The Danger of Denial

Talent Management

February 17, 2013

by Marshall Goldsmith

We all have an incredible ability to deny what we don’t want to see coming – even though it may be obvious to everyone around us.

In the 1980s, I appeared on a videotape that was widely distributed as part of a leadership development course for IBM managers. On the tape, I suggested that small computers – more powerful than existing mainframes – would soon be on desktops everywhere and that they would cost less than $5,000. Anyone could have figured this out. All I had to do was look at the path of technological innovation and make a reasonable guess. Many people in IBM knew what was coming – they were just in denial about how fast it would happen. After losing billions of dollars, the IBM board woke up and decided to get new leadership. They changed the company, and IBM made a remarkable comeback.

After making my first free VoIP phone call to a friend in Asia, I suggested to a group of AT&T leaders that they were facing an incredible competitive threat. It seemed certain that AT&T’s profit margins on long-distance calls were going to start disappearing and that their historic profit machine was going to go away. I don’t know much about telecommunications – it just seemed obvious. Several executives laughed at my comments, and said that the “quality of competing technologies was no good” and that their long-successful business would continue to generate huge piles of cash for years to come. They were in massive denial. After watching billions of dollars of profit disappear, the AT&T board finally woke up and decided to get new leadership. In their case, it didn’t work.

I just returned from a trip around the world. As an American, what I observed was sobering. Within the next 20 years there will be millions of brilliant, highly educated knowledge workers flooding the global job market. They will speak fluent English. They will be incredibly motivated to improve the quality of life for themselves and their families. They will have deep expertise in many fields. They will be willing to work for less than supermarket checkout clerks in the United States.

I had the chance to meet many of these young men and women. They appreciate and value learning. They are grateful for the chance to grow and to develop their skills. They are willing to invest in their futures.

Many Americans don’t have a clue what is coming. Our political leaders are in denial. Both political parties imply that, given a level playing field, the American worker will win. This is easy for them to say – it’s what voters like to hear. Unfortunately, it is far from reality.

Can you imagine most Americans’ reaction if the German, French or Japanese people even implied, “Given a level playing field, we will always win.” Americans would consider this arrogant and would be appalled at this incredibly offensive comment. How do you think the rest of the world feels when it hears our leaders talk this way?

I haven’t met too many American workers who have IQs of 160, outstanding educations and the willingness to work 80 hours a week making less than $20,000 a year. I have met many workers who would, and they are from Eastern Europe, India and China. Given a level playing field, we won’t always win!

Former Intel Chairman Craig Barrett recently said that he feels positively about Intel’s future, but is concerned about his grandchildren’s future. He is apprehensive that as Americans, “We somehow think that we have a God-given right to be the world’s number-one economy.” Barrett believes that if Americans don’t increase our efforts in research and development, and dramatically improve our education system, we may lose our leadership. He’s right. Barrett has the courage to tell the hard truth, and we should all be listening.

I’m not suggesting that America cannot meet this new challenge. The United States has a history of continued innovation and flexibility that few countries can match. I’m just suggesting that it won’t be easy. The rest of the world is catching up faster than we want to admit.

Like IBM and AT&T, Americans are going to have to face the competitive reality that exists, and make the necessary changes or suffer the consequences. Unlike a company, a country doesn’t have a board of directors. We, the citizens, are the board. We need a new kind of leadership. We need leaders who tell us the hard truth and challenge us to face the competitive reality that exists. As Barrett suggested, we have to make continuing education a top priority. We have to invest in our people and our future. We have to let go of the arrogance that says, “We will always win.” We will only continue to win if we deserve to win.

We have to recognize the danger of denial – the sooner the better.