Why Leaders Miss Red Flags
The Psychology, Neuroscience, and History Behind Invisible Warnings
“It’s not that we didn’t see it coming. We just didn’t see it clearly.”
— common refrain after every disaster, scandal, and collapse
INTRO: When the Obvious Isn’t
Red flags often seem unmistakable in hindsight.
The missed signals before Challenger. The ignored memos before Enron. The blind eyes before 2008. The hindsight is always vivid. The foresight? Foggy.
So we assume ignorance, apathy, or incompetence.
But the truth is more unsettling: Leaders miss red flags not because they’re blind — but because their brains are wired to normalize the familiar.
This isn’t just a leadership problem. It’s a human one.
And it’s deeply embedded in how our psychology, neuroscience, and systems interact. Today, let’s connect those dots.
DOT 1: Optimism Bias — The Brain’s Default Setting
In 2011, neuroscientist Tali Sharot found something fascinating:
People update their beliefs more readily when hearing good news than bad.
This is called optimism bias, and it’s not just wishful thinking — it’s neurological. The left inferior frontal gyrus actively downplays negative outcomes when they contradict what we want to believe¹.
For leaders, this means that even when data shows risk or dysfunction, the brain itself may filter it through hope.
This isn’t naivety — it’s biology. Leaders are trained to be vision-casters. But that same strength can blind them to the present.
Dot: The same brain that dreams big also downplays danger.
DOT 2: Familiarity Rewires the Brain — Normalizing the Abnormal
In medicine, there’s a chilling term: “inattentional blindness.”
It’s why trained radiologists can miss clear anomalies on scans². Their brains filter out the unusual because it doesn't match the expected pattern.
In leadership, the same mechanism plays out.
Psychologists call it habituation — the diminished response to a repeated stimulus³. If a leader sees the same mediocre performance or risky shortcut over and over, the brain eventually stops flagging it as unusual.
We become desensitized not because we don't care — but because the familiar rewires us.
Dot: The more we see dysfunction, the less we notice it.
DOT 3: History's Loud Warnings Are Often Whispered First
Think of the space shuttle Challenger.
Engineers raised alarms about the O-rings. Memos were sent. Concerns voiced. But NASA leadership, under political and launch schedule pressure, normalized the risk — after all, they’d flown before under similar conditions.
The same pattern repeated with Columbia in 2003.
It’s what historian Barbara Tuchman called the **"March of Folly"**⁴ — when leaders ignore valid warnings not from lack of knowledge, but from overconfidence, inertia, or systemic blind spots.
Dot: The first warnings often sound like whispers — easy to ignore when urgency and ego are louder.
DOT 4: The Organizational Immune System — Rejecting the Disruptor
Inside companies, red flags are often spotted by frontline workers, not executives.
But when those signals travel upward, they often trigger organizational antibodies — behaviors that suppress change: “That’s not how we do things,” “Let’s not make waves,” “This isn’t the hill to die on.”
Psychologist Chris Argyris called this Model 1 behavior — where preserving comfort and control becomes more important than learning⁵.
So the one person who raises the issue becomes the issue.
Dot: The messenger gets muted, not because they’re wrong — but because they’re disruptive to the system.
DOT 5: The Self-Protecting Leader — Why Some Truths Feel Dangerous
If a leader’s identity is built around competence, being the visionary, or having “great instincts,” then red flags represent more than operational risk — they threaten identity.
And the brain protects identity with everything it’s got.
The amygdala, the brain’s fear center, activates not just for physical threats — but for social or ego threats too⁶.
In other words: If a red flag undermines how a leader sees themselves, they may unconsciously avoid or minimize it — even while claiming to be objective.
Dot: Leaders don’t just protect companies. They protect their self-image — often without realizing it.
THE CONSTELLATION: The Invisible System That Makes Red Flags Hard to See
When you connect the dots, a pattern emerges:
Psychology teaches us we favor optimism over realism.
Neuroscience shows that the brain filters out familiar risks.
History proves that red flags rarely scream — they whisper.
Organizations punish disruption more than dysfunction.
The self avoids truths that threaten identity.
This isn’t about bad leadership.
It’s about brains doing what brains were designed to do — normalize, protect, and conserve.
But in leadership, that wiring can be deadly.
Seeing red flags isn’t just about data.
It’s about learning to see against our own wiring.
CHALLENGE: Rewire Your Radar
Reflect:
What have you stopped noticing because it’s familiar?
What discomfort have you reframed as “normal”?
Practice:
Create a monthly “disruption roundtable” with someone outside your chain of command.
Their unfamiliarity may help you notice what your brain tuned out.
Track:
Start a “red flag log.” List the odd, the off, the awkward — without needing them to mean anything yet.
Over time, you’ll start to see constellations where others see stars.
Works Cited
Sharot, Tali. The Optimism Bias: A Tour of the Irrationally Positive Brain (2011)
Drew, Vo, Wolfe. “The Invisible Gorilla Strikes Again: Sustained Inattentional Blindness in Expert Observers.” Psychological Science (2013)
Rankin, et al. “Habituation revisited: An updated and revised description of the behavioral characteristics of habituation.” Neurobiology of Learning and Memory (2009)
Tuchman, Barbara. The March of Folly (1984)
Argyris, Chris. Knowledge for Action (1993)
Eisenberger, Naomi. “Does rejection hurt? An fMRI study of social exclusion.” Science (2003)