Richard S. Tedlow

Emeritus Professor

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Richard S. Tedlow is the Class of 1949 Professor of Business Administration at the Harvard Business School, where he is a specialist in the history of business.

Professor Tedlow received his B.A. from Yale in 1969 and his M.A. and Ph.D. in history from Columbia in 1971 and 1976 respectively. He came to the Harvard Business School on a fellowship in 1978 and joined the faculty in 1979. From 1979 through 1982, he taught First Year Marketing. His involvement in marketing has continued, and he has been a member of the faculty of the "Strategic Retail Management Seminar," the "Top Management Seminar for Retailers and Suppliers," "Managing Brand Meaning," and the "Strategic Marketing Management" executive education programs. From 1978 to the present, he has been involved in the School's Business History program. In 1992 and 1993, he taught a course entitled "Business, Government, and the International Economy." He has also taught in numerous executive programs at the Harvard Business School as well as at corporations, including programs in marketing strategy and general management. His book -- Giants of Enterprise: Seven Business Innovators and the Empires They Built (HarperBusiness, 2001) -- was selected by Business Week as one of the top ten business books of 2001.

Prof. Tedlow’s book, Andy Grove: The Life and Times of an American, was published by Portfolio, an imprint of Penguin Group USA, in November 2006. It was selected by Business Week as one of the top ten business books of 2006.

Prof. Tedlow's most recent book, Denial: Why Business Leaders Fail to Look Facts in the Face, was published by Portfolio in March, 2010. It was selected by strategy+business as one of the best business books of 2010.

Featured Work



  1. Denial: Why Business Leaders Fail to Look Facts in the Face--and What to Do About It

    Richard S. Tedlow

    This book deals with two of the biggest problems in business: Why do sane, smart leaders often refuse to accept the facts that threaten their companies? And how do they find the courage to resist denial when facing new trends, changing markets, and tough new competitors?

    Keywords: Change Management; Leadership; Problems and Challenges; Personal Characteristics; Competition;

  2. Giants of Enterprise: Seven Business Innovators and the Empires They Built

    R. S. Tedlow

    From the table of contents: Andrew Carnegie: From Rags to Richest; George Eastman and the creation of a mass market; Henry Ford: The Profits and the Price of Primitivism; Thomas J. Watson Sr. and American salesmanship; Charles Revson and Revlon: Consumer Packaged Goods and the Television Revolution; Sam Walton: All-American; Robert Noyce and Silicon Valley: Toward a New Business World.

    Keywords: Business History;


    Tedlow, R. S. Giants of Enterprise: Seven Business Innovators and the Empires They Built. New York, NY: HarperBusiness, 2001. (Selected as one of the 10 best business books of the year 2001 by Business Week. It has also been translated into 7 languages, including Chinese (complex characters), Chinese (simplified characters), Indonesian, Hungarian, Korean, Portuguese (Brazil) and Russian.) View Details

Journal Articles

  1. Nothing to See Here: Richard Tedlow Explains Why So Many CEOs Refuse to Confront the Truth

    Richard S. Tedlow

    The article presents an interview with business historian Richard Tedlow on the topic of why chief executive officers (CEOs) sometimes refuse to acknowledge data or information that indicate they need to shift their strategy. He notes that denial is a typical response to terrifying truths. He says CEOs need to surround themselves with people unafraid to be truthful, and that CEOs should be proactive in soliciting contrary points of view.

    Keywords: Management;


    Tedlow, Richard S. "Nothing to See Here: Richard Tedlow Explains Why So Many CEOs Refuse to Confront the Truth." Conference Board Review 47, no. 3 (Spring 2010). (A conversation with Richard Tedlow, by Matthew Budman.) View Details
  2. Leaders in Denial

    Richard S. Tedlow

    Henry Ford's stubborn refusal to admit the changeability of consumer demand allowed Chrysler and GM to horn in on his market. Half a century later the whole U.S. auto industry made the same mistake: Enter the Japanese. But denial comes in many forms, as Sears, Digital Equipment, and Bear Stearns can attest.

