Managing Expectations to Manage the Unexpected

Crises inherently involve unanticipated events. And one way that leaders often shape how people around them think about crises is by talking about expectations. For example, much of the recent talk initiated and perpetuated by leaders within the U.S. government incorporates aspects of expectation management.

Take, for instance, President Barack Obama’s Feb. 24 address before a joint session of Congress. In his speech, which dealt largely with his plans to bolster the economy, Mr. Obama incorporated several elements of expectation management. Specifically, after discussing his immediate plans for economic recovery, Mr. Obama’s rhetoric shifted to describe plans with a decidedly futuristic orientation. To illustrate with a simple example, let’s consider the president’s use of two phrases: “short term” and “long term."

For starters, Mr. Obama used the phrase “short term” twice while mentioning “long term” six times. But what is compelling from an expectation-management perspective is that both times that he said “short term,” he immediately juxtaposed “short term” with “long term.” Early in the speech, Mr. Obama compared the two, saying, “Short-term gains were prized over long-term prosperity.” Later, he said, “The recovery plan and the financial stability plan are the immediate steps we’re taking to revive our economy in the short-term. But the only way to fully restore America’s economic strength is to make the long-term investments that will lead to new jobs, new industries, and a renewed ability to compete with the rest of the world.”

In his recent column on Forbes.com, Shaun Rein describes Mr. Obama’s expectation-management strategy as one that business leaders should adopt in difficult times. Rein wrote, “President Obama has continually lowered expectations about his ability to right the economy quickly. This has given him time to maneuver and allowed for more upside potential … Managing the expectations of investors and employees is critical now. One of the biggest mistakes senior executives make is trying to put too positive a spin on a situation.” Indeed, business bloggers are also picking up on the importance of expectation management in the face of crises.

Bloomberg News columnist Caroline Baum focused instead on Mr. Obama’s optimism. In her Feb. 26 column, she wrote, “Chicago is home to, among other things, rational expectations theory, the idea that outcomes depend to some extent on what people expect to happen. It would have been hard to spend that much time in Hyde Park without some of Chicago rubbing off on Obama … If we expect the future to be better, rational expectations dictate that it will be.”

Taking a scholarly perspective, organizational theorists argue that people’s expectations regarding what constitutes the ordinary shape how they make sense of and ascribe meaning to the world around them. So in terms of leadership, it behooves leaders to manage expectations carefully, keeping in mind the power of suggestion and using talk to frame how others regard their environments. At the same time, however, it’s crucial to manage expectations in such a way that people are more likely—not less—to notice and publicize the weak signals and small deviations from normality that are all too often beacons warning of impending disaster.