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Admit it: You're in denial

Richard Tedlow
Richard Tedlow is the Class of 1949 Professor of Business Administration at Harvard Business School. His most recent book is Denial: Why Business Leaders Fail to Look Facts in the Face -- and What You Can Do About It.

If any business leader could stare facts squarely in the face, it would seem to have been Henry Ford. His hard-headed analysis of mechanics, manufacturing, and marketing produced the legendary Model T, which put America on wheels and made Ford a business titan. More than 15 million Model T's were sold in the two decades after its introduction in 1908.

But something happened. By 1927, Model T sales had flagged so severely that Henry Ford discontinued the line in order to retool his factories for its successor, the Model A. To make the change, he shut down production for months, at a cost of close to $250 million. This chain of events was disastrous for the company, because it allowed Chrysler's Plymouth to gain market share and permitted General Motors to seize market leadership.

Why did Henry Ford, who was such a visionary in the industry's infancy, fail to see that the Model T was about to run its course and that a smooth transition to a new vehicle was essential? After all, evidence of the Model T's declining fortunes was everywhere apparent at the time. But Ford dismissed sales figures documenting the product's declining market share, because he suspected rivals of manipulating them. When one of his top executives warned him of the dire situation in a detailed memorandum, Ford fired him.

Ford wasn't stupid. He wasn't ill-informed. He wasn't merely mistaken. He was in denial.

Denial is the unconscious calculus that if an unpleasant reality were true, it would be too terrible, so therefore it cannot be true. It is what Sigmund Freud described as the combination of "knowing with not knowing."

Denial is one of the most common and potentially ruinous obstacles that managers face. From Ford to General Motors, Sears to Lehman Brothers, it has torpedoed many good businesses.

Why would any sane, smart executive deny a fact of critical importance to his or her business? Because, to state the obvious, he or she is human. From the alcoholic who swears he is just a social drinker to the investor who refuses to open his 401(k) statement after a market crash, denial permeates every facet of life. The impulse to avoid painful truths, just like the impulse to avoid pain itself, is a part of human nature.

There is no foolproof way to escape denial. But there are tell-tale signs of its presence in an organization. And if you don't spot it, you can't fight it.

Ask yourself:

1. What happens to the bearer of bad news? Does your firm "shoot the messenger"? Doing so doesn't change reality, but it does send a clear message: Those who voice disagreement or "speak truth to power" do so at their own risk. Which means you'll find it awfully hard to discover the truth thereafter.

2. Are meetings more interesting after they are over than while they are in session? Do colleagues wait to secrete themselves in their offices before speaking frankly to one another because they see no point in being candid when the boss is present?

3. Does your company argue about the actual workings of the business or about the motives and methods of the people putting forth ideas? People versus principles. Think about it.

4. Is your firm putting up a big building or constructing an elaborate campus? Why? What is it ignoring while it is engaged in celebrating itself?

5. Would you rather be conventionally wrong or unconventionally right? If you answer the latter, odds are you are in denial. "Think different" is what Steve Jobs told his colleagues when he returned to Apple in 1997. The results of Jobs's exhortation speak for themselves. But at how many firms do people really think different? By definition, not many. Is yours among those favored few?

The executive can defeat denial, and the rewards for doing so are princely. How do you do it?

First, you must find out what the facts really are. You have to separate rock solid truth from the surrounding haze of assumption. That is what Jim Burke, CEO of Johnson & Johnson, succeeded in doing when Tylenol was mysteriously poisoned in 1982.

Second, you have to deal with perspective. That is to say, you have got to see the world through a point of view other than your own.

Here is an example. In the midst of a crisis at Intel in 1985, Andy Grove found the way out by constructing a "virtual" Andy. He and Gordon Moore, his boss and one of America's greatest technologists, were fighting what appeared to be a losing battle against an impossible business dilemma. At a loss, Grove finally asked Moore, "If the board kicked us out and brought in new management, what do you think they would do?" Suddenly, the answer to the issue they faced became obvious to both men.

