How Positive Psychology Can Boost Your Business

In tough times, entrepreneurs try the so-called science of happiness to build thriving companies
To understand how positive psychology—the so-called science of happiness—is being used by entrepreneurs, it helps to look at a company under siege. After all, it's one thing to talk about the connections between a positive mental state and a healthy company when a business is running well, turning a profit, and grabbing new customers. But tougher times really test entrepreneurs, separating those who hunker down and hope the worst will pass from those who use their strengths to find opportunity amid rubble.

Robert Aliota is determined to be, when necessary, one of the latter. In 2004, Aliota, the owner of Carolina Seal, an 11-employee Charlotte (N.C.) company that makes custom-engineered parts for DuPont (DD) and John Deere (DE), among others, learned that a competitor had pounced on one of his key segments. Worse, the rival had hooked ExxonMobil (XOM), a customer that had eluded Aliota.

Rather than hole up in anger or fume, Aliota followed a central tenet of positive psychology: capitalize on your fundamental character strengths, especially when things get bleak. Aliota's strengths include extroversion, optimism, and generosity. He had in the past referred business to the rival and toured its plant. Now he concentrated on cementing the relationship. Not long after, he got a call from his competitor: ExxonMobil needed a special part. Could Aliota supply it? Four years later, he and the onetime rival "are as closely allied as you can get without a legal alliance," says Aliota.

Coaches specializing in positive psychology are selling entrepreneurs a twofold promise. One is that optimism and cheerfulness have a measurable effect on the bottom line. The other is that happiness is a muscle you can strengthen. Aliota is buying all of it. "We're capable of thinking in a more positive way, but you need help to learn how," he says. That Carolina Seal has posted three years of double-digit growth, Aliota says, "is a lot due to the awareness we've gained." He hires for strengths rather than résumés, and when necessary, he redeploys staff to create a better fit. His employees get more extensive training, and therefore, far more autonomy (Aliota took his first-ever two-week vacation this summer). Aliota begins and ends meetings with praise rather than criticism. And he has changed how he frames his mission. "We're a personal- and career-development company," he says. "It turns out the by-product is engineered rubber, metal, plastic, and foam."

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