Knowing Without Knowing

In 1913, Sigmund Freud wrote about "the strange behavior of patients in being able to combine a conscious knowing with not knowing" -- and went on to dramatically demonstrate the behavior personally, since he was diagnosed with cancer yet continued a habit of incessant cigar smoking. Beginning in the 1920s, Freud got regular reminders that he was risking death: He underwent more than 30 surgical operations to have precancerous growths removed from his nasal and oral cavities. 

This Verleugnung, as Freud called it, or "denial," is also common in the business world, says Harvard Business School historian Richard S. Tedlow. The behavior pattern was there when Henry Ford refused to acknowledge the signs all around him that car buyers were no longer satisfied with a one-size-fits-all Model T. It was there in the 1960s when Sears refused to take notice of the emergence of such discount retail chains as Target, Wal-Mart -- and Kmart, the company that would absorb the once proud Sears in 2005.

Tedlow's new book, Denial: Why Business Leaders Fail to Look Facts in the Face -- And What to Do About It is a provocative and enjoyable reflection on numerous business blunders and successes. These aren't just errors in judgment, mind you. They occur when executives avert their eyes from a reality of which they cannot but be aware. My review of Tedlow's book can be found at: http://www.dailyfinance.com/story/company-news/books-daily-finance-facing-up-to-the-awful-truth/19411308/