Summing Up
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?
Original Article
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.
It is easier for the employee/manager to address denial to their bosses when it has more tactical, and less strategic, importance. What is the hardest is changing the opinion of the CXOs on matters that could have fatal impact on the company's survival - partly because of their ego but more importantly that they are in DENIAL.
I believe that a powerful board that takes serious interest in the company's growth and is not afraid of taking action irrespective of their relationship with founders or CXOs if things are not going right could go a long way in preventing such failures.
Often intelligence, education, and even experience are overriden by denial. I believe this is caused by 'conditioning' and ego. The banking crisis is a good example of total denial. Most people were taken by surprize when it occurred but the warning signs were there, we were just in denial.
I have seen many decisions made from a position that is more personality based than team or logic based. Often the team member who brought the problems to surface was condemned as being negative, and the denial rolled on. Good communications can eliminate a lot of denial but we really have to listen and ask questions, and most importantly 'do not kill the messenger'.
We need to break the cycle of the analyst merely creating a reality out of numbers and management making numbers out of that reality. I say to many, cut your pay grade, and be compensated for your actual value-added to the WORLD, rather than one's mere egocentric perception of the net worth of his/her work to society and to the world.
I have visited more than 100 companies to help them with their Project and Portfolio Management (PPM) processes. I urge them to determine and establish their "flavor" of PPM based on buusiness objectives specific to their organization, objectives almost always driven by their specific problems. One of the problems plaguing most organizations today is project failure rates (about 50% of IT projects according to just about every study I have seen in the past 20 years).
So I ask them, "What are your project failure rates?" I have yet to find an organization that even measures their project failure rate, let alone respond to it. I haven't even encountered an organization that has defined what constitutes a "failed" project. When the topic is broached, it degrades into an emotion-filled discussion littered with rationalizations and denial.
I believe the denial problem is fostered by two things:
- an inherent human aversion to failure
- organizational tendency to respond punitively to failure and "shooting the messenger"
The enterprise-wide phenomenon of denial (endemic to leadership, management, and their charges) won't change until organizations foster a culture of accepting and identifying failures, and treating them as opportunities to learn and improve.
Steve Romero, IT Governance Evangelist
http://community.ca.com/blogs/theitgovernanceevangelist/
I think you definitely need to create a culture to better understand market opportunities. then again, the next article would probably be..."Risktaking...endemic of Management?"
Personally, businesses should understand their niche and how to protect it and expand it slowly. Denial is only part of the problem, not understanding your capabilities and resources is a bigger issue.
An effective organizational policy to combat chronic denial of management could be frequent and regular independent outside auditing and have a fair and transparent accountability measures in place.
Of course, it is quite natural that those in charge who are avid fan of denials might prevent these accountability measures to be materialized to serve their own interest.
Denial is not endemic to management. I think the problem is at least three-fold and deeper than it appears.
One issue is that of ignorance; meaning that there simply exist lots of facts that a decision maker may not be aware of. If we all had infinite wisdom looking backward and infinite wisdom looking forward we would surely make better decisions. With perfect knowledge would we make perfect decisions? I still doubt it. Human nature is as predictable as it is unpredictable.
The next issue is agenda. Too often, managers are tasked with a mission, an agenda with a desired outcome. Managers work to make that desired outcome a reality and in the process they forget that the premafacia data may not point in their desired direction. Against all odds, managers often want to be brave risk takers, forward thinkers (IBM was "wrong" and Microsoft was "right" in their forward thinking) who take a chance and secretly pray that thier decisions will be accepted as correct.
Finally there is the issue of focus or blinders. I really believe that some managers are so focused on this issue or that task or that outcome that they gift themselves with a form of tunnel vision and fail to see what exists to the left or to the right of them. As they work, they convince themselves that what they are doing is right and that the way they are going about it is the only way. In the process of doing and achieving, they draft like-minded people to their cause and soon enough group-think sets in. If the team is on the right track, then they are all aces; all is well. If they are wrong, they will surely fail but as we all know, Planet Earth will not cease to rotate as a result of their failure.
This is a game of the small, the large, and the catastrophic outcomes where the skill and insight into the best and worst cases of events has to be mastered. Sometimes one can save the ship and refusing to try because one's certainty about the outcomes are shaky is the wrong tactic.
