Despite its reputation for softness, a particular kind of optimism is the most useful thing a leader can bring to bear in times of uncertainty.
For most of my career, I saw optimism as a sign of naivité. As sceptics quickly, and rightly, point out, some of the most expensive mistakes in business are optimistic ones. Behavioural economists like Daniel Kahneman call it the planning fallacy: leaders forecast from hope rather than a sober weighing of gains, losses and probabilities, and so they overstate the upside and underestimate the cost. Big programmes commonly run long and over budget. The 2008 crisis had systemic over-optimism built into its foundations. Optimism bias is real, measurable, and occasionally ruinous. Optimism is not an unqualified good.
What I had wrong was the diagnosis. Look closely at those failures and they share a signature: optimism with the honesty stripped out. A naive optimism that believes in the upside with no reckoning of the downside - hope that hasn’t done its homework. Realistic optimism retains the honesty. The realistic optimist sees the hard truths the pessimist does, then asks what remains possible before setting about making it happen. And it earns its place in hard-nosed company. Without ignoring the risks or glossing over how hard things are, realistic optimism drives you to act, to keep your options open, and to adapt as the ground shifts. As such, it is a vital source of organisational resilience.
Gripping harder makes your thinking poorer
Under the stress of volatile, uncertain, complex and ambiguous contexts, the natural response to a loss of control is to grip harder. Tighten the plan, demand more certainty, narrow the options to the ones you can predict. It can feel like rigour, but the conditions actually make your thinking poorer. Threat pushes people into a fight-or-flight state that is measurably worse at the creative, exploratory thinking that uncertainty demands. It makes us more cautious, taking the small sure thing over the larger uncertain one, even when the payoff you need sits on the uncertain side. So the responsible-looking reflex costs the two things leaders need most in a crisis: creative problem-solving capacity, and nerve. Grounded optimism protects both - keeping your options open, maintaining the ability to act and adapt - it is a source of agility that creates and sustains resilience.
There is no strategy without it
Optimism is also a precondition for strategy. Strategy is the act of moving towards something better and you cannot define better, or ask others to strive for it, unless you believe better exists and is reachable. Pessimism masquerading as rigour is just as problematic as naive optimism as it precludes the exploration of possible achievable futures - a common and largely invisible form of strategic failure. Its driver is avoidance, or damage-limitation, which has its place but it isn’t enough on its own for you to secure your big strategic goals.
Realistic optimism is the pragmatic approach
The corrective action for optimism bias is structured honesty. Psychologist Gabriele Oettingen's research showed that people who pair a vivid goal with a clear look at the obstacles in the way outperform both the pure dreamers and the pure doubters. The most useful version of this I know is the pre-mortem: before you commit, imagine the project has failed completely and write the story of how. It changes the room. The colleague who has been quietly worried for weeks finally says so. We are well practised at asking what could go wrong but oddly reluctant to ask with the ram rigour what could go right, and what it would take to get there. Realistic optimism asks both. You come away with a clear-eyed grasp of the challenges and risks, and the resolve to act on them anyway.
Nowhere is this more necessary right now than in boardroom discussions of AI. The AI hype and resulting backlash are equally loud and useless: the hype waves away the risks, the fear dismisses the opportunity, and neither really helps with the practical work of adoption. We cannot yet know all of AI's risks, because they are still unfolding. But not knowing is not the same as being powerless. The mathematician Hannah Fry, whose BBC series “AI Confidential” catalogues real harms from economic upheaval to the chatbot sycophancy that talks people into decisions they regret, takes a realistic optimist position. She argues that despite these risks, the AI era can go the way of the Y2K bug, where catastrophe was averted precisely because enough people took the threat seriously and did the work. Facing the danger honestly is what gives you the power to manage it.
The same choice shows up in organisations. For example generative AI is already absorbing the research and drafting that used to train junior lawyers, and firms are trimming their junior intake to match. Without intervention the pipeline hollows out and liability grows as future talent won’t have the judgement or experience needed to spot a confident wrong answer. Researchers have a name for the risk: cognitive deskilling. But it isn’t inevitable. As law dean Nick James puts it, the choice is "between dealing with this crisis by design or by default". Realistic optimism is what makes “by design” possible: believe a better future is achievable, name the risks, and redesign the work so that even in the AI-enabled workplace, juniors are still trained and human judgement is deliberately protected.
Optimism is the more demanding discipline
None of this is soft. Realistic optimism asks more of you than pessimism does, because it makes you hold the possibility and the difficulty at once and still move forward.
Consider Ørsted. Fifteen years ago it was DONG Energy, one of the most coal-intensive companies in Europe. Its leaders could see where energy markets, regulation and public opinion were heading, and the long-term strategy of continuing to optimise their coal business was questionable. Despite heavy internal scepticism, they sold off the oil and gas parts of their business and bet on offshore wind when it still cost twice as much as onshore power. Within a decade, Ørsted was the largest offshore wind producer in the world. Their realistic optimism drove them to build and sustain their agility and resilience, keep going where competitors froze, and seize the openings that only appeared once they had started. It hasn’t been easy - they cancelled projects and suffered heavy write-downs. But they expected that turbulence - theirs was a clear-eyed reading of the risks on both sides, and a choice to build the harder, more adaptable future rather than defend the comfortable one until it failed.
That is the choice in front of most leaders now, with AI and more besides. You can let the future happen to you, or you can use realistic optimism to help shape it. So when the next wave of uncertainty tempts you to tighten your grip and defend, ask yourself these three questions instead: what if it goes wrong, what if it goes right, and what would it take to improve the odds? Uncertainty is not going anywhere, and it rewards the leaders who can look at it clearly and still choose to act. Far from naive, realistic optimism is the smartest stance a leader can take.
