Optimize: Why is it so difficult for smart and driven executives to confront reality?

Bossidy: It's difficult from a few standpoints. Some people find reasons to avoid confronting reality—for instance, they only want to hear what's pleasant to them. There are wishful thinkers who believe that whatever is wrong will become righted. There are those who think that confronting reality will represent an uncongenial view to their leaders. Others understand reality but wouldn't know what to do with it if they confronted it.

Optimize: And these include driven and influential executives you've dealt with personally?

Bossidy: Yes. I think executives you meet will tell you that if nothing else, they're realists. But their actions suggest the contrary.

Optimize: What's the most common mistake executives make about not confronting reality?

Bossidy: They don't understand the world around them enough. They may not understand the regulatory influences which may help or hurt their business, and as a consequence, they tend to be isolated as opposed to looking at the biggest picture possible.

Optimize: What's the best way to correct that?

Bossidy: Let your performance be the judge. If you're making all your performance targets, chances are you're confronting reality. If you're not, there are aspects of reality that perhaps you haven't confronted.

Optimize: In your book, you mention the "iteration stage," a time frame when businesses should be prepared to make trade-offs. Are we entering a phase of IT that includes trade-offs?

Bossidy: Yes. IT is all about projects, and we need to look at these and make sure we understand their value; we need to understand better what the costs are, and we need to understand the talent we're going to be able to apply against these tasks. And that's when iteration becomes important: You have to make sure these three things are in constancy. If so, the chances of getting a project done within the time and the money budgeted get dramatically better.

Optimize: What are some less-tangible signs that tell you business leaders are on the path to growth?

Bossidy: The people who have the best handle on growth are those who understand their customers the best. They're the ones who go to their customer's store, who understand how the supplier works, how a product is utilized, and how it's differentiated from that of the competition.

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