Just reading "Shop Class as Soulcraft", Matthew Crawford, as he posits: "Managers often communicate to cover up" not confront facts, and how that kind of denial creates it's "own sort of morality, one in which the fixed points of an internal moral compass [one's personal values, integrity] must give way to the 'drift of the organization' ".
However, conscious of the dark side of denial, I compensate by hiring smart people unafraid of confronting me. I think both denial and clear-headed pragmatism are required to lead and manage well.
It might be a kind of Heisenberg Principle, where what is measured then becomes the illusion of the measurement system.
Over the years, more than 40 now, I have developed a saying of my own around denial, especially among business management and leadership teams. I have come to dub their behaviors of denial as the Ostridge Syndrome. As the designation implies, their heads are positioned so that they, by design, cannot see their environment. Secondly, the physical positioning of the head in the sand causes that part of the anatomy, otherwise obscure and unseen by others to appear with prominence. It is generally this part of the anatomy that is the conversation starter for the meeting in the hallway after the group meeting.
By now, you likely have come to believe that I have strong feelings about denial. You are correct, I do. My position is that, if you take on the profession of management, you know and understand the four dimensions of a SWOT analysis (to me, this is management 101). If the "T" in the SWOT analysis cannot be talked about openly and candidly as the "S" and "O", frankly, you have an Ostridge in the making. (I hold the same for the inability to talk openly and candidly about the "W".)
Knowing myself as I do, provided the impetus for me to develop the ability to TELL, rather than withhold, the truth. I have come to appreciate that how I present information is as important as the information presented. This has been a challenge, for sure. However, I do like the dividends. My point being, when I know (per the data), this will never work; I have to position my argument so others will choose to listen, hear, and understand. As I said, I have been practicing this for more than 40-years. (Good luck to the neophyte.) However, I believe that if you are not willing to participate in the solution... find another vocation.
One of my favorite quotes is a statement made by a commercial nuclear power executive: "Let's not go out seeking problems, we'll only find them". Scenario planning and risk management are hard work. Resources to seek and solve problems directly reduce corporate earnings; resources to combat actual problems after-the-fact are fully reimbursed by rate-payers, with interest. The proactive course of action impacts bonuses and future promotions, reacting to a situation brings opportunity to demonstrate the full measure of one's leadership and career potential. And the civil fines for regulatory noncompliance are less than trivial.
But why assume that denial is only an issue within business ranks? After all, Congress and the Administration have fully tax-subsidized more nuclear power plants and guaranteed a new, rapid escalation in high-level nuclear waste even as they've eliminated the single long-term storage option under development these past 30 years.
A crisis is a terrible thing to waste.
Rather than try to convince them they are wrong, use that ego against them. Convince them that an additional approach (in the proper direction) will better feed their ego. If the ego is based on power, get them to see the extra power in the additional thought. If the ego is based on money, show them how the additional idea will make them richer.
One time I was trying to get a book published which claimed that a lot of common management wisdom was wrong. The publisher said that approach would not sell, because none of the audience would want to admit they were wrong. She said effective business books merely claim to enhance (add on to) the brilliance the business executive already has. This they will accept.
Good advice.
Remember, the ultimate goal is changed behavior. If you can change behavior while still leaving a bit of denial (for awhile), then you have done your job.
While I absolutely agree with Steve that the denial problem is fostered by two things:
An inherent human aversion to failure.
Organizational tendency to respond punitively to failure and "shooting the messenger."
While humans have an inherent aversion to failure and all rational behavior is motivated by desires for success,
While desire for success is acceptable, Problem is when Denial becomes a defense mechanism and refuses to accept the problem and stop continuing the same behaviour.
An alcoholic who tells himself and the world "I can quit any time I want to." He doesn't quit, though, and doesn't recognize the impact of his drinking on himself or on those who care about him.
The same defense mechanism can be applied to management behaviour too. Most managers honsetly beleive that these issues can be fixed over time, and what is missing in Orgaizations is
1) The lack of metrics/measures to indicate that things are indeed bad (crossing the point of no return?) .. "What gets measured is what gets managed." No Measure - no need to manage- an easy way to get into the Denial mode
2) If the metrics are there then "Who will bell the cat".. the lack of Organization culture where there are avenues for 'whistle blowing'.
