subject: Don't say no – the perils of executive denial [print this page] Don't say no the perils of executive denial
Blind spots kill more businesses than rivals. And all blind spots begin with not facing up to reality. Tony Scott explores a critical corporate illness, its symptoms and its remedies.
Don't say no the perils of executive denial
Mahatma Gandhi, the 20th-century Indian pacifist and politician, said once: Everything that happens to you is your teacher. The secret is to learn to sit at the feet of your life and be taught by it.'
It sounds simple enough. But it isn't easy to do. If it were, there would be more Gandhis in the world and fewer businesses in distress.
There's another complexity, too. While it is relatively easy (or at least seems to be) to see where other people are going wrong, it's extraordinarily hard to notice where you're going wrong. By definition, your own blind spots are invisible to you.
Yet not seeing them or worse, pretending to the world, your colleagues and yourself that they're not there carries enormous risks. Corporate demoralisation, financial loss, potentially collapse.
Bob Chase, a company doctor, argues that executive denial has a curiously paradoxical quality. You'd expect it to be worst in a badly run business led by not very bright people. In practice, in my experience, it affects most strongly the leaders who are most intelligent and most competent.
There seems to be a circular argument taking place in a leader's head. Something along the lines of: "I'm pretty competent and smart. Therefore I can't have missed anything key. So if things are still not going right, it must be because no significant improvement is possible."'
A London business turnaround specialist, Nigel Atkinson, says that the problem is often compounded by the unwillingness of colleagues to question the leader, precisely because the leader has a deserved reputation for intelligence and competence.
Perhaps the worst effect is that leaders start feeling helpless and demoralised,' says Nigel. They feel: What's the point? That depression can turn to anger, which makes the problem worse particularly if they aim the anger at someone trying to help. And it can spark very real and paralysing fear.'
Once that happens, it can seem impossible to find a way out. There is, he says, an inability to develop options'. Typically, middle managers who become aware of this high-level paralysis yearn for clarity, and are eager to have someone tell them what to do. Senior managers are more likely to shoot the messenger.
Yet in the real world, there are always options even if they don't look attractive. There are always at least four strategic choices in business: get bigger; get smaller; get out; or do nothing. And the first step in most crisis situations is to withdraw the business to an area you can defend.
But executives who are in denial can't easily face these choices. Consider, for instance, a listed company with which one firm of company doctors is currently working. The company is 50.1 per cent owned by a family. It has a turnover of around 60m, and two joint chief executives. And it is losing money.
The Board can't face getting bigger because the family fears diluting their shareholding and losing control. They can't face getting smaller because that will mean losing some long-standing staff and shrinking their own benefits to match; that will cramp their lifestyle and is already making them worry about what other people will think. They can't face getting out because it would look like failure and a betrayal of the family's legacy. So they're stuck for the time being with the worst option: do nothing.
All this raises two questions:
How do you spot a blind spot?
What can you do about it?
Despite the difficulties, it is possible at least to glimpse the truth if you or your colleagues are playing ostrich. Here are six symptoms to look out for. One in your own company is worrying. Several are cause for serious alarm. At the very least, it may be worth bringing in the fresh eyes of an outsider to check whether your concerns have any foundation:
1. There's more chat in corridors than round meeting tables, and the chat is largely inconsequential or personal, not focused on the business.
2. A welter of studies market, feasibility and all the rest and a heap of thick papers serve to prove' that the Board has thought of everything. But there are few, if any, live small-scale, low-cost experiments. As William Goldman, Hollywood screenwriter, puts it in his book Adventures in the Screen Trade: Nobody knows what will work... until it does.' And as the economist JK Galbraith said once: Faced with the choice between changing one's mind and proving there is no need to do so, almost everyone gets busy on the proof.'
3. Meetings are uncommonly well-behaved but rather dull.
4. Initiatives generate unanimity, not debate. The Japanese custom of waiting for the boss to pronounce first may help corporate harmony. But it is not a recipe for creativity or radical change.
5. A mood of depression or hopelessness dominates the Boardroom, interspersed with flashes of irrational anger.
6. There is an almost total absence of contingency thinking or planning. Nobody asks: What if...?
What remedies are worth trying?
For my money, Napoleon had it right when he wrote: Strategy is a simple art; it's just a matter of execution.' So does Richard Branson: I've always merely tried to make the figures fit the ideas I've had, rather than the other way around. I guess that's doing it backwards.'
But those maxims, sensible though they are, won't necessarily help a team of executives who are mired in gloom, unable to see a way out, and resisting the notion that any exit is possible. What more commonly helps is to approach them as if they were recovering from a heart attack or a broken leg.
Anyone convalescing from such a trauma is bound to be nervous of putting weight on the leg. Anxious about stretching further or tackling a hill because he or she is frightened of making the problem worse. Quite understandably so. In these circumstances, hectoring will only make matters worse, stiffening resistance and paralysing movement.
The more effective approach is gentler.
Help the leaders to take small decisions, and to contemplate small changes. That way, confidence gradually returns. And with it comes a willingness to develop new options... and an ability to see the next step... and the one after that.
