Is Denial Endemic to Management?
Poring over reader responses to his May column, HBS professor Jim Heskett is struck by the fact that they include behavioral, structural, and even mechanical remedies. (Forum now closed. Next forum opens June 3.)
How best is denial managed? Denial is endemic to management. It is a natural part of human nature, closely related to the survival instinct. It can be useful or disastrous. And it can be managed. That sums up at least many of the reactions to this month's column.
Jeffrey Scott commented that "it is a natural human tendency to devolve into denial." As Elaine Sihera put it, "Denial comes out of fear … of being wrong." Dan Wallace pointed out that neuroscientists tell us that "once you've solved a particular type of problem several times, your brain stops looking for new ways to solve it" and suggested that the phenomenon applies to organizations as well as individuals. In Steve Sheinkopf's opinion, "Denial is only part of the problem; not understanding your capabilities and resources is a bigger issue." Phil Clark raised denial behavior issues to a new level by commenting, "It is tough to even have people agree on what is being denied …."
Denial can be beneficial. Joline Godfrey waxed almost poetic in saying that "denial is a critical component of my ability to outwit the impossible." Rob Jones commented that "Denial might be best categorized as a form of risk taking." Aruna Sharma pointed out that "It's all about buying time to see if something can be done to reverse the trend …." Joe Schmid opined, "Denial is the first step of the change process—it is natural and necessary …." Len Bullard suggested that "Ruthless realism is, itself, pathological …. The professional pilot denies a crash is inevitable until a second before impact, and that ability to believe one can save the ship is critical to the attitude of actually saving it."
Remedies to denial in management include a "powerful board" (Ravi Mistry), careful listening on the part of leadership (Dayvon McCarrell, C. J. Cullinane), transparency (Joanna), measurement of project failure rates (Steve Romero), surrounding oneself with people who are not like-minded (Philippe Gouamba), the adoption of a "data-driven decision style" (David Cawlfield), the development of "early warning indicators" combined with an "external interference mechanism" (Gopal Padinjaruveetil), scenario planning of the type practiced by the Shell organization (Vic Williams), and attention to the T (threats) and W (weaknesses) in SWOT analyses (Thomas Stephens, Jr.).
Looking over the suggestions, I'm struck by the fact that they include behavioral, structural, and even mechanical remedies. They raise questions about how effectively the challenge of destructive denial can be addressed through the selection of leaders. That is, what qualities should we look for in leaders capable of employing denial usefully? To what degree do they include such things as self-confidence (within acceptable levels of hubris), self-awareness, the ability to listen, and tolerance of dissent? Or should we concentrate on structural, mechanical, or other remedies? How best is denial managed? What do you think?
There's an old saying heard over and over that "What gets measured is what gets managed." That's why we measure so many things, including the unimportant, in business. And yet when poor results from the measures are presented to management, they can be ignored or, worse yet, denied, as happened so often in the days leading up to the recent Great Recession. It's denial that's the concern of Richard Tedlow in his new book, Denial: Why Business Leaders Fail to Look Facts in the Face—and What to Do About It.
Tedlow, a business historian, defines denial as "the unwillingness to see or admit a truth that ought to be apparent and is in fact apparent to many others." In other words, denial is "seeing but not seeing." His interest is in cases where "denial … is avoidable and … leads to failure," such as Henry Ford's presumption that consumers would continue to want black autos in the face of evidence that they were becoming more interested in color; IBM's dogged pursuit of PC hardware while Intel usurped the microprocessor market and Microsoft became dominant in software for PC operating systems; and the belief by entrepreneurs and investors alike that online grocery orders to the long-gone Webvan, the largest single start-up during the Internet bubble, would become a preferred method of grocery shopping.
Why do people practice denial? Because it is often easier, "safer," and more profitable in the short run, and more comfortable than confronting a problem, a poor decision made by a superior, a difficult personnel decision, or a failing strategy. At times, denial can lead to remarkable achievements against all odds, particularly for entrepreneurs nurturing start-ups. It is not to be confused with willful behaviors designed, for example, to shield potentially dispiriting information from others.
Denial is described here in degrees, as on a spectrum between "facing facts" on one end and "denial" on the other. Further, Tedlow maintains that it happens as part of a pattern of behavior (like "deferred maintenance"), not as an isolated event. The lessons he takes from his examples are that: (1) "the time to deal with denial is right now," (2) facts have to be confronted, not avoided, (3) a climate of straight talk where truth can be spoken to power has to be encouraged, (4) leadership behaviors such as listening are essential, (5) behaviors designed to optimize the short-term that may themselves be symptoms of denial, (6) words matter; when words are used to obfuscate, denial may be near, (7) while obvious, it is critical to tell the truth, and (8) it is better to be unconventional and right than it is to be conventional and possibly wrong, as in the old saying among information technology managers that "nobody ever got fired for buying IBM."
This leaves us with questions concerning just how these lessons are put into practice. Remedies obviously involve individual behaviors. For example, what do you do when the real issue of the next meeting you attend is addressed in the hallway after the meeting rather than in the meeting itself? How easy is it to do something about that in your organization? Why? What can you do, if anything, if you believe that the people to whom you report are in a state of denial? What does your response tell you about the nature of the organization? Is denial endemic to management? What do you think?
To read more:
Richard S. Tedlow, Denial: Why Business Leaders Fail to Look Facts in the Face—and What to Do About It (New York: Penguin Portfolio, 2010).
Richard S. Tedlow, "Toyota Was in Denial. How About You?" Business Week, April 19, 2010, p. 76.