    Keywords: Decision Choices and Conditions; Judgments; Leadership; Demand and Consumers; Auto Industry; United States;


    Tedlow, Richard S. "Leaders in Denial." HBS Centennial Issue Harvard Business Review 86, nos. 7/8 (July–August 2008). View Details
  3. The Dangers of Wishful Thinking

    Richard S. Tedlow and David Ruben

    Too many U.S. businesses (including tires, super-markets, and information technology) have been infected with the disease of denial. The answer? In Lincoln's words, “We must disenthrall ourselves.”

    Keywords: Knowledge Acquisition; Knowledge Use and Leverage; Leadership; Growth and Development Strategy; Success; Behavior; Cognition and Thinking;


    Tedlow, Richard S., and David Ruben. "The Dangers of Wishful Thinking." The American: A Magazine of Ideas (January–February 2008). View Details
  4. Making Choices: Aspects of the History of the Harvard Business School MBA Program

    Nancy F. Koehn, Thomas R. Piper, V. Kasturi Rangan and Richard S. Tedlow

    Keywords: Higher Education; History; Decision Choices and Conditions; Boston;


    Koehn, Nancy F., Thomas R. Piper, V. Kasturi Rangan, and Richard S. Tedlow. "Making Choices: Aspects of the History of the Harvard Business School MBA Program." MBA Leadership and Learning (1992). View Details

Book Chapters

  1. Theodore Levitt's 'The Globalization of Markets': An Evaluation After Two Decades

    Richard S. Tedlow and Rawi Abdelal

    Keywords: Globalized Markets and Industries;


    Tedlow, Richard S., and Rawi Abdelal. "Theodore Levitt's 'The Globalization of Markets': An Evaluation After Two Decades." In The Global Market: Developing a Strategy to Manage Across Borders, edited by John A. Quelch and Rohit Deshpandé, 11–30. San Francisco, CA: Jossey-Bass, 2004. View Details

Working Papers

Cases and Teaching Materials

  1. Sole-Sourcing the Intel 386: A Company and Industry Transformed

    Richard S. Tedlow and David Ruben

    Intel's precedent-breaking decision not to second-source its groundbreaking 386 microprocessor in 1986 propelled Intel to new heights and fundamentally transformed the computer industry.

    Keywords: Decisions; Technological Innovation; Production; Hardware; Transformation; Brands and Branding; Product Development; Computer Industry; United States;


    Tedlow, Richard S., and David Ruben. "Sole-Sourcing the Intel 386: A Company and Industry Transformed." Harvard Business School Case 809-076, November 2008. (Revised June 2009.) View Details
  2. Harrington Collection: Sizing Up the Active-Wear Market

    Richard S. Tedlow and Heather Beckham

    In the wake of slumping sales and sagging profit margins, a leading manufacturer and retailer of high-end women's apparel, Harrington Collection, must evaluate an opportunity to expand into the high-growth active-wear market. Sara Huey, Vice President of Strategic Planning, calls on two of her colleagues to help perform a comprehensive market evaluation. They must analyze the financial implications of the opportunity, assess trade and competitor reactions, consider the risks, and determine whether the Vigor division of the company will be able to successfully launch and manage the new product line.

    Keywords: Breakeven analysis; consumer behavior; Product introduction; Expansion; Consumer Behavior; Supply and Industry; Product Launch; Apparel and Accessories Industry;


    Tedlow, Richard S., and Heather Beckham. "Harrington Collection: Sizing Up the Active-Wear Market." Harvard Business School Brief Case 083-258, September 2008. View Details
  3. Harrington Collection: Sizing Up the Active-Wear Market (Brief Case)

    Richard S. Tedlow and Heather Beckham

    Keywords: Breakeven analysis; consumer behavior; Product introduction; Analysis; Consumer Behavior; Profit; Product Launch;


    Tedlow, Richard S., and Heather Beckham. "Harrington Collection: Sizing Up the Active-Wear Market (Brief Case)." Harvard Business School Teaching Note 083-259, September 2008. View Details
  4. Du Pont: The Birth of the Modern Multidivisional Corporation

    Richard S. Tedlow and David Ruben

    Du Pont's realization in 1921 that its "U-form" corporate structure was ill-suited to its new diversification strategy led to a pioneering new kind of organization—the "M" or multidivisional form—that has been called the most important innovation of capitalism in the 20th century. This case examines how and why this pivotal transformation took place and what its implications may be for corporations that are trying to align their structure with their strategy as they undergo rapid growth and change.

