In 1932 the American public lost faith in the ability of the banks to guarantee their deposits. People ran to the banks trying to get their money out before the banks became insolvent. This mass behavior did indeed force banks, even those with sufficient funds, to close their doors on frantic depositors.

The sociologist, Robert K. Merton, coined the term "the self-fulfilling prophecy" to explain this turn of events. Once the public perceived the situation as a threat, their subsequent behavior turned those fears into a reality. He defined a self-fulfilling prophecy as "a false definition of a situation evoking a new behavior which makes the originally false perception come true."

However, self-fulfilling prophecies can be based on true as well as false definitions of a situation. They can be used for positive as well as for negative outcomes. Another sociologist, W.I.Thomas, stated this fundamental truth about human nature. "If men define situations as real, they are real in their consequences." In essence, expectations shape reality.

The nature of the expectation of success by an individual, a group, or an organization as a whole leads to the kind of striving that is likely to result in outcomes supporting the initial prophecy. I shall demonstrate this principle by describing sales achievements of four types of sales persons.

• The AVERAGE ACHIEVER sets limited goals and puts forth moderate effort to achieve these goals. The prophecy is fulfilled with the achievement of these limited goals.



• The OUTSTANDING ACHIEVER sets stretch goals and puts forth strenuous effort to achieve these goals. Again, the prophecy is fulfilled with the achievement of the stretch goals.



• The ANXIOUS ACHIEVER sets limited goals and puts forth strenuous effort. The rep is afraid to aspire higher for fear of failure. The self-fulfilling prophecy is based on the expectation that hard work is needed to assure even limited success.



• The SELF-DEFEATING ACHIEVER sets stretch goals to gain approval, but puts forth only moderate effort, never coming near to the goals set. This sales rep starts with an expectation of personal inadequacy that gets reinforced by continuously disappointing performance. Even the moderate effort is more a show of work, more a display of rote behavior than of looking after the essentials.

This concept of a ‘self-fulfilling prophecy’ can be applied to the leadership behavior of any manager by keeping in mind one distinction. The sales rep sets personal goals and is personally responsible for his/her own effort. The manager sets the direction toward unit goals [department, division] and endeavors to mobilize unit-wide effort on behalf of these goals. Leadership effectiveness is determined by the extent that the unit achieves its unit goals. There are four types of managers analogous to the four types of sales reps.

• The AVERAGE manager sets limited goals for the unit and mobilizes moderate unit-wide efforts to achieve these limited goals.



• The OUTSTANDING manager sets stretch goals for the unit and mobilizes strenuous unit-wide efforts to achieve these strenuous goals.



• The ANXIOUS manager sets limited goals for the unit and mobilizes strenuous unit-wide efforts to achieve these limited goals. What a waste of potential!



• The SELF-DEFEATING manager sets stretch goals for the unit but mobilizes only moderate unit-wide effort. The unit learns not to take the stretch goals too seriously.

In both situations we can portray a 2x2 table based on the interaction between ‘Level of Aspiration’ and ‘Degree of Effort’, leading to 4 prototypical cases. Table 1 illustrates these cases.

Table 1: Four Types of Achievers

The leader who understands the dynamics of the self-fulfilling prophecy can use it to coach managers to become outstanding achievers. The process is a gradual, step-by-step change.

• The self-defeating manager can be helped to become an average manager. The leader has to put this manager on a ‘guaranteed success’ program, lowering the goals to make them fit the actual moderate effort. The expectations of failure, disappointment and a sense of personal inadequacy have to be broken. Once success comes to be expected, the moderate efforts become more functional replacing the earlier superficial style.
• The average manager has to pass through the stage of being an anxious manager en route toward eventually becoming an outstanding achiever. The leader has to help the manager get his/her unit to put forth more strenuous effort while still retaining limited goals. The unit comes to expect success as a result of the hard work.
• The anxious manager, whose unit is accustomed to strenuous effort, can now be converted into an outstanding manager. The leader has to help the manager gradually raise the bar and let go of the security blanket of readily achievable targets. Not only the manager but the whole unit becomes higher performing, constantly trying to surpass its best achievements.



• Outstanding managers and units should have their successes recognized and be properly compensated.

For the sales rep the difference between moderate and strenuous effort lies in the effort to cultivate the personal competencies required for sales success. For the manager of a unit the difference between modest and strenuous effort lies in the effort to build unit capabilities required for unit success.

The CEO directs toward organization goals and endeavors to mobilize organization-wide effort on behalf of these goals. For the CEO the difference between modest and strenuous effort lies in the effort to build organization capabilities essential for strategic success.

Expectations lead to efforts to shape reality in the direction of the expectations.