Never Turn Your Back on Reality When you start to believe you can do no wrong and everyone around you agrees, that's when you're in trouble.

I saw it bearing down on me like a runaway freight train. The worst thing about it is I could neither stop it nor get out of its way. I was toast and I knew it. All I could do was wait out the inevitable and hope the end would come quickly.

It didn't. Although I'd already been standing there for an hour, the presentation would go on for at least three more … plus a dinner break in between. Every minute was like torture. The food tasted like dust.

OK, maybe I'm being a little dramatic, but trust me when I say it wasn't pleasant.

No, my presentation wasn't bombing. It was actually a very good presentation, one of the better ones I'd given in a long and distinguished career. But there was one thing I hadn't considered and that's what got me in the end.

You see, a year after cofounding a management-consulting firm, I landed a big contract to reorganize and restructure a $400 million public company. Three months later it was time to present my final strategic assessment to the company's leadership team.

I had taken companies through this same process several times, but this company had far more issues than I'd expected. It needed a lot of work. And if it didn't fix its problems, it would go downhill from here.

Still, my team and I had spent months meeting with dozens of customers, employees and analysts. We had met with all the executives one-on-one. We had several strategic off-sites with the entire executive management team. This was simply the culmination of all our collective effort.

At this point, we had our ducks in a row. I knew what the issues were and how to correct them. After all, this wasn't rocket science, at least not to me. This is what I did for a living.

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But the one thing I hadn't counted on, the one thing I never would have thought possible, was that the company founder and CEO couldn't handle the truth. He looked reality straight in the eye and denied its very existence. He was in deep, dark denial, and it was clear that he wasn't coming out into the light anytime soon.

And so it was a long night.

It was no consolation that I was right, that the company's growth had already peaked and it would barely reach half its goal of becoming a $1 billion company before declining. It was eventually acquired and nearly all of its thousands of employees laid off. Today, just one of its many product lines continues to exist. Sad but true.

I learned a very important lesson from that experience, and I'd like to pass it on to you:

Founding CEOs can be myopic to the point of denial.

This should come as no surprise. We're often too close to our own problems to see the forest for the trees. What is surprising is that otherwise successful entrepreneurs and executives will delude themselves with Utopian BS rather than face cold, hard reality backed up by solid data and objective analysis.

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To be fair, I'd seen that kind of thing many times before. I'd watched CEOs slowly unravel as the false curtains they hid behind were swept away by the harsh realities of competitive markets. It's no fun to witness, that's for sure. But I'd never seen anything like what I saw that night.

What I found most chilling about the experience was that this man who'd worked so hard for so long to bring the company he founded to this point was so cavalier about throwing it all away because the very idea that he was flawed was too much for him to bear.

In the end, it was easier for him to live in a dream than to face a wakeup call. In the end, he lacked the strength and courage it takes to build a company that will last. And his many thousands of stakeholders – employees, investors and customers – paid the ultimate price.

Also, this CEO surrounded himself with others who were just like him. His outside directors and trusted top executives were all beholden to him. That led to a self-perpetuating groupthink, the belief that they had all the answers and that success would continue indefinitely.

It's such a common failure mode for successful business leaders and their companies I can't tell you. When you start to believe you can do no wrong and everyone around you agrees, that's when you're in trouble.

Never turn your back on reality.

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