3) Lack of transperancy /Dictatorial leadership style coupled with an inner core of advisors or "Yes men" cronies who gives a false notion that "everything is OK".
Denial might be best categorized as a form of risk taking; and many, if not most of us are prone to it as an initial reaction to almost anything that runs counter to a belief. The reasonable [i.e., healthy] person can shake it quickly enough when confronted with a few facts, and begin to engage in analytical assessment of the propriety of holding to the belief. Moderate denial upon any challenge is perhaps prudent, a function of the innate wisdom in true leaders that enables them to stay the course, against the odds. At the very least, it is what enables all of us to make decisions and stick to them despite uncertainties.
On the flip side, however, I'd wager that "safety" is not the modus operandi of the chronic and pernicious denier, but is perhaps founded in the same driver that leads gamers to stay at the betting tables despite knowing that the vast majority of gaming participants lose. "I'm different. I'm not a loser. I'm going to win." Entire destination cities are built around our addictive determination to beat the odds. Apparently, so are at least a few business organizations.
A great starship captain once said, "I don't believe in the no-win scenario." His final victory was Pyrrhic. Risk taking is a characteristic of leaders. Moderate risk taking is the sign of a healthy leader. Chronic and unreasonable denial is a "Captain Ahab" syndrome, a form of risk taking characteristic of unhealthy leaders. Denial is human. Immoderate denial often requires professional help.
We find it in civil service particularly in developing nations in spite of being signatories to international conventions. This eventually leads to encouraging corruption. We also find it in the private enterprises where corporate responsibility is compromised for temporary gains.
Compliance to policies and rules coupled with enforcement and monitoring will go a long way in containing this belated societal illness.
Professor Tedlow's efforts, I believe must be globally promoted and effected.
Joseph Davies, CEO
Davies Intercontinental Corporation, Japan
Founder: The Nigerian Chamber of Commerce and Industry in Japan
That would translate into typical American style management being more prone to denial than say a Japanese management. If my job depends upon the performance in this quarter, I would care two hoots about what my actions do to the organisation over a year or more.
Interfacing proactive living (i.e., predominantly analytical, goal- and future-oriented--a kind of inside-out thinking imprisoned by fixed outer orientations) with reactive living (i.e., predominantly present, empathic and intuitively oriented--a kind of outside-in thinking imprisoned by fixed inner orientations) to pursue aspirations, thereby, deepening and enriching an open unconscious-conscious relationship, can help. Being proactive, we can pursue our aspirations and restore low self-awareness, and being reactive as well, we can search for new opportunities and challenges, avoid psychological biases, prevent goal-fixation, overcome unconscious uncertainties or fear of failure, and solve outdated or biased conceptions to regain inspiration and develop resilience. For more on this topic, please read:
Reviewing a Biography of Each of Us: The ghost in near-death experiences presses for self-management to enjoy work, life and society by Roy Bhikharie
"A book that may help readers balance the demands of life ... some interesting topics ... Some content is inspiring ... the writing resembles a doctoral thesis ... On the positive side, the author includes helpful exercises and, thankfully, numbered conclusions at the end of each chapter ... The 'environmental survey' (work environment, that is) ... is of particular value ... Some pearls of wisdom here ..." --Kirkus Discoveries Aug/2009
In an organisation, however, there is a greater evil constantly at play. Ego. Multiple egos. The egos of decision-makers are perhaps as generous as their paychecks. Perhaps, one of the (discreet) core competencies required by a leader is the keen ability to ignore the outcome of one's poor choices despite knowing the impact it may have on the business or even worse, the morale of resources. Past mistakes are constantly swept under the carpet, to be discovered by future leaders whom, more often than not, conveniently repeat this cycle of ignorance.
Yes, we may argue that leaders are faced with greater responsibilities and mostly bound by policies and stakeholders' demands - but admitting failures is a more noble feat than denying the obvious and projecting it elsewhere. Leaders should (swallow their pride) and perhaps, be grateful for 'messengers' who strive to say it as it is - albeit, it is an uphill task managing this perspective - honesty is very much needed for an organisation to prosper and to avoid a greater pandemic altogether.
Denial could also be a result of ignorance generated out of opaqueness in reports due to complexity of operations.