Why? The question did not make either man suddenly smarter. Indeed, both are quite smart enough. Denial is not as much about IQ as it is about point of view.

What Grove's question did was to strip away his and Moore's self-imposed blinders. The two men could look at the issue they faced with a new frame of reference, unencumbered by the dead hand of the past. Liberated from history, they saw clearly and decided rightly.

You can't afford to deny denial. So learn to recognize it. The more we remind ourselves of our capacity for self-deception, the less likely we are to succumb to it. Blind spots in a car are inevitable, but good drivers train themselves to become aware of them and take appropriate precautions. So it must be with managers and denial.

Henry Ford was in many ways a brilliant man. But he was painfully unaware of his blind spots. This ignorance cost him and his company a great deal. Don't let the same happen to you.

By Richard S. Tedlow

 |  February 26, 2010; 10:29 AM ET |  Category:  Leadership skills Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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MTLUMPKINS, what on *earth* does your comment have to do with this article? You must have had multiple tabs with multiple articles open, and accidentally went to the wrong one.

Perhaps it's useful to compartmentalize before attacking Professor Tedlow for his take on the elder Ford. That is, the professor is clearly saying essentially the same criticisms as some here have, but restricting his focus, as a professor of business administration, to a purely business context. And in that context, the Model T and production line *were* brilliant innovations.

Similarly, Hitler was the motivator behind Volkswagen -- "the People's Car." Very much "Model T Gone German." That doesn't make Hitler a nice guy, just as the Medol T doesn't make the elder Ford a nice guy. And *had* they been the nicest guys in the world but they're cars had failed -- they still would've been nice guys.

Two different issues.

It is true that if we make a single, holistic judgment of Ford of the Model T, many -- probably most -- of us are going to come down on the side against him. Except for people such as members of the KKK, Aryan Nation, European neo-nazi movements, admirers of Iran's President Mahmoud Ahmadinejad, and the like.

Posted by: MekhongKurt1 | February 27, 2010 3:25 AM

John S. Reed, a founder of Citigroup said the following about the attitude of current top executives on Wall Street: “There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”
NY Times, 01-09-10

This is an example of denial and self-rationalization that goes beyond the status of any specific corporation. Based on this delusion, the Big Wall Street executives are fighting any substantial regulatory change, denying that anything is seriously wrong, and trying the perpetuate a status-quo which will allow them to wreck the entire economy again just as they have in the recent past.

Posted by: twm1 | February 27, 2010 12:36 AM

Andy Grove went into full denial mode when the Pentium coprocessor had an obscure math error. --- I read the numbers to be divided in the newspapers, my HP calculator got it right, my Excel running on that P1 got it wrong. --- Intel said for weeks that nobody would ever have a problem, but ended up replacing millions of chips at a cost of about $500 million. --- Now we have Toyota claiming floor mats jam on the gas, when the electronics are clearly at fault. One crash occurred when the floor mats had been stored in the trunk. Then it was supposed to be a faulty plastic part of the gas pedal mechanism, etc. Talk about denial...

Posted by: isenberg888 | February 26, 2010 11:56 PM

A bit off subject, but of tremendous importance:

Henry Ford's decision to shut down Model T production in 1928, and waiting a year and a half to begin production of the Model A, was the single most important EVENT precipitating the Great Depression.

Posted by: rbdave | February 26, 2010 11:09 PM

Many executives believe themselves to be brilliant. In their minds, they alone are responsible for and able to achieve business success. Any opposition from the direct reports or their direct reports is a demonstration of incipient unrest that likely leads to chaos and business failure. Best to nip that in the bud by discharging the trouble makers. Sociopathy is rampant in executive suites. These are people who are able to appear competent to a board of directors as they invisibly abuse the power they wield to bad ends. One such executive I know survived for more than a decade. Only when he tried to stage a coup d'etat did his sociopathy become apparent to those people who had the power to show him the door. Those who had suffered under him were relieved to see him go.