    Keywords: Change Management; Innovation and Invention; Growth and Development Strategy; Organizational Change and Adaptation; Organizational Structure; Alignment; Corporate Strategy;


    Tedlow, Richard S., and David Ruben. "Du Pont: The Birth of the Modern Multidivisional Corporation." Harvard Business School Case 809-012, August 2008. View Details
  5. Benjamin Franklin and the Definition of American Values

    Richard S. Tedlow

    Discusses the value systems and their relationship to the conduct of business in 18th Century America. Also focuses on Benjamin Franklin, the preeminent colonial American, to examine how business was conducted in his era. Based on an earlier case by B.E. Supple.

    Keywords: Business Ventures; Values and Beliefs; Business History; Business and Government Relations; United States;


    Tedlow, Richard S. "Benjamin Franklin and the Definition of American Values." Harvard Business School Case 383-160, March 1983. (Revised March 2008.) View Details
  6. James Burke: A Career in American Business (A)

    Richard S. Tedlow and Wendy Smith

    Presents an historical overview of the professional career of James E. Burke, chairman and CEO of Johnson & Johnson. Examines the corporation's handling of three major occurrences--the Tylenol poisonings in 1982 and 1986 and the acquisition and subsequent sale of Technicare, a maker of diagnostic imaging equipment.

    Keywords: Business History; Marketing Strategy; Ethics; Personal Development and Career; Crisis Management; Consumer Products Industry; Health Industry; United States;


    Tedlow, Richard S., and Wendy Smith. "James Burke: A Career in American Business (A)." Harvard Business School Case 389-177, April 1989. (Revised October 2005.) View Details
  7. James Burke: A Career in American Business (B)

    Richard S. Tedlow and Wendy Smith

    Covers the history of Tylenol from the autumn of 1982 through the second tampering incident in February 1986. Also deals with other developments in the history of Johnson & Johnson, especially the acquisition and divestiture of Technicare.

    Keywords: History; Pharmaceutical Industry;


    Tedlow, Richard S., and Wendy Smith. "James Burke: A Career in American Business (B)." Harvard Business School Case 390-030, August 1989. (Revised October 2005.) View Details
  8. Westfield America

    William J. Poorvu, Richard S. Tedlow and Daniel J. Rudd

    The company is attempting to duplicate its Australian formula for successful mall ownership in the U.S. market. It must deal with rapidly evolving financial markets while recognizing and capitalizing on emerging trends in retailing.

    Keywords: Market Entry and Exit; Adaptation; Financial Markets; Property; Trends; Retail Industry; Real Estate Industry; Australia; United States;


    Poorvu, William J., Richard S. Tedlow, and Daniel J. Rudd. "Westfield America." Harvard Business School Case 899-260, May 1999. (Revised August 1999.) View Details
  9. Organizational Capabilities and U.S. War Production: The Controlled Materials Plan of World War II

    Robert D. Cuff and Richard S. Tedlow

    A vehicle for the discussion of a very important set of institutional arrangements that helped enable America to mobilize its economy for World War II.

    Keywords: Economy; Production; Organizational Change and Adaptation; Strategic Planning; War; United States;


    Cuff, Robert D., and Richard S. Tedlow. "Organizational Capabilities and U.S. War Production: The Controlled Materials Plan of World War II." Harvard Business School Case 390-166, April 1990. (Revised August 1997.) View Details
  10. Railroad Problem and the Solution

    Richard S. Tedlow

    A vehicle for a discussion of the causes and consequences of the Interstate Commerce Act.

    Keywords: Transportation; Rail Transportation; Fluctuation; Outcome or Result; Public Sector; Government and Politics; Business History; Complexity; Problems and Challenges; Rail Industry;


    Tedlow, Richard S. "Railroad Problem and the Solution." Harvard Business School Case 384-032, August 1983. (Revised March 1995.) View Details
  11. Why Bad Things Happen to Good Companies

    Benson P. Shapiro, Adrian J. Slywotsky and Richard S. Tedlow

    Describes the Darwinian internal and external processes that lead to poor performance from a previously well performing company. Demonstrates why any business design eventually fails and the role of organizational calcification and poor leadership in the failure. Also provides prescriptions to prevent and alleviate the problems.

