Recognize and Avoid Denial in Business Decisions

If you think are you aren’t susceptible to denial, you’re in denial. It’s a difficult thing to manage, compared to simple lying, because much of denial can be unconscious and, as a result, more difficult to recognize and change. But, change we must, because denial prevents us from seeing and addressing critical issues that could greatly affect outcomes, both personally and professionally.

I find that, except for the news, we favor positive circumstances and sometimes deny challenges. We “see what we want to see” by checking the stock market or the score of the game only when we’re ahead. We look for positive weather forecasts and focus on the great things about our kids. This type of tunnel vision can make it hard to see the whole picture. It can also affect decision-making in cases where positive bias greatly alters assessments.

Psychologically, denial is a mechanism that results from the inability to cope with reality. However, there is an immutable fact about denial: it does not work as a long-term problem-solving mechanism. Reality always wins. And when it does, the next step in the process is blame, which shifts responsibility onto someone or something else. Blame eases the pain when reality bites. But, we need to take ownership of our actions and recognize that if we work to avoid bias and denial, we can often avoid having to face a harsh reality down the road.

Example of ownership, accountability, and responsibility:  "Ok, can we explore that more so I can understand it better?"  Example of blame, excuses, and denial Ah, well, that is because of X, Y, Z,..."

Bias is one of the greatest deterrents of accurate scientific analysis. I also believe social bias can be more impactful than statistical. These include our preconceived perceptions and assumptions. I am always amazed that many programmed employee selection tools outperform interviews, especially in jobs requiring specific skills. Similarly, the perceptions of many presentations are established in the first minute or so.

Cultural and environmental factors also affect bias. Dress, demographics, weather, location, and culture all affect perceptions in the decision-making process. These can also be used to your advantage when talking to colleagues by increasing bonding with similar people. Whenever I meet someone who is also from the Southside of Chicago like I am, agreement on differences becomes much easier.

Denial is more prone to happen when there is more complexity and variables involved in a situation. Our brains try to counter this by attempting to create simplicity. Once we understand that this is what is happening, we can use to our advantage. For example, we all know simplicity can help decision making by prioritizing, focusing, and pursuing clear goals. On the other hand, we need to consider multiple factors like rewards, probability, environment, resources etc. in making our decisions. Here are some examples where the two strategies can be complementary:  

  • The 80-20 rule (which states 80% of results are from 20% of effort) calls for focus to be more important than ever. Eliminating unproductive efforts is the most important aspect of the 80-20 rule.
  • More data, variables, and analysis are generally good, but it must be useful, valid, and correct. For example, if you are measuring an outcome, pinpoint the important factors rather than trying to measure everything. In particular, you should be careful to avoid random relationships and misinterpreting cause and effect. For instance, pre-pandemic data may be less relevant than before.     
  • Most efforts have multiple goals like sales, growth, profit, quality, good will, satisfaction, etc. What is the priority and importance of these goals and how are you measuring them? Personally, I am always battling writing long blogs that are intellectually interesting versus short practical blogs with specific recommendations.
  • There are tradeoffs among innovation, experience, excellence, risk, and quality. Quite simply, the more innovation you pursue, the more trial and error. In contrast, you want experience and quality if you are doing things like open-heart surgery.
  • Denial reduction can also be affected by our attitudes and mood.  Don’t underestimate the benefits of just taking a break or getting enough sleep in developing a more realistic approach.  One of the side effects of working from home may be an endless workday and a lack of distractions, which provides no time to relax and reenergize.
  • Balancing simple and complex tasks can be improved by focusing on your strengths and paying less attention to your weaknesses. For example, I have a client who has the best product in the industry, but charges a little more money. She has achieved success by moderating some prices, but mostly developing messages that explain her quality difference.
  • Don’t underestimate intuition, which is quite different from denial. While we continually get more data to make better decisions, we should not forget our gut feelings. Someone does win the lottery and some of the best outcomes come from low probability efforts. For example, the pandemic has caused great uncertainty about 2022 and there are lots of opportunities to take a little more risk. 
  • The use of virtual rather than rigid models can help deal with complex issues. They are easier to understand, diagnose errors, and manage multiple situations. In general, we are moving towards more flexibility in decision-making.
  • Openness can also facilitate avoiding denial. Organizations need to be open to measurement and feedback. Observing, understanding, and sharing financials, operations reports, and sales reports are the first step. Simple research tools that social media can provide can be used regularly. A management style such as the “walk around” and asking simply, “how are you doing, is there anything you need?” can be priceless. Look for alternatives and ‘what if’ discussions.

"You can avoid reality, but you cannot avoid the consequences of avoiding reality."  - Ayn Rand

We all experience denial, but it is our responsibility to admit when we’re allowing our own biases to influence us or giving in to our brain’s desire to simplify complex issues. Therefore, we must constantly work to develop safeguards that will help recognize, test, and avoid denial. Because when we can see the full picture clearly, we are able to react and respond in the most effective way.

Related: Fostering Connections in the New Norm