Usually organisations do not measure how big a perceived threat can turn out to be ? So while management is still toying with the idea of taking a threat seriously or not, the crises blows out of proportion.
To handle denials, following may be useful:
1. Listening to the listening of the organisational & business community and customer community in general. Putting mechanisms in place for the same.
2. Ensuring that entire operations can be seen in a transparent manner comprehensively at one point.
3. Putting mechanisms in place for external environment monitoring for threats to business and their probable impacts.
4. Giving serious considerations to odd man out voices.
5. Promoting Innovation audits and compliance
6. If an organisation management does not see a solution to a threat and is in a denial mode, the first thing is to declare a crisis/ or ask a question at all the possible places where they can and keep working on it till they do get an answer.
In my long human experience, I have found that denial in the mind of the person doing the denying is essential (feels life threatening, stressful). For example, many of the things already mentioned: fear of failure, ridicule, or of being ostracized, and the need to justify decisions once made.
Finally we have "The Emperor's New Clothes" as an insight into our collective ability to deny reality.
This fear of 'failure' lies at the root of most decisions, outcomes and inactions and is often a paralysing force in actually seeing the truth, or allowing one's self to see the truth, of a situation.
In my own experience, the best cure for this syndrome is for an organization to adopt a data-driven decision style. A colleague of mine puts it this way: "In God we trust, but all others bring data." Conducting repeated tests, analyzing data statistically, and accepting only statistically valid results; these are are the essentials to apply the scientific method in business.
I't not exactly a novel concept, but it works.
Someone once said, 'we are as sick as the depth and breadth of our secrets.'
1) Organization's Culture
2) Organization's leadership style
3) Organization's Power structure
4) Organization's Risk Acceptance Policies (willingness to extend the risk to unknown levels).
While transparency is a good mechanism, what is truly needed is "early warning indicators", and the collective ability of the organization and its eco systems (Governance Structures - internal and external) to recognize these early warning indicators and interfere and manage the behavior with due diligence.
One thing that the global economic downturn has taught us is that the belief or the school of thought that, individuals and organizations (and nations) will always behave rationally at all times and all situations is not true. Denial is irrational behavior, and the notion of self correction (rational behavior will take over at some time) may not work at all times, and in such cases an external interference mechanism has to be in place, or as we have seen historically "nature" will take over and correct the situation.
If the denial is from a leader of autocratic and selfish nature for which we can have many examples in the history as well as in the contemporary corporate leadership, it is a fallout of the self-belief of the infallible nature of oneself and the hubris of past success. In such cases, some amount of denial can possibly sail the leader thru for they have built a fairly long history of successes. However, repeated denials could lead them to eventual failure and erase the track record of success. When leaders are successful there is a tendency to rely on their past experience that made them successful besides clouding their ability to gain in-depth insight into the issues by seeing and listening to all the signals and sounds that are all around! The prevalent tendency is also to ignore the negative signals and early warning signs supposing them to be of no significance or of temporary nature.
An authentic leader who resorts to denial in the larger interest of the company or to keep the morale of the people could possibly be doing the right thing when things are not going too well but accepting the situation openly could cause a negative impact on the morale of the team. The leaders have a responsibility to keep the head high and to keep the flags flying high even in most difficult situations. Here, the leaders are not in denial mode due to ignorance or to protect their personal turfs but in the larger interest or a bigger cause. Here the leader attempts to create a positive force and optimism that is expected to overcome the negative effect of the situation.
Next ... the magnitude and gravity of the issue or risk. Bill Gore's waterline principle comes in handy to differentiate the big vs. small denials. The denials of below waterline issues or decisions that are below the waterline require more careful consideration for the impact is expected to be of considerable impact.
To combine the two aspects namely, leadership style and issue magnitude, I believe that the haughty leadership and denial of the below the waterline issues, could lead to the downfall of the organizations. Here is where the great leaders, I believe, would differentiate themselves from ordinary and selfish ones by being by being able to face the facts courageously and take bold measures out of conviction and not out of fear or personal interests.
I believe all previous posts were great points, from Egos to fear of failure.
From my personal experience in dealing with senior leadership, listening is a major problem as described in point #4 from above: (4) leadership behaviors such as listening are essential.