    Keywords: Leadership; Management Practices and Processes; Organizational Design; Failure; Performance;


    Shapiro, Benson P., Adrian J. Slywotsky, and Richard S. Tedlow. "Why Bad Things Happen to Good Companies." Harvard Business School Background Note 595-045, November 1994. View Details
  12. Hart Schaffner & Marx: The Market for Separately Ticketed Suits

    Richard S. Tedlow

    Calls for a decision on whether Hart Schaffner & Marx, the nation's leading manufacturer of high quality, branded suits, should expand its product line by marketing suits that are separately ticketed (i.e., the coat, vest, and slacks are sold from individual hangers and priced separately by the retailer rather than being sold and priced as an ensemble). Serves as a vehicle for discussing product policy issues in the context of a fragmented, mature, and highly competitive industry. Related issues of channel management, pricing, and advertising also must be analyzed. Demands skilled quantitative analysis of a complex breakeven situation.

    Keywords: Advertising; Decisions; Price; Markets; Distribution Channels; Production; Mathematical Methods; Competitive Strategy; Apparel and Accessories Industry;


    Tedlow, Richard S. "Hart Schaffner & Marx: The Market for Separately Ticketed Suits." Harvard Business School Case 582-134, April 1982. (Revised June 1993.) View Details
  13. Federal Trade Commission and the Shared Monopoly Case against the Ready-to-Eat Cereal Manufacturers, Teaching Note

    Richard S. Tedlow

    Keywords: Monopoly; Food and Beverage Industry; United States;


    Tedlow, Richard S. "Federal Trade Commission and the Shared Monopoly Case against the Ready-to-Eat Cereal Manufacturers, Teaching Note." Harvard Business School Teaching Note 385-109, August 1984. (Revised June 1985.) View Details


  1. From 'Universalistic Rather than Particularistic' to 'The Treasure of the Sierra Madre:' Another look at Chapter 2 of Alfred D. Chandler, Jr.'s Strategy and Structure

    Richard S. Tedlow

    Keywords: Strategy; Books;


    Tedlow, Richard S. "From 'Universalistic Rather than Particularistic' to 'The Treasure of the Sierra Madre:' Another look at Chapter 2 of Alfred D. Chandler, Jr.'s Strategy and Structure." Paper presented at the Academy of Management Annual Meeting, August 11, 2008. View Details

Other Publications and Materials

    Research Summary

  1. Denial: Why Business Leaders Fail to Look Facts in the Face

    by Richard S. Tedlow

    Richard S. Tedlow is currently working on a book concerning historical examples of outstanding businesspeople who faced daunting challenges.  The book is divided into two parts:  "Getting It Wrong" and "Getting It Right."  Many times, great businesspeople have simply refused to face reality, and they and their organizations have suffered dreadfully as a result.  The reality of which Prof. Tedlow writes was not only knowable to these businesspeople at the time, it was in fact known by them.  This is not a book that exploits hindsight.  The question which the first half of the book explores is:  Why, knowing that they were facing disaster, did these great businesspeople not change course?  The second part of the book explores business executives facing similarly difficult dilemmas who did change course.  The question with which the book deals is:  Why is it that some people "get it wrong" while others "get it right"?
  2. The American Chief Executive from 1850 to 2000

