Being great under pressure is hard work, and this is part of the reason why we are so impressed by people who seem immune to choking, writes Paul Sullivan in ‘Clutch: Why some people excel under pressure and others don’t’ (www.landmarkonthenet.com).
Clutch vs choke
Defining ‘clutch’ as the ability to do what you can do normally under immense pressure, the author notes that most people fail in extreme situations. “They may be able to do what they do just fine under everyday conditions, but when the pressure mounts, their ability leaves them. They choke. Yet there is a small subset of people who not only succeed but thrive under pressure.”
While the majority of such successful people consider themselves as clutch, the opposite can be true of chokers who hold themselves in high esteem before they fail, Sullivan finds. “Just because someone is successful does not mean he will be good under pressure. High-profile chokers are the car crash we can’t take our eyes off of. They fascinate us, largely because we expect high achievers to do so much better.”
Facing financial pressures
A chapter titled ‘how to be clutch with your money’ concedes that making clutch decisions when it comes to money can be the most difficult thing in the book to master, because “money is linked to everything – safety, health, relationships, creativity and spontaneity, social belonging. It’s one thing that intersects everything.”
When many people saw their portfolios plummet in the Great Recession, loss led to anger and, worse, blame, recounts Sullivan. “They waited too long to take action. They took baby steps when decisive action was needed. They choked when it came to making decisions about what they had left.”
Drawing insights from the bad times, he lists five specific steps as what one should take when the pressure faced is financial. These imperatives are: Accept, psychologically readjust, prioritise, take responsibility, and focus on the outcome.
Accept, adjust
Accept, the first step, is about admitting that one is in a tough financial bind. Accept that your financial situation is not as you thought and the longer you wait to act, the more pressure will be on every decision, the author advises.
The next step is to psychologically readjust, because obsessing about money is not going to make it come back, the book instructs. “You could have made better decisions ahead of time, but you didn’t. Still, you have a chance to save what you have and, you hope, to make better choices the next time around.”
Sullivan frets that what holds people back is the powerful emotional force exerted by the decision-making part of the brain exerts over the rational part. He cites Brad Klontz, a financial psychologist and author of ‘Mind Over Money,’ for the analogy of an elephant and the rider: “When things are going smoothly, the two work together; when something spooks the elephant, there is little the rider can do but hang on.”
Live to fight another day
Prioritise, the third step, is about deciding how to divide things up, that is, what you need, what you want to keep, and what must go immediately. Getting rid of what you can’t afford in a crisis will go a long way to bettering your financial position, though it is a tough thing to do, Sullivan counsels. While in the case of a widow or a retiree, circumstances may change several years before people change their lifestyles, a person whose finances are under pressure does not have the luxury of time, he adds.
Take responsibility, the fourth imperative, calls for rational thought in the place of emotion. For, the effect of not taking responsibility can lead to ‘money-avoidance disorders,’ that Klontz warns of. “A simple version of what he calls a ‘money script’ is ‘Money is bad; rich people are shallow and greedy; people become rich by taking advantage of others.’ You can think that all you want, but it is not going to make your financial situation any better,” reasons Sullivan.
The fifth and final step is to focus on the outcome, where the key mantra is to live to fight another day. “Your goal is not to sell one thing to buy another. Your goal is to shore up your personal balance sheet… Once you have restructured your cash flow, you will be better positioned to make money decisions under less pressure.”
Two leaders
The tales of Ken Lewis of Bank of America and Jamie Dimon of J. P. Morgan are discussed in a chapter titled ‘a leader’s responsibility.’ The two men were operating in the same difficult economic environment with the same access to the best and brightest people in the financial world, and both had support from the federal government in the darkest months of the recession, the author narrates.
“But Dimon made his firm better and stronger during a time in which Wall Street was under intense scrutiny. Lewis not only left his firm struggling to integrate what he bought but made himself a target of Congressional inquiry, judicial subpoena, and public disdain.” The difference, in the author’s view, was that Dimon was a clutch while the other choked.
When it comes to choking, a refusal to accept personal responsibility is often the starting point, says Sullivan. “The unwillingness to take blame for bad decisions and tolerate criticism for tough ones is a telltale sign of a bad leader under any conditions. It becomes a critical flaw, though, if he finds himself in a situation where serious, tough, and probably unpopular choices are necessary, as Lewis did.”
Responsibility is your actions
The contrasting example of clutch, in the Dimon story, is about how he handled the Bear Stearns deal. “We did real due diligence with people we trusted. We had a real margin for error built into the price. And we had people who could run it the next day,” is a snatch of Dimon-speak quoted in the book.
Throughout this, Dimon was surely clutch – focused on the merger, disciplined in how he assessed Bear’s value, ready to accept his plan and walk away if necessary, completely present throughout the process, and wisely fearful of hurting his firm, the author observes. “He also personally accepted responsibility for what was happening. He knew he was ultimately accountable to the shareholders.”
Without taking personal responsibility, a leader can never be clutch, rules Sullivan. In times of pressure, responsibility is not an accounting for your actions; it is your actions, he describes. “Under pressure it becomes purely focused and is the underlying force in the action: I am doing this because it is the right thing to do, and if I fail, I know I tried.”
Such a clutch was missing in Lewis and Dick Fuld (of Lehman Brothers), the author rues. The sad part with leaders like them was they thought they could do no wrong because they had had long, successful careers, he says. “They had become dangerously insulated. They were both imperial chief executives. And their closest advisers treated them with deference instead of presenting them with the truth.”
Dangers of overconfidence
Behind big-ticket choking episodes, a common factor can be overconfident leaders, informs a chapter on ‘overconfidence.’ Sullivan warns that when the leader of a company becomes overconfident, his choking may be systemic, as opposed to a person blithely overconfident on his own who is most likely to spiral into ineffectiveness or barroom solipsism without doing greater harm.
Tracing the collapse due to overconfidence, the author outlines that it usually starts off as a feeling of unease, and that the uneasiness may manifest itself as a sense that something is not sustainable, perhaps even at the top. “Then, it abates, with months, years passing before anything more happens. But when the collapse comes, it is usually swift. And those left in its wake start to wonder how they missed something so obvious. The lies, the tales, the trumped-up reports were, of course, too good to be true…”
Introspective read that you can ill afford to let drop off from your hands.
**
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