Posted by: BlueTwo1 | February 26, 2010 10:35 PM

Talk about denial! Let's not forget that Ford was a notorious antisemite who made no secret of the fact. But he was was far more dangerous than your average, small-town Jew-hater -- he was a crank with millions of dollars to spend on spreading his prejudices. He paid to have 500,000 copies of the Protocols of the Elders of Zion printed, published a barrage of antisemitic screeds in his newspaper, The Dearborn Independent, which he required his dealers to distribute, and was a great and open admirer of the Nazis. He set up a detective agency to investigate the private lives of prominent Jews. His antisemitic book "The International Jew" is still in print. His company helped arm Hitler at the same time Ford was resisting converting its American factories to war production. He was a guy who came up with one good idea -- build a simple, reliable car on an assembly line and sell it to average people at a price they could afford. He did that well -- but as Professor Tedlow documents, he never got beyond that one great success. Ford was a one-trick pony and otherwise a dysfunctional, destructive nutcase whose grandson, to his credit, spent an inordinate amount of effort trying to undo the damage the elder Ford had done. It's time to stop holding him up as a model 20th Century industrialist who suffered from a few minor flaws.

Posted by: HLM501 | February 26, 2010 9:55 PM

Ford is a great American Automaker. In the past few months, Ford won many awards-safety, efficiency...- for several of its models. With Toyota's safety problems, Ford could become the world's greatest automaker. I'm replacing my Avalon with one of Fords' models.

Posted by: editor4tonio | February 26, 2010 8:08 PM

likovid wrote:
"Ford was prominent and influential in making America the great power it became and still is now. He contributed immensely to wealth creation for the country and to the formation of its great middle class, unlike some of the renowned financial billionaires that we have now, trumpeted as some kind of geniuses while they produce wealth only for themselves with phony, highly-leveraged financial instruments and transactions while the rest of society declines into poverty."

Well put! Now, back to your inane rants everyone else!

Posted by: fireball72 | February 26, 2010 7:37 PM



Posted by: jcck | February 26, 2010 7:15 PM

Others have noted Ford's anti-semitism, and it probably didn't help his sales that for several years in the early 20's, he was peddling copies of "The International Jew" right there in his dealerships! Talk about clueless.

Posted by: andym108 | February 26, 2010 6:39 PM

Freepost wrote:
"Ask yourself the same question about Obama. Why is the man so arrogant, so presumptuous, and narcissistic? Why does he want to ram his health care bill through Congress when the vast majority of Americans don't want it? Why is he hell bent on attacking American businesses and in enacting redistribution economics? Why has he abandoned the inner cities? Why is he harsher with the Republicans than he is with America's enemies such as Iran? The lis goes on and on..."
I think that he is "arrogant, so presumptuous, and narcissistic" is that it is a sign of the times and generations. Yournger generations are even more arrogant, presumptuous and narcissistic as well as entitled.
You say the majority of Americans don't want the health bill, which is true, but if you are one of the 30 mil that doesn't have health care or the 20mil more that will lose their health care over the next few years, you would want it. It is hard to have a majority, when you already are a minority.
I'm not sure why he is attacking business and wanting a redistribution of wealth. I am sure it has to do with the huge gap between a 15k a year earner and a 300k a year earner. If more people at the bottom had maoney, there would be an increase in the amount of people that would be able to start businesss. Maybe, Still not clear either on this.
I don't think that he has abandoned Inner cities, but how do you propose to do anything there when even the word taxs makes people hate him more.
He is harsher on Republicans because they mean to stonewall all of his ideas in thinking that their ideas are better, which has never proven to be the case. Republicans want to control all of government and that's it. The funny thing is is that neither party are correct in anything or are doing what their actual jobs should be. When one side does something wrong the other side jumps on them to get elected only to sdo the same mistakes that the other party did and the cycle repeats.
Iran is not Americas problem alone. It was The Republicans that helped give them the power that they have. Has anyone ever heard of the "October Surprise"?
The list does go on and on but why is it that we are so blind to anything that happened before and only see the problems we have today? Why blame the person to that sweeps up the ashs and trys to fix things when it was someone else who originally started the fire?

