Expectation management is an important skill for every entrepreneur. Customers need to know when their goods are arriving; staff need to know whether or not they will receive a bonus; and shareholders need to know that budgets are going to be met.
Some would argue that setting expectations well is the secret to a happy life. There are none so bitter as those who cherish great aspirations only to see them dashed — while those who set modest expectations, which they then exceed, are far likelier to be content. We are forever living partly in the future and if that turns out to beat our plans, we are likely to be pleased.
In a way, expectation management is linked to confidence, which is possibly the most important quality of all for the ambitious. Without confidence, no leader could inspire and no start-up would ever get off the ground. However, there is often a fine line between well-founded confidence and bullshit. Confidence is destructive when there is no follow-through and promises remain unfulfilled. It is better in the long run to underpromise and overdeliver, in business and politics, and, indeed, in life. We prefer to be pleasantly surprised on the upside than let down.
The art of good expectation management requires high-quality communication, so standards are aligned. With more transparency, there is less room for misunderstandings. Many of the best things happen when expectations are fairly low: the humble manager who displays unexpected brilliance; the pupil who fails at school but succeeds spectacularly in their career; the perennial no-hoper who comes from behind to win the prize. One of the perils of early triumph in life is that it builds huge anticipation of future victories, which can so easily lead to a succession of disappointments.
Initial high hopes often translate into anticlimax, be that with an elaborate new product, a superstar hire, the holiday of a lifetime or the heavily plugged film. It is often better to spot the sleeper — the unassuming hit coming from left field — rather than the overhyped option, predicted to be fabulous and freighted with prospects, which may or may not be achieved.
Making acquisitions is a matter of expectation management. Sexy is costly, but sometimes humdrum can be the real bargain. Occasionally, the best deals are the ones that are initially unprepossessing, yet are revealed on further examination to be attractive opportunities. When I first looked at the retailer Topps Tiles in 1996, I thought it an unexciting business, but a colleague pointed out the high returns on capital, and after meeting and liking the duo who ran it, we bought a strategic stake, helped to take it public and did extremely well. Almost 25 years later, it continues to prosper as a market leader, despite huge portions of the retail landscape having collapsed around it.
Like so much, expectation management is a balancing act — avoiding over-optimism while not falling for undue pessimism. The latter can feel particularly seductive at present. Expectations among the public and business community for next year are probably fairly low: a possible no-deal Brexit, more lockdowns and mask-wearing, continuing restrictions on travel, higher unemployment and a debt hangover. For many, this year feels like the worst ever.
However, 2021 is almost certain to be better. Interest rates are very low, so money is cheap — which helps to stimulate investment. Households have record levels of savings because spending has been so subdued. Many companies have adapted to the new environment and are leaner and more efficient. As demand recovers, they should generate improved profits. Many businesses and entrepreneurs have proved more resilient than one would have expected. Reserves have been depleted, but levels of energy and enthusiasm are still strong. At the same time, other businesses have enjoyed a boom and are doing remarkably well, thanks to the dislocations of lockdowns.
I suspect that lots of young people will decide to start a business to exploit new opportunities exposed by the pandemic and lockdowns — partly because decent jobs just aren’t there right now. So these founders will create their own — and possibly jobs for others, too. Many of us, fed up with idling, have rediscovered our appetite for risk and work.
I admit that I have surrendered to defeatism at times since March. Isolation and fear have hammered everyone’s morale, but vaccines are helping the fog to clear and, as ever, catastrophising isn’t the solution. The endless months of fear, caution and gloom have become very tedious. It is time to look forward in a positive frame of mind.