Posted on The Change Master: December 7, 2009 1:11 PM
Denial dogged my travels around the world these past weeks. At a World Economic Forum gathering in Dubai just before Dubai World's debt problems made headlines, the head Sheikh touted Dubai's superiority over the West for problems that Dubai had seemingly avoided. But the idle cranes and empty buildings I saw were monuments to denial that global economic interdependence would pose a limit to Dubai's risky post-crisis speculation. Rather than change strategy, Dubai Inc. continued business as usual—and failed. The Sheikh denied the failure, telling the press that the world just doesn't understand.
When I arrived in Australia, denial was undermining carefully crafted government action to reverse global warming. Revelations of foolish emails by U.K. university scientists fueled climate-change-deniers and skeptics about Prime Minister Rudd's emissions trading scheme (ETS). The government wanted the ETS ahead of the Copenhagen talks, to make Australia, which faces drought and desertification, an international leader in reducing carbon emissions. Opposition party leader Malcolm Turnbull was set to join Rudd in passing the legislation. But the leaked emails gossiping about weaknesses in the science destroyed the coalition. Deniers of global warming joined with change-skeptics to remove Turnbull, discredit Rudd, and destroy a consensus solution.
Meanwhile, closer to home, Fritz Henderson's exit as General Motors CEO seemed the result of ongoing denial of the need for radical change. GM's initial plan presented to Congress in November 2008 was full of denial, as I indicated then to the Wall Street Journal, stressing better execution on what was already underway, not significant change. GM's struggles continued long after bankruptcy, bailout, and emergence from bankruptcy. Henderson talked "culture change" but the strategy represented continuation of that same pre-bailout thinking.
Arrogance of power fuels denial. Executives flush with memories of past successes sometimes think that they are above the facts, that the facts don't apply to them. Deniers prevent change when they give lip service to problems but reject solutions that would require sacrifice or wrenching turns. Perhaps GM was on the right track all along (doubtful as that seems), but Henderson's forecasts were considered too rosy by his own board, and his progress too slow.
Deniers gain followers because the "no change; carry on as usual" message is comforting. Doing nothing different or nothing at all—is easy. Everyone has silent veto power. Deniers can simply sit on their hands, miss meetings, lose reports, or let timetables slip. Presto! No change.
Whatever a change agent's cause—global warming, ending risky financial speculation, reforming pay to reward performance, corporate culture change, or innovation in an established institution—confronting denial is essential. A few tools can help.
1. Unassailable facts. Change advocates must make sure the evidence they marshall is beyond reproach, which often means from multiple sources. A setback occurred in the U.S. Congress's first pass at health reform legislation when the Congressional Budget Office presented cost figures higher than the administration's numbers. Oops. Small flaws discredit the case for change. 2. Counter-arguments. Supporters watch how leaders handle skeptics and critics. Each counter-attack must be answered. Change advocates must know the other side as well as their own. They must confront, not deny, alternative explanations and respond with compelling arguments, sometimes incorporating grains of truth in skeptics' positions. 3. Big Picture. Significant change rests on beliefs, not just facts; the future is inherently uncertain, facts only a starting point. Change leaders must cultivate fired-up stakeholders by identifying long-term benefits valuable to many. Leaders must inspire belief that they stand with and for stakeholders' values and goals. In Australia, former opposition leader Turnbull thought it would be enough to have facts on his side, but when climate-gate exploded, he lost both the facts and constituents who had grievances with him. 4. Pressure and repetition. When pressure for change is in deniers' faces every day, they often succumb. RBS and Goldman Sachs became recent converts to reduced bonus schemes, despite worrying that they'd lose talent, because multiple media repeated public outrage amplified by public sector regulators. Staying on message and communicating often can sometimes defeat denial.
Fact-based management is lauded as the best way to run any organization, and I generally agree. But answers will never come directly from analysis. There is always judgment and politics. When facts become subject to interpretation, or when science is discredited, then denial grows beyond garden-variety change resistance. All that remains is leadership. Let's hope there are enough far-sighted leaders to defy denial and accelerate productive change—whether in Detroit, Dubai, or the world.