February 12, 2010
Jack Covert Selects: Jack Covert Selects - Denial
Denial: Why Business Leaders Fail to Look Facts in the Face—and What to do About It by Richard S. Tedlow. Portfolio, 272 Pages, $26.95, Hardcover, March 2010, ISBN 9781591843139 Professor Richard Tedlow, author of two of my favorite books, Andy Grove and Giants of Industry, has written a book that tells memorable stories of business leaders who were in denial and whose businesses (think Sears, Coke) were subsequently affected by their inability to see the forest for the trees. This new book, Denial, begins entertainingly with the story of Henry Ford. In the early 1920s, Henry Ford was crushing his competition: the Model T was a spectacular success. Tedlow tells us that “It took seven years for the company to sell its millionth Model T. Only a year and a half later, it sold its two-millionth. Four million were sold by 1920. The number of units sold doubled by 1923.” At the same time, the automotive industry was changing as the country went from a war economy to greater prosperity. Ford wouldn’t listen when his people warned him about Alfred Sloan, at General Motors, who believed that the consumer wanted something more than a black car. In fact, Ford fired an executive who wrote a memo about GM and called for Ford to change in order to compete. Henry Ford was in complete denial. There are plenty of business books about the dangers of ignoring your competition—I’m thinking of Clayton Christensen’s The Innovator’s Dilemma and Andy Grove’s Only the Paranoid Survive, both of which warn of disruptive innovation and being able to predict moments of competitive crisis. Tedlow’s Denial looks at why so many companies get it wrong. He also offers common signs to watch out for so your organization avoids this trouble—or at the very least can find a way out of the forest.