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The Peril of Leaders in Denial

Posted on February 12, 2017 in Articles

Are you one of the leaders in denial?

Firstly, what is denial? According to Sigmund Freud described denial as a state of “knowing-but-not-knowing.” According to Harvard Business Review, the economist Paul Ormerod, on average, more than 10% of all companies in America disappear each year. Why? Denial is a one of the reasons—perhaps the major reason—for this constant failure. History has taught us that many great companies, and even nations falls because of leaders being in denial.  The question is, do we learn from them, or rather do we want to learn from them?

What do we know about leaders in denial? Here are five warning signs of a leader in denial:


What do we know about leaders in denial? Here are five warning signs of a leader in denial:

  1. Leaders who are blinded by their previous success.

    Nothing causes people to be blind-sided more than people who had just had a success. An encounter with success makes people think that they are indestructible. Success drives arrogance and pride. As the saying goes, pride goes before the fall.  Arrogant leaders fail to understand the changing reality and tend to overestimate their ability; soon they are taking on challenges too big for them leading to failure.
  2. Leaders who are comfortable and sticks to what worked in the past.

    This trap is one that leaders of successful organisations fall into on a regular basis. Believing that what they had done was the sole factor of achieving success. Hence they are more likely to stick to what had been done because the old realities worked so well for them. Older and more established organisations tend to stubbornly stick to the past habits and deny new realities which is dangerous to the organization where new challenges pops up ever so often.
  3. Leaders who distorts current reality.

    Leaders in denial put a positive spin on everything so that the new realities are nothing different from the current. Often leaders downplay current reality in an attempt to protect people from the challenge and not to create unnecessary concern. This causes the people in the organization to be lulled into a false sense of security.
  4. Leaders who blame everyone else but themselves.

    Blame is used as a defense where blaming others is easier than to face the reality. Leaders find it hard to deal with the situation of being in the wrong or losing control. By blaming others and not owning the problem to their own, it closes the door to change and being able to do something about the problem. A quote from Robert Anthony; “When you blame others you give up your power to change”.
  5. Leaders who have their inner circle filled with like-minded people.

    Leaders, seeking to re-enforce their ideas, thinking and ego surround themselves with those who hold the similar views, namely what we call as “YES” people. This creates a very unhealthy leadership team dynamics, which is not open to critique, or opposing ideas. Successful leadership teams needs an open environment where issues are able to be explored from different perspectives in order to facilitate sound decision making and commitment to a course of action. 
Freud himself was a victim of the very knowing-but-not-knowing that he described in others. He kept smoking cigars even after his oral cancer was diagnosed. Another leader who was also a victim, Henry Ford dismissed sales figures documenting the Model T’s declining market share, because he suspected rivals of manipulating them. One of his top executives warned him of the dire situation in a detailed memorandum. Ford fired him.

Both Freud and Ford were smart, successful men who paid a terrible price for denial. Don’t let it devastate you and your organisation too.


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