We Think We're Rational. We're Not. (Part 1 of 3)

We think of ourselves as rational beings.

We assess situations objectively, weigh the facts, and make logical decisions based on truth. That's the story we tell ourselves, anyway.

But I've learnt something from 12 years of living through business crisis, from coaching people through job transitions, and from my Samaritans training: we're terrible at this. Almost universally, appallingly bad at it.

Not because we're stupid. But because we lie to ourselves.

This is a three-part series:

Part 1 (this post): The rationality myth - why self-deception is the first barrier to change

Part 2: The emotional bottleneck - even when we know the truth, emotion paralyses us and stops us acting

Part 3: The power of being heard - and why it matters in crisis

I know this because I've experienced it myself.

Back in 2014, after I'd been running my business for a couple of years, our biggest client - John Lewis - announced they were no longer going to use us. That client constituted 85% of our revenue.

In any business this is a massive problem. But in a manufacturing business where you're set up with significant overheads to service client demand and operating on very tight margins, the window before you start haemorrhaging cash is incredibly narrow. 85% was an almost unbelievable amount of business to lose.

The warning signs had been there for a long time. As a small manufacturer, we were competing against much bigger British manufacturers and global importers from Eastern Europe and Asia. It wasn't a surprise. Our sofas were in 60 John Lewis stores across the UK, but our opportunities with the centralised buying team had been dwindling.

The news that they were going to remove us as a supplier was something I refused to believe. In the early part of my leadership career, with no one around me to shake me into action and confront me with the brutal truth of what I was facing, it took me weeks, possibly months if I'm being really honest, to truly accept what it meant.

I didn't lack the facts. I lacked the honesty to confront them.

Fortunately there was a wind-down process that gave me a year to replace the business. But that delay? It cost me. I couldn't pay myself anything in salary for five months to protect the business and the people who worked in it as much as possible.

It's perfectly possible I would have needed to make that sacrifice anyway. But the personal pain went on longer than it needed to because I couldn't confront the brutal truth quickly enough.

This is what I now see as a turnaround consultant.

When people finally pick up the phone to me, it's invariably too late - not because the crisis appeared overnight, but because of self-denial. People aren't willing to admit their own trouble and give the mandate to someone else to drive the difficult, sometimes brutal decisions and change that's needed to come through the fire.

The red flags are usually screaming by then - consecutive quarters of decline, losing major clients, board losing patience, struggling to make payroll.

But the amber flags? Those are what worry me more, because they feel manageable in isolation:

• Constantly firefighting rather than building anything

• Leadership meetings dominated by problem-solving rather than executing on long-term strategy

• Difficult conversations with key people who are disgruntled about direction

• Innovation no longer a priority

• Every decision about surviving this quarter, not building for next year

I've even seen management teams agree not to discuss certain issues in meetings to avoid worrying external investors.

That tells you everything about how honest they're being with themselves.

The companies that recover strongest? They're the ones where leaders can look at the situation with brutal honesty and say: this is where we are, this is how we got here, this is what we need to do, and this is what I can't do alone.

That level of self-awareness is rare. It's also essential.

But here's the thing: even when leaders finally find that honesty and accept the brutal truth of their situation, there's a second barrier that stops them acting.

I'll talk about that next week.

I'm Marc Richard. I help businesses facing existential threats transform through crisis - because I've experienced it myself, not just studied it. Over the next few weeks I'm sharing what I've learnt about why change is so hard, and what actually makes it possible.