Denialism: It’s a Win-Win Situation

Within confines, people can succeed without accepting reality. The Western church succeeded in building itself into a hugely successful entity while denying the world was round for 1,000 or so years. Many banks and bankers denied making bad loans, first to themselves and later to shareholders, regulators, newspapers, and anyone else they thought might listen. So denying reality does sometimes work. These people firmly abide by the belief that ignorance really is bliss.

Of course, while holding to the ignorance is bliss theory, collateral damage cannot be considered because the damage is usually long-term (denying reality works best when only the short-term is considered, not the long-term). This means success has to be measured narrowly. The banker who made $50 million by denying reality is successful. The investors, jobless employees, taxpayers, and homeowners are not successful.

When building a long-lasting business that benefits many stakeholders, doesn’t it make sense to start by identifying reality, even if reality conflicts with the owner’s desired reality? Many agencies have faltered and failed because the owners would not accept reality. They definitely observed Michael Spector’s first law of denialism: “The truth is not going to get in the way of people who are moved by faith, greed, fear, or desire to deny what they see.”

Irrational Optimism

Irrational optimism is a form of denying reality that runs rampant in this industry. Given the nature of the insurance industry, irrational optimism is a necessary survival skill, according to some. I honestly agree with this in many circumstances such as individual sales and dealing one-on-one with carriers, their marketing reps and underwriters. In these small scale interactions, irrational optimism is valuable. But I vehemently disagree when it comes to actually running a business called an independent insurance agency.

Big picture success requires more rational thought. It is impossible to build a truly strong (strong, not big) business in today’s fast moving, economically troubled world with a distorted vision. Clear vision is essential.

Clear vision is often hard to get even with outside help. This industry is full of attorneys, accountants, consultants, business brokers and investment bankers who will take advantage of a business owner’s distorted vision. Many live for the opportunity to take advantage of people moved by faith, greed, fear or the desire to deny reality. These people are relatively easy shills for a sale. Sometimes, it’s like seeing a happy cow as it is led to slaughter.

On the other hand, some good advisors have just given up. It is so tiring to get clients to see a reality they do not want to see. So they just go with the flow. They lead the horse to water, but since they cannot make them drink, they eventually quit even trying to lead them.

All humans deny reality to some degree in some facet of their lives. Middle-aged men like to deny they are not attractive to 22-year-old women. Middle-aged women like to deny they are middle-aged. Americans in general like to deny they need to save money. Some denial is humorous. Some is sad. Some denial leads to serious consequences. Alcoholics like to deny they have a serious problem. Agency owners like to deny their producers are not really producers.

Cheated Opportunities

This last point is a huge problem with serious consequences. When agency owners deny the reality that their producers cannot sell, they cheat themselves of opportunities, growth and value. They cheat themselves by giving producers house business to build their books and to justify the producers’ positions as producers. They cheat themselves out of hiring better people because good producers want to be treated better than “producers” who have been given all their business. They cheat themselves out of growth because by denying their producers cannot produce, they are telling everyone that growth and sales are not necessary. Then they exacerbate the situation by overtly pushing sales yet giving away accounts or setting expectations extremely low. Their actions speak louder than their words.

Quite similar are the agency owners who constantly complain about the producers they hire only to discover five years later that these hires cannot produce. They blame the failure on the producers, but really this is denying complete management failure. If an agency cannot get new producers to generate at least a minimal book of business within five years, management has failed. It failed in its hiring process. It failed in adequately tracking the producers’ activities. It failed in offering adequate training, development, mentoring and/or leadership.

Management denial in just these two categories cost agencies millions annually. “With much wisdom comes much sorrow; the more knowledge the more grief.” (Ecclesiastes) Accepting reality creates much grief.

With the pain of wisdom comes much opportunity. What great opportunities exist for those who do see reality? Agencies that are mired in deception are not going to hold onto their best accounts forever. They are not going to hold onto their good employees forever either. The agency that sees reality and runs an independent insurance agency business can pick those accounts and those employees. It may take a while to get the accounts, but they’ll eventually be won. It may take a while to get the employees too, but sooner or later those employees will get tired of working for extremely nice people that have no future. Eventually, they’ll choose economic security over extremely nice.

Even the companies most loyal to their agencies are tired of agencies that will not produce. Maybe you have lusted after a competitor’s key company and you know their producers cannot really produce. Begin working on that company. They are more ready to listen today than ever before.

Many wondered why a high profile company began planting with so many new agencies a few years ago, often planting with new agencies across the street from longtime “partners.” The company knew some agencies have no producers and therefore can’t generate new growth. They also knew that because those agencies cannot produce, their ability to move their business is limited (although they probably did not count on the market remaining soft for so long).

For many agency owners, it is time to take a good, hard look in the mirror. What do you see? Are you in denial? The opportunities are fantastic for those that are not in denial. Those that are in denial won’t feel the pain for a long time because ignorance is bliss. It really is a win-win situation because both parties can be happy simultaneously, even if one is winning and one is losing. That is the price (or opportunity) of denialism.