    by Richard S. Tedlow

    Richard S. Tedlow's research explores changes in the leadership strategies, styles, and backgrounds of corporate chief executive officers in the United States over the past century and a half. This project has both a qualitative and a quantitative component. The qualitative issues are described and analyzed in his book Giants of Enterprise: Seven Business Leaders and the Empires They Built (New York: HarperBusiness, 2001). The discussion of these seven business visionaries provides a prism through which we can see the evolution of American business and the American chief executive officer over the course of a century and a half. Business Week selected Giants of Enterprise as one of the top 10 business books of 2001. The quantitative side of this research is composed of data gathered on the CEOs of the nation's 250 largest corporations at different points in history. This database consists of demographic information (such as age, income, education, and place of birth) and information on career path (including number of companies worked at, number of jobs held, and number of years in business before reaching the top). Professor Tedlow's most recent book is a dual biography of the Thomas J. Watsons, Sr. and Jr., and the long term impact of their leadership on IBM. Entitled The Watson Dynasty: The Fiery Reign and Troubled Legacy of IBM's Founding Father and Son. This book was published by HarperBusiness in November 2003. Professor Tedlow has just competed Andy Grove: The Life and Times of an American. It is forthcoming from Portfolio, an imprint of Penguin Group USA, on November 2, 2006.

      Read excerpts from DENIAL

      The Edifice Complex: Denial at Sears

      Book Excerpt: Denial at Sears (, February 26, 2010)


      From Denial: Why Business Leaders Fail to Look Facts in the Face—and What to Do About It, Richard S. Tedlow tells how the retailer let ego get the best of it

      By Richard S. Tedlow


      Beware the monument.

      Please bear with me for a moment and read the following short poem that Shelley published in 1818, entitled Ozymandias:

      I met a traveler from an antique land

      Who said: Two vast and trunkless legs of stone

      Stand in the desert. Near them, on the sand,

      Half sunk, a shattered visage lies, whose frown,

      And wrinkled lip, and sneer of cold command,

      Tell that its sculptor well those passions read,

      Which yet survive, stamped on these lifeless things,

      The hand that mocked them, and the heart that fed.

      And on the pedestal these words appear

      quot;My name is Ozymandias, King of Kings:

      Look on my works, ye Mighty, and despair!"

      Nothing beside remains. Round the decay

      Of that colossal wreck, boundless and bare

      The lone and level sands stretch far away.

      Ozymandias was a heavy hitter in days gone by. He built a huge statue of and to himself. If the meaning of the statue was not clear enough, he had inscribed on the pedestal that he was such a big shot that "ye [other] Mighty" were reduced to despairing at his magnificence.

      But, look! The ruins of the statue were all that survived, and it has become nothing more than a "colossal wreck." Whatever the "works" were that should have caused despair to the mighty have now disappeared into the sands of time.

      Gordon Metcalf became CEO of Sears in 1967. Odds are, he had never read Shelley's poem. "Being the largest retailer in the world," he said, "we thought we should have the largest headquarters in the world." So, just as cracks began to appear in the armor of Sears—despite a seemingly robust bottom line, some metrics, like return on equity and employee productivity, had begun to flag—Metcalf decreed that Sears would construct the world's tallest building. The 110-story Sears Tower, renamed Willis Tower in 2009, came to be known as "Gordon Metcalf's last erection."

      On the surface, Metcalf's explanation for building the Tower seems to make sense. But when you really think about it, it doesn't. The two clauses have nothing to do with one another, and the declaration cannot survive one single word: Why? Why is it that the world's largest retailer should have the world's largest headquarters?

      In 1993, when Intel was experiencing its spectacular growth, CEO Andy Grove, like the rest of the company's employees, had not an office but a cubicle. It was tiny. Fortune, in a clever variant of a classic retail metric, conducted a return to the shareholders survey that year. It measured return to the shareholders per square foot of the CEO's office. Grove led the pack by far, as Intel returned $1.64 per square foot of his cubicle.

      It was not apparent that Intel needed a giant building to celebrate how wonderful it was. Why was it so obvious at Sears?

      Building monuments deserves a file drawer along with trash talking when you are looking for companies in denial. I recall interviewing top executives in the Sears Tower in the summer of 1980. The pictures on their walls were quite beautiful. I wondered whether the average Sears customer could have afforded the frames. The furniture was plush. It didn't look like it came off the floor of a Sears store.

      I remember looking out the windows. The view up Chicago's lakeshore was spectacular. And there was not a competitor in sight. The people down below looked like ants. Those ants were supposed to be Sears's customers. Of all industries, it is most important for a retailer to keep his or her ear to the ground. The Tower was a symbolic denial of that reality.

