Thinking Managers

Robert Heller of demonstrates how denying the facts can lead to dreadful consequences.

Denial Must Not Be a Part of Your Business Strategy

The huge upheavals through which we have all lived must obviously result in lasting changes of massive importance. We must identify those changes and understand the nature of what has happened up to now. Of course, that is a problem for all thinkers. Managers have to both read the runes as accurately as they can and take effective action. There is the analogy with waging wars: however smart the staff officers, they don’t send the troops into battle. The commander has to plan and execute, as well as think and lead.

Unfortunately, the truth is that most commanders get set in roles and routines in which they feel most comfortable. Although this is understandable, it tends to end in tears. Because circumstances change, management has much need for discomfort. If business strategy and tactical thought lag behind, setbacks and struggles are never far away. This isn’t a case of sophistication. Toyota's problem, for instance, was fundamental. Although the company was pursuing the right aims, more or less, it was doing it in the wrong way. It’s impossible to disagree with the following verdict…

"A failure to deal with obvious problems was its biggest problem... First, when it comes to crisis management, the company stinks. Second, when it comes to manufacturing automobiles, Toyota isn’t what it was cracked up to be."

Observant managers will know that faults such as these are by no means rare. The author of the quote above is Richard Tedlow, a teacher of management at Harvard. He pinpointed the vital, stark truth. Neither the mistakes at Toyota nor the board reactions were special to that company: "If Toyota’s products were as fatally flawed as they were, that would be too awful to be true. Therefore that awful truth was brushed away."

Tedlow found this deadly flaw was so general in so many companies that it compelled him to write a book on Denial ('Why Business Leaders Fail to Look Facts in the Face’), reviewed in Business Week in April 2010.

Avoiding painful truths might be effective as far as it goes. It saves face and hides shame, makes it easier to protect jobs and sweeps crazy errors under the carpet. But that protection only goes so far – just ask Wall Street.

You should always ask these questions in moments of threatened danger:

• What happens to the bearer of bad tidings? Does the company shoot the Cassandra in question, instead of heeding and acting on what's said?

• Does the management avoid serious investigation of the risks in difficult situations?

• Is the competitive threat real and is the subject regularly reviewed and acted upon?

• Is false pride fuelling the company.

• Would the firm prefer to be conventionally wrong rather than unconventionally right?  

The cure for self-delusion is reality. However, self-delusion is far easier than grasping a painful truth. It was only revealed sins discovered outside the company that brought Toyota’s crimes to attention internally.

Despite this, the management remained in foolish denial, as if defective accelerators and brakes could be kept secret. Denial is a product of emotion, not reason, and emotions are very powerful. If the denials are accepted, the company can avoid all manner of terribly unpleasant outcomes – above all, the need to accept that its goodness and behaviour are wonders that cannot be doubted.


About the author
Robert Heller is one of the world’s best selling authors on business management.

  Robert Heller