1. Leaders engage themselves in filtered information, they surround themselves with bureaucracy that thinks the same way they do. As a consequence, although they reach agreement, oftentimes that agreement is not contemporary and not in any way relevant to what's going on in their marketplace.
2. Leaders who engage in selective hearing, in other words, they hear what they want to hear but not necessarily what they should.
3. Wishful thinking that when the business is off, the market will come back, they all do, they see the world through rose-colored glasses, they see the world as they want it and not as it is.
4. Fear. There are cultures that suppress reality. They punish people that have views that are confrontational or that are different from the norm. Organizations that suffer from this don't get real information, as a consequence, you behave in a way that's not contemporary with what's going on around you.
This is from Larry Bossidy's speech. He is the author of Execution: The Discipline of Getting Things Done co-authored by Ram Charan.