A disconnect is created between Senior and middle management if senior leadership is not willing to hear the potential effects or current situations that arise from their decision. From this, fear of being wrong and losing their job plays a major role. If a person fails as a CEO, the chances may be slim he/she may be able to fill another CEO position with another company. Due to this, there is a drop in power, respect and earned income potential. So, instead of admitting failure, why not Deny Failure or state the approach that was presented to the masses was not carried out properly.
With Denial comes a price. A CEO does not know everything; however, the information is out there if the CEO is willing to accept failure supported by solid facts. From these facts, I believe will determine how organic the company and CEO are to incorporating minor or major changes for positive results.
CEOs must have the ability to listen in order to move the company forward. People, for the most part, will and want to do a good job. All people want in return is recognition and the ability to go against the grain without fear of reprisal if warranted and backed by pertinent data.
People speak of maintaining transparency, a system of checks and balances and ethical conduct to keep things under control. But do they really work? Didn't the Great Depression happen in spite of most of these conduct-guidelines firmly in place? Humankind has been doing business since centuries past. What has changed over the centuries - apart from adding more and more rules and regulations to our code of conduct?
The lust to make money stays. And so long as this over-arching ambition to incessantly keep running after the "next-summit" stays - who's going to ensure that the "ambition" stays within the ambit of what's socially acceptable? At the risk of sounding very negative indeed my experience tells me nothing really changes - Sarbanes-Oxleys of the world notwithstanding. We'll have rules and more rules and we'll perhaps discussion forums will never tire of discussing and debating the why's and the wherefore's. But life will go on. Deny or accept - it doesn't really matter.
Many of the comments have made this more complicated than it is. What appears as "denial" to outsiders is, to the insider, simply the adherence to settled knowledge. Our brains are wired to do two things when we confront new information. The first is to find patterns in it. We couldn't survive if we treated every situation as new. The second is that once we've identified a pattern, we filter new information in or out depending on the degree to which it conforms to the patterns we understand.
Both of these phenomena have been documented by neuroscientists. (The first is pretty obvious. If you have any question about the second, ask yourself how else Rush Limbaugh and Keith Olbermann could possibly live in the same universe, each with diehard fans who are convinced that the other guy is the anti-Christ.) In fact, the research on the second phenomenon shows that once you've solved a particular type of problem several times, your brain stops looking for new ways to solve it (when was the last time you tried to find a new way to calculate the length of the hypotenuse of a right triangle?). That's what homework is about. It makes us efficient but limits creativity.
Like individuals, every company has a belief systems, a shared understanding of how the world works. If the company has been successful at all, the belief system will have a basis that was factually sound at some point in the past. The problem is that reality evolves, while, for the reasons described above, the belief system remains static. People filter out information that conflicts with the belief system because, after all, it can't possibly be true. The underlying reason why every consulting client I ever had called me was that the gap between the belief system and the current reality had grown so wide that the pain was intolerable. And all any of them ever wanted was for me to tell them that the belief system was right and the reality they were observing was wrong.
This phenomenon is pretty well documented. My friend Adam Hartung calls in "Lock-In." I coined the term "Corporate Kryptonite" to describe it. Gary Hamel talks about "Business Model Orthodoxies." Last March, the HBR published an article authored by consultants at the Conference Board on the subject "Growth Stalls," sudden drops in revenue and profit growth that virtually all companies experience if they live long enough, and from which few recover. The common cause: excessive reliance on obsolete beliefs and assumptions about the company and its market.
These obsolete beliefs often seem positively silly to outsiders, but are accepted as received wisdom by insiders. The best one I ever heard came from the leadership team of a very sophisticated printing company, who told me (independently of one another), "The first thing you have to understand about our business is that we don't make money on printing. We make it by reselling paper and ink." Since they didn't actually resell paper and ink unless they'd printed something on it first, this statement was preposterous, and yet was totally believed by a group of smart, well-educated executives. I could go on. . .examples abound.
Again, the important thing to remember is that this is a hard-wired human trait. If you have a pulse, you do it. The best authority on this subject is Pogo, who said, "We have met the enemy and he is us."
The only way I've found for business leaders to inoculate themselves is to be aware that what they know is true actually becomes less true every day, and that they won't be able to see it. Armed with that awareness, smart leaders constantly seek the perspective of outsiders, whom they invite to challenge that which the leader knows is true.