      The year the Tower was dedicated, 1973, was the first year of the chairmanship of Arthur Wood. Writer Donald Katz described him as "patrician," "elegant," "the consummate old-world gentleman-businessman." His opulent office included works from his private art collection by Degas and Monet.

      Wood was unlike Kmart's great merchant Harry Cunningham. An even bigger problem is that he was the antithesis of the incomparable Sam Walton.

      Just prior to the first oil shock in 1973, retail sales in the United States began to decline in real terms. Sears's economist (this is prior to the oil shock) felt the country was looking at a severe recession the following year. A "senior officer" of the company, according to Katz, told the economist that if he publicized an official forecast to this effect, he would be fired. There appears to be a persistent belief in once-great companies that have lost their way that if you simply avoid speaking the blunt truth, all the problems will just go away. It is almost as if by telling the truth, you are endowing problems with a reality that they would not otherwise have. It is this brand of magical thinking that leads to shooting the messenger.

      Sales in 1974 actually increased seven percent, which would not have been bad if the company had not forecast a rise of fifteen. Profits were off almost a quarter, a dramatically steep slide. Here indeed is the essence of the problem of denial. Reality is always just around the corner.

      Sears wandered in the wilderness amid intermittent signs of life from 1973 until it was bought by Kmart owner Eddie Lampert in 2005. The company abandoned its Tower in 1992, a year in which it lost almost $4 billion, and relocated outside of Chicago to a town called Hoffman Estates. Kmart adopted Sears's name and the combined company is today called Sears Holdings.

      Sears began to hire consultants in the 1970s, but they were no more helpful than the homegrown executives. Sears convinced itself that its market was "saturated." The way to grow, therefore, was to enter whole new lines of business. The company bought the real estate franchise Coldwell Banker and the financial broker Dean Witter. Why the company's CEOs thought they would do better managing businesses in industries they did not understand than they would in general merchandise retailing remains one of life's mysteries.

      In fact, there was a fortune to be made in the very classes of trade in which Sears made its name. We know this—and everyone at Sears should have known it at the time—because Wal-Mart's spectacular success was no secret. Sam Walton had become the richest man in the world. He dressed in a grass skirt and did the hula on Wall Street itself in 1984 because Wal-Mart's stock had so outperformed what he had bet it would be. You had to be wallowing pretty deeply in denial to miss this.

      Sears executives should have been focused on nothing else. Instead, they were playing around with the "store of the future" and telling themselves they would succeed selling "socks and stocks."

      For the sake of symmetry, we should note that Walton did not pay much attention to Sears. In his autobiography, he only mentioned it once, and not very flatteringly. "One reason Sears fell so far off the pace is that they wouldn't admit for the longest time that Wal-Mart and Kmart were their real competition," he wrote. "They ignored both of us, and we both blew right by them."

      It has often been observed there are no mature markets, only tired marketers. Unfortunately, nobody at Sears was making that observation, and there is no company which it described—or which demonstrates the pitfalls of denial—more perfectly.

      Adapted from Denial by Richard S. Tedlow by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright © 2010 by Richard S. Tedlow.

      Introduction to DENIAL

      THIS BOOK is being written in the midst of the worst global economic crisis since the Great Depression. How, when, and indeed if the crisis will end no one knows. But whatever the future holds and the postmortems reveal about the crisis, one culprit is abundantly clear: denial.

      Denial by financiers who pursued short-term gain while ignoring long- term consequences that were highly likely, if not inevitable. Denial by the banking and real-estate industries that what goes up can come down.

      Denial by homeowners and consumers that the bills for goods bought on credit will someday come due.

      Denial by investors who convinced themselves, once again, that “this time, it’s different.”

      Denial by politicians and bureaucrats of inconvenient truths that didn’t fit their free-market ideology.

      Denial even by swindlers whose Ponzi schemes could only end in disaster, not just for their victims but for themselves.

      Denial today is all around us. Eliot Spitzer, the governor of New York (who made his name while the state’s attorney general as the “watchdog of Wall Street”), was in March 2008 caught patronizing a high-priced prostitute in a fancy Washington hotel. It quickly came out that this was not his first such dalliance. Later, after he had resigned as governor because of the scandal, Spitzer was asked by a television interviewer how a well-known politician such as himself could possibly have expected to get away with such behavior. “[Being caught] crossed my mind,” he replied, “but like many things in life, you ignore the obvious at a certain moment because you simply don’t want to confront it.”

