Even a glance at the headlines these days will give you an eyeful of negativity. The U.S. economy contracted in the first quarter for the first time in three years, triggering concerns about rising unemployment and fears of a recession. Inflation, which had been expected to decline, is rising again. Tariffs and trade wars, particularly with China, continue to cause disruptions globally.
Business leaders across multiple industries are expressing concerns about decreasing revenue and shrinking profitability as they face the fallout of the trade war. For example, General Motors announced that tariffs are increasing its costs by as much as $5 billion, prompting the company to cut its profit forecast for 2025. The Footwear Distributors and Retailers of America—which includes Nike, Adidas, and other major brands—is petitioning the Trump Administration for an exemption to what it called the “existential threat” of reciprocal tariffs on their products. Retailers, looking ahead to the holiday season later this year, are worried about the impact on tariffs—and whether they can afford to stock their shelves.
In the face of such pessimism, it’s time for some realistic optimism.
I’m not talking about ignoring the economic data or adopting a Pollyanna attitude. However, as the former chair and CEO of Baxter International, a $12 billion global health care company, and having weathered numerous economic storms in the past, I can attest to the power of a positive attitude. It’s the number one defense against becoming overwhelmed by the unknown and paralyzed by fear.
Optimism that is grounded in realism supports resilience, encourages solutions—and lowers worry, fear, anxiety, pressure, and stress. Studies also show that optimism has health benefits, which is good news for business leaders in high-pressure jobs.
Here are five ways to stay positive in an increasingly negative world.
- What Goes Up Must Come Down—And Vice Versa. This is economics 101 and the business cycle of expansion, peak, contraction, trough. We see the same up-and-down pattern in our own lives; no one’s life follows a straight path upward to bigger and better things. As simplistic as it may sound, an attitude of “this too shall pass” reminds us that current circumstances are not permanent. Things will change—again. This realization is both liberating and empowering. It helps us maintain a positive attitude while responding to changes in the short term and planning for the long term.
- Knowing What To Do. In forty years of self-reflection, I’m constantly reminding myself of what I will do in both good times and bad times. When things are going well, I’m grateful. I’ll celebrate with others and thank them for their support and contribution. However, I also have a plan for when things turn down (as they eventually will) by committing myself to two things: (1) to do the right thing and (2) to do the best I can in the time I have. Here’s an example from my days as CEO: When we were experiencing strong growth, expanding margins, and higher profits, I would congratulate every team member for their performance. Right after the celebration, though, I would ask them to identify the areas of the business that were most vulnerable to a downturn so we could plan how to respond. For example, if we knew a new competitor was entering the marketplace and pricing pressure was likely, we would begin looking for ways to counter the expected impact such as by freezing expenses. That preparedness helped keep us optimistic about the present—and the future.
- Communicate—Early And Often. The more things change, the more uncertain they become, the more we need to communicate. Otherwise, the scenario you’re facing will likely follow a “formula” I see all too often: Change + Uncertainty = Chaos. For business leaders, this means letting colleagues, customers, suppliers, and shareholders know what is happening and the likely result. For example, a company that is impacted by tariffs may be concerned about whether a decline in the business will lead to layoffs. The leadership team may be hesitant to even discuss the possibility because they don’t want people to worry. Guess what? People are already worried! They see the decline in sales, the increase in inventory—and they’re wondering if management is aware. Resist the temptation to wait until you have all the information—that will only heighten the uncertainty. Instead, increase the frequency of communication: telling people what you know, what you don’t know as yet, and when you will get back to them with more answers to those things you don’t know right now. This is the essence of realistic optimism: seeing circumstances and challenges clearly but communicating with confidence that the organization will persevere.
- Respond—Not Overreact. With open, honest, and realistic communication, information can flow in both directions. Crucial feedback from customers and suppliers is communicated from the front lines of the organization to the C-suite. How the company will respond to those changing market conditions then flows from the senior team to all levels of the organization. The key word, though, is respond—not overreact. For example, companies that manufacture products overseas may be assessing whether to move their operations back to the U.S. That is a monumental decision in terms of cost and logistics. For example, as Bloomberg reported, companies wanting to shift more manufacturing to the U.S. are impacted by tariffs on Chinese-made machinery. Rather than make kneejerk reactions—especially amid the back-and-forth of trade talks and gamesmanship—companies need the balanced perspective of long-term thinking. That balance also helps encourage optimism about the future amid short-term challenges.
- People Are Watching…You: As a final note, it’s important to remember that, no matter how unnerving the news, the leader embodies the message. In other words, the more confident you are about the future (self-reflection is essential to ground this attitude in reality), the more people will adopt that same realistic optimism. This calls to mind a humorous incident from early in my career, when I was first named chief financial officer (CFO) at Baxter. I stopped in the company cafeteria for a quick bite and then rushed out to attend a meeting in another building on the corporate campus. Later that afternoon, the head of HR came to my office. When I asked how he was doing, he responded: “I wasn’t doing too well at lunch. I was in the middle of my sandwich when I saw somebody running out of the cafeteria. If that guy with his tie flung over his shoulder was a junior analyst, I wouldn’t have thought twice about it. But when the CFO of the company runs like that, it causes tremendous indigestion.” We laughed about it—but I got the point. People are always watching leaders for signs and signals of just how things are going.
Across the business landscape, leaders need their teams to stay grounded, remain nimble in their response to shifting circumstances, and gain confidence about the future. One of the best thing leaders can do is project an optimistic attitude—staying positive despite the negative.