Posted by: ai3di | February 26, 2010 6:12 PM

I have heard some people in the media claim that the politics of hardliners of Iran includes Israel bashing with rhetoric started by Marx such as "arrogant ones". People deny these threats claiming a norm for Iran referencing 1979 Revolutionary rhetoric.

Radicalization of "True Believers" starts with extremist rhetoric and yet people try to minimize (a form of denial) hardliner rhetoric which excites violence against non-Muslims.

Blind spots to me have been witnessed not through denial as much as perceptions through my own vision exclusively which does contain certain amounts of societal conditioning known as contempt prior to investigation (ie. politics) or status quo thinking. I hope that I have shown gratitude when perspectives outside my personal bubble have been revealed to me. Psychology has also demonstrated same concepts through the Jakarta (sp) window model.

Posted by: truthhurts | February 26, 2010 5:11 PM

I read a bit about all the major car campanies and saw that they all were in and out of banckuptcy. Why did we bail them out this time since it has been proven that a business can be rebuilt better if left alone? I heard it was because the government offered them insurance that they then spent, so when the car companies needed it, there wasn't anything left for them, and instead of letting these companies call out the government for the insurance scam that was being run, they had to give in and bail them out. Not sure how much of that is true, but I don't doubt it.

Posted by: ai3di | February 26, 2010 4:52 PM

Ford was a contemptible man. To use him as an example of a successful businessman is to ignore all the truly terrible things he did to the people who worked for him, not to mention his antisemitism. He would better serve as a model of the sociopathic industrialist, of which this country has minted many.

Posted by: fatman985 | February 26, 2010 4:40 PM

Obama is the one who has the information before him and refuses to ignore it ...

Posted by: JimZ1 | February 26, 2010 3:55 PM

So true, so true - probably what pisses off most Anti-Obama folks - he speaks to the nation as if we are adults.

Posted by: JohnDinHouston | February 26, 2010 4:40 PM

And let us not forget that Ted Kennedy's father, Ambassador Joe Kennedy, was a virulent anti-semite and Nazi sympathizer who openly admired Adolf Hitler.

Posted by: screwjob2 | February 26, 2010 4:15 PM

Freepost has it exactly backwards. The GOP obstructionists are the cantankerous Henry Fords in heavy denial, staring 30 million Americans in the face and saying "You don't have a big enough problem to be worth a good-faith effort from your government." Their preferred Model T version of health care coverage is at the end of its useful life, and they refuse to acknowledge it.

And Obama is the clear-minded top executive whom they want to fire. LOL!

Posted by: mrjah | February 26, 2010 4:13 PM

Freepost wrote:
"Ask yourself the same question about Obama. Why is the man so arrogant, so presumptuous, and narcissistic? Why does he want to ram his health care bill through Congress when the vast majority of Americans don't want it? Why is he hell bent on attacking American businesses and in enacting redistribution economics? Why has he abandoned the inner cities? Why is he harsher with the Republicans than he is with America's enemies such as Iran? The lis goes on and on..."

Obama is the one who has the information before him and refuses to ignore it. If that comes across to Republicans as arrogance that only reflects the state of Republican denial. There are 30 million people currently without health-care, and if reform is not implemented quickly, the Medicare program will fail and expose another 50 million people to catastrophe. All told, that would be 80 million people who would need health-care compared to the 3 million people the GOP intends to cover. With math that simple I can see someone becoming incredulous when confronted with people in such a state of denial that they cannot or will not see it.

Posted by: JimZ1 | February 26, 2010 3:55 PM

Ask yourself the same question about Obama. Why is the man so arrogant, so presumptuous, and narcissistic? Why does he want to ram his health care bill through Congress when the vast majority of Americans don't want it? Why is he hell bent on attacking American businesses and in enacting redistribution economics? Why has he abandoned the inner cities? Why is he harsher with the Republicans than he is with America's enemies such as Iran? The lis goes on and on...

