Guest Insights: Admit it: You’re in denial – Richard S. Tedlow

Admit it: You’re in denial

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.