      If you’re looking for a succinct expression of the essence of denial, it would be hard to do better than this. You ignore the obvious. Why? Because you simply don’t want to confront it. You know the consequences, but you don’t know. You see, but you don’t see.

      Denial is the unconscious calculus that if an unpleasant reality were true, it would be too terrible, so therefore it cannot be true. It is what Sigmund Freud described as the combination of “knowing with not knowing.” It is, in George Orwell’s blunt formulation, “protective stupidity.”

      From the young child who insists that his parents haven’t separated even though his father has moved out, to the alcoholic who swears he is just a social drinker, to the president who declares “mission accomplished” when it isn’t, denial permeates every facet of life. Business is no exception. In fact, denial may be the biggest and potentially most ruinous problem that businesses face, from start-ups to mature, powerful corporations.

      But surely businesspeople ought to be among the most hardheaded and clear-eyed among us. Why would a sane, smart person deny a fact of critical importance to his or her business? Because, to state the obvious, he or she is human. And the impulse to avoid painful truths, just like the impulse to avoid pain itself, is a part of human nature.

      I have been teaching and writing about business history for four decades, and what is striking about the dozens of companies and CEOs I have studied is the large number of them who have made mistakes that could and should have been avoided, not just with the benefit of hindsight, but on the basis of information available to decision-makers right then and there, in real time. These mistakes resulted from individuals denying reality.

      Denial is a pervasive problem not only historically but today. It seduces not only dreamers but the most rational people among us. Why is it seductive? Because it is soothing. It is convenient. It allows us to live in a world of our own creation—while it lasts. It permits us an “as if ” existence. We live “as if ” things were the way we want them to be, rather than the way they are.

      But this is only part of the seduction. Denial sometimes actually works. Plenty of entrepreneurs have succeeded even though others denied they had a chance. The overwhelming majority of new businesses fail. Everyone who starts a business denies that the statistics apply in his or her case.

      Even denial in the face of certain catastrophe is not necessarily irrational. The inevitability of catastrophe does not mean that we personally will suffer its consequences. Our successors or descendants may pay the price instead. “Après moi, le déluge” was the famous phrase attributed to Louis XV. “After me, the deluge.” He did not use the preposition pendant, which means “during.”

      Anyone could increase the profits of Procter & Gamble this year by eliminating the advertising for Tide. It would be a terrible blow to the brand in the long term, but sales might not slump too badly right away. A decision like that would be so obvious that it would make news. However, the same result could be achieved in a thousand less public ways throughout the corporate world.

      Even in the case of certain catastrophe, denial can be an intelligent strategy. Permit me to provide a personal illustration. As my late wife was dying of cancer, she once said to me that we should declare a forthcoming holiday a “disease-free weekend.” I immediately agreed. Denial was automatic and complete. We lived “as if” she were healthy. She bought us four wonderful days in the face of the abyss.

      Denial is seductive because it can work in the short term. Occasionally it works in the long term, but that is rarely true in business. In business, pretending that things are better than they are virtually ensures failure.

      As we have noted, however, denial is a part of human nature. You can never avoid it completely, and its avoidance is not a matter of raw intelligence. The protagonists in the first part of this book were not stupid. If they could succumb to denial, anyone can.

      Yet as the second part of the book shows, some people rise above denial and stare reality unblinkingly in the face. These exemplars of courage and clarity are remarkable and merit scrutiny. Indeed, the British sociologist Stanley Cohen suggests that denial is so common that rather than trying to fathom why we deny, we should instead focus on when and why we do not. “When do people pay attention?” he asks. “When do they recognize the significance of what they know? When will they be aroused to act, even at personal risk?”

      Shedding light on these questions is the aim of this book. Discovering who got it right, who got it wrong, and why may help us to answer them and move us closer to our goal. A goal that should be no more or less than this: to confront more than we deny.

      Adapted from Denial by Richard S. Tedlow by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright © 2010 by Richard S. Tedlow.