPs to decrease in 2009.

It’s heartening to see business leaders feeling some level of optimism, but a word of caution may be in order. No doubt a lot of people are probably looking at the results and wondering whether they’re looking at predictions or cheerleading. After all, any group that can be accurately described as “global business leaders” is the sort of group that can spearhead a self-fulfilling prophecy. Such is the nature of surveys.

Our advice – lead with your brain instead of your feelings. Perhaps this seems too obvious to even be worth saying, but tough times can lure us into bad decisions. Smart leaders can think their way to the head of their industries, but in tight economic times emotion tends to elevate hopes over analysis. As I’ve noted before, what’s called for is clear, measured strategic thinking.

In any case, let’s hope these business leaders are right. I know a lot of companies out there are ready to start booming again.


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