If we continue to deny this, the structural implications from being loaded with debt at more costly rates in interest when our credit rating is dunked are frightening. The same applies to many other countries. Denial can pay dividends when it helps overcome risk aversion. It can also be enormously costly when it results in recklessness and going out naked as did our friend the Emperor so rightly quoted by many earlier commentators.
The economy is bad, orders are slowing, budget is off, but "the turnaround" is just around the corner because senior management needs to continue to press on with the message of future success in order to keep their jobs and maintain the status quo. Eventually, the fall is far greater and more serious that it needed to be because of the protracted period of overspending and inaction. Immediate acceptance of bad news and careful response and action lead to faster company corrections and less damaging outcomes for all.
So many thoughtful comments on this subject tell me it's part of the human condition, not just a sympton of "management" and business life. How long did Bernie Madoff think his Ponzi scheme would escape discovery? Did Ellliot Spitzer or Tiger Woods delude themselves into believing their dalliances would never come to light? Is America in denial regarding the long term effects of public spending far beyond its means? Or that the American standard of living is sustainable? Or that living on the San Andreas fault line makes good sense? Denial comes in so many flavors and colors.
One had better first decide whether denial is an ACTIVE disregard for facts and circumstances or a more subtle expression of preferences that we don't question (challenge?) a conventional wisdom, status quo, and/or desired pathway and outcome. And figuring out whose ox might get gored is central to the assessement. Those insights can help shape the answer to the really important question I see in Professor Heskett's introduction....."what can you do, if anything, if you believe that the people to whom you report are in a state of denial?" Then it's a personal decision.....is it a cause worth fighting? Can a non-threatening way be found to allow others to get back off the limb I think they're out on? Can one person make the difference? Am I alone or can I enlist others?
Do I have the time, energy and position to change minds? Or do I just walk away and find myself a more open and enlightened group to be part of? Answering those questions might help one decide what to actually do. If it's just a job.....well, those can be replaced. But some "denials" may be too big, too important for us to ignore.
In my view, every professional needs to build the internal reinforcement system that helps us take positive actions when we see our organizations beginning to detach from reality.
Here are the five actions we all need to be able to do skillfully to avoid falling into denial or colluding with it:
1 - Making healthy compromises (being willing to face hard truths and adapt to them ourselves)
2 - Candid conversations (practicing with being honest about what we can and cannot deliver and when we disagree)
3 - Positive limits (if we know we can say no in ways that do not invite retaliation, we are more likely to face the situations where we need to set limits. Dr. Ury's The Power of a Positive No offers an excellent model for how.)
4 - Skillful influence (knowing how to bring in information from trust sources, connect the dots between those who see risks with those we need to act differently, demonstrating new options, etc, so an organization with its head in the sand can see its way out)
5 - Constructive exit (always being willing and able to leave if the conditions become untenable, and doing so in a way that has the most positive impact)
These do not necessarily require a lot of drama, but we do need to commit to act on them whether our organizational culture supports them or not.
And we shouldn't wait until we see the organization is in denial -- the time to act on this is BEFORE the denial, practicing being different in constructive ways from the beginning.
One coach I know advises his clients starting a new job to ask their boss right away, "How do you want me to disagree with you?"
Isn't this really what we mean by taking responsibility?
Regarding the future and the present, I had this wonderful Mother-In-Law who had this rare and remarkable ability to strip away all emotion and sentiment to view reality unclouded by wishful thinking or other psychological traps.
The golden rule for improving decision making is to learn from your mistakes. This requires both the discipline to record and preserve the rationale of a decision as it is made, and also the discipline, courage and freedom from fear to conduct an impartial and honest assessment.
The medical profession enforces a peer review which forces doctors to face the brutal facts about decisions that they made.
With respect to denial, some executives and teams handle this well and others poorly. There are tools and practices that we can implement to overcome the psychological trap of denial.
I believe denial is not seeing data at all or seeing it and coming to an erroneous conclusion within oneself. That's different from seeing the data, coming to the correct conclusion within oneself and nonetheless pursuing a course of action contrary to the internal conclusion. I believe the latter is called politics. So, for clarity, perhaps in this article it would be worthwhile to distingish a bit more robustly between the two. But both certainly need this investigation and more. Happens all the time and it's especially damaging when the lapse is strategic.