Posted by: freepost | February 26, 2010 3:27 PM

this article DESCRIBES mayor slay of THE CITY OF ST.LOUIS,from himself to all his
appointee's under him. the city is under a
full scale INVESTIGATION,by the STATE OF MISSOURI,and THE F.B.I. for corruption under slay's administration.this is the same guy who has his EYE on running for the senate! the city is financially broke,
from all the missing moneies,myself and other city resident's can hardly wait for the F.B.I. to finish their INVESTIGATION..
and wait for the deniability to start,as it already has and will continue..hopefully

Posted by: mtlumpkins | February 26, 2010 3:02 PM

back to the real topic, Henry Ford is a great example of someone who believes his luck was part of his own design, i.e. a case study in denial. I've always felt that denial is the first step a person takes when confronted with a problem because it has been so effective for that person in the past. Consider a fabulously successful person who simply doesn't know that luck has played an important role in his previous successes (like Ford). If you have never been swept asunder by some problem, why would you expect the current problem to not prove transient? This is why denial is the first step in the grieving process.

Posted by: spam21 | February 26, 2010 2:46 PM

The old saw is: "It is hard to convince a man of one thing when both his reputation and his livelihood is dependent upon him believing the exact opposite."

I wonder if Al (The science is settled)Gore and the other global warming men of his ilk ever consider this point?

Yes, denial is a terrible thing. But sometimes it can be quite a profitable gambit in the short run.

Posted by: pgould1 | February 26, 2010 1:58 PM

Gee Likovid, talk about denial....

Posted by: morth | February 26, 2010 1:56 PM

Oh, boy, did YOU pick the wrong business executive to use for an example. Henry Ford lived his entire life in denial. He so desperately wanted to have a "rags to riches" story he completely hid the fact that he grew up in a wealthy farming family with parents who could indulge his budding interest by buying him farm engines to tinker with. The guy invented nothing, really. He was just smart enough, and lucky enough, to incorporate the assembly line at the time America needed lots of cheap wheels. Anybody who has ever visited his Greenfield village in Detroit can see this is a man for whom denial was a way of life. He financially supported the Nazis and published the PROTOCOLS OF THE ELDERS OF ZION, and yet denied he was an anti-semite. Now THAT'S quite a feat of mental gymnastics!

Posted by: gasmonkey | February 26, 2010 1:42 PM

To further the comments of mooshoo1: Ford wasn't merely "a bloody antisemite"--he sent a few million of his dollars to the German Nazis, to aid, abet and directly collaborate with them in their "final solution" of concentration-camps/mass-murder. If you know automobiles you also know that Ford products have traditionally been made "on the cheap". The best designed Ford products these days are actually the Volvos they bought in the '90s; just as the best GM cars of today are the SAABs GM snagged back then.

Posted by: marc85 | February 26, 2010 1:34 PM

fr mooshoo1:

>Let me just point out that Ford was a bloody antisemite...

He was also rabidly anti-union, and employed his little "service squad", with ex-cons, to break up union activities and meetings, as well as to report to him those employees who were pro-union. Those who were pro-union were quickly fired, which is ILLEGAL today.

(Too bad wally world and sammie's club don't realize that!)

Posted by: Alex511 | February 26, 2010 1:25 PM

Ford was most prominent and influential in making America the great power it became and is now. He contributed inmmensely to wealth creation for the country and to the formation of its great middle class, unlike some of the renouned financial billionaries that we have now, trumpeted as some kind of geniuses as they only produce wealth for themselves with phony highly leveraged financial instruments and transactions as the rest of the society declines into poverty. Tedlow is probably a fan and supporter of this latter clan, but I guess, being a Harvard proffesor, he gets to rewrite history.

Posted by: likovid | February 26, 2010 1:03 PM

Let me just point out that Ford was a bloody antisemite. To use him as an example of leadership, would be tantamount to using a grand wizard of the KKK for a good example of leadership.

Posted by: Mooshoo1 | February 26, 2010 1:01 PM

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