THE BLOG
08/09/2011 01:58 pm ET Updated Oct 09, 2011

Our Economy With Performance Anxiety

The psychology of confidence is just as important in the boardroom as the bedroom. As Wikipedia suggests, "Confidence can be a self-fulfilling prophecy as those without it fail or don't try because they lack it and those with it may succeed because they have it rather than because of an innate ability."

Harvard Business School Professor Rosabeth Moss Kanter wrote a book, Confidence, which could be distilled down to the following: Losing streaks are often created and then perpetuated when people lose confidence in their leaders and systems, while winning streaks are fueled by confident people who are secure in their own abilities and the ability of their leaders. Winning streaks are characterized by continuity and continued investment, while losing streaks are marked by disruption and a lack of investment that typically give way to a self-fulfilling prophecy of failure. Long-term winners often face the same problems as long-term losers, but they just respond differently. They know how to recover quickly and not let failure mess with their head.

We've all seen classic human behavior when our confidence is shaken. It could be the coach who throws out the game plan and tries the "Hail Mary," leading to further embarrassment of the team, or the business group that starts blaming each other for petty issues. Or, at the high school dance, it could be the shy guy who feels smaller and smaller after two girls turn down his offer for a dance. And, of course, in the bedroom when performance anxiety strikes, one can feel like there are three Olympic judges propped on chairs above the bed ready to reveal their scores.

If "Disappointment equals Expectations minus Reality," at some point, after a few too many disappointments, we start expecting less. This is often the path to personal depression and it could be the same for an economy, which shares that same word -- depression -- to describe a similar valley. We end up with a "sulking economy." And, that's where we are today. For a leader, it's not an easy thing to rebuild the expectations of one's people after constant disappointment. The tried and true method of doing this is what I call the "momentum of victory," creating a feasible goal in the short-term and achieving it. Once that's accomplished, it means finding another small, concrete win on the horizon. Winning and losing are 90 percent mental.

Lyndon Johnson was the first White House occupant to have The Conference Board looking over his Presidential shoulder and rating "consumer confidence" as a monthly measurement of our collective psychological well-being. This strong man from Texas saw confidence plummet late in his time in office. True again four decades later, when his fellow Texan George W. Bush saw nearly an 80 point drop in confidence, the worst since LBJ.

Our most effective confidence-producers have been Reagan (41 point rise) and Clinton (40 point rise). Barack Obama is a man who inhabits his head. Yet, like any athlete -- especially a basketball player -- hopefully, he knows that over-thinking rarely enhances performance. It's time for our shrink-in-chief to step it up and find his natural rhythm as a leader. When in doubt, find the goal that we can all believe in and achieve (maybe, today it's reestablishing our credit rating of AAA) and start creating a micro-map of small victories that can reestablish our confidence as Americans who have a common goal.