The New Face of Confidence

Business leaders may be better positioned than they have been in years to make smart calculations about growth and strategy. Here's why.

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Two years ago Stephen Satterwhite was a very confident guy, and today he's a very confident guy, and there the similarity ends. Satterwhite, the CEO of Entelligence, an IT staffing and services provider, tells the story while driving back to his home in Houston. He has just finished a meeting at Dell Computer in Austin, where he impressed the attendees with his pragmatic promises and subdued conviction. Satterwhite says that doing the right thing is now number one on his dashboard, and it's not until he's said it two or three times that it becomes clear that he's talking about a kind of spiritual/ethical barometer and not the control panel on his BMW 528i. After five years in which almost everything went right and six months in which nothing did, he's figured out there's more than one kind of confidence.

"Our early confidence was euphoric, egotistical," says the CEO. "We thought there was nothing we could touch we wouldn't make a success of." But then, in 2001, Entelligence took three disabling hits: a sputtering technology market, September 11, and Enron's implosion, which rattled all of Houston. Satterwhite, who realized too late that back in the glory days his company was just one boat on a rising tide, watched as the water swirled down the drain, threatening to take him with it. Things got so bad that he started bringing home backup tapes from the company's PCs in case his landlord locked them out. "One of my partners said, 'Maybe you're not the right guy to run the company," says Satterwhite. "And I thought, 'Maybe he's right."

Satterwhite regained both confidence and financial stability through a series of humbling but fruitful negotiations with his landlord, his bank, the phone company, and other creditors, in which he laid everything on the table. "I got naked," he says. "I'd always been about looking good, but not anymore." The CEO was able to get out of his lease and into cheaper space, negotiate interest-free extensions on his debt, and significantly reduce operating costs. Now the company's financial position is healthier than it's ever been, and so, says Satterwhite, is his personal outlook. "I learned this last year about a confidence that's different from 'I feel good about a sale' or 'I feel invincible," he says. "I just feel in my gut every day that I'm going to do the right thing. I have to keep focused on my values and being straightforward and truthful. That's where I derive my confidence now. It's not something I have to pump myself up for."

Satterwhite represents the new face of confidence among entrepreneurs who, having survived tough times, feel a less heady, more rational faith in their own skills. Another is Gary Berman of Greyhawk North America, a construction-management consulting firm on Long Island. Berman has scaled back his growth objectives after losing contracts when New York City canceled projects post-9/11. But he remains positive. "I know we're going to grow, and I know we're going to get there," he says. At ProSys Information Systems, in Norcross, Ga., founder Michelle Clery has drawn confidence from an unexpected source: her employees' loyalty. "During the dot-com boom, I was afraid every day that people were going to leave me for another $5,000 in salary," says Clery. "Now I'm sticking by them in tough times, and that's increasing their loyalty, which is so important to our future."

The tempered optimism expressed by Satterwhite, Berman, and Clery showed up again and again in more than 50 interviews conducted for this story. Our objective was to gauge the current attitudes of business owners and to explore the deeper sources of confidence among them. The discovery that entrepreneurs' confidence is becoming more grounded in reality is to be expected. Failure, like imminent death, has a way of concentrating the mind. What surprised us was how often their confidence runs higher than their circumstances would appear to warrant.

The evolving field of behavioral economics suggests a possible explanation. Terrance Odean, an assistant professor at the Haas School of Business at the University of California, Berkeley, has studied the cause and effect of overconfidence in investors and executives. He points to something called "attribution bias," the tendency of people to credit themselves unduly for successes that are heavily influenced by external factors (such as a boom market or a technology revolution) and to blame external factors disproportionately when they fail. He also suggests that it's a good thing for decision makers to be mildly overconfident because they are likely to assume a degree of risk that is healthy for their companies.

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Leigh Buchanan

Leigh Buchanan is an editor at large for Inc. Magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture, and she contributes Inc.'s capsule book reviews, "A Skimmer's Guide to the Latest Business Books."

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