Wayne,
I think that you bring up a couple of very good points. "Confronting Reality" is important if organizations are going to remain viable and continue to improve. At times it does take courage to stand up and state what the current reality really is (many times others intuitively feel the same thing but are afraid to say because it might disrupt the status quo). Organizations that create a culture that allows openness in saying what needs to be said even though it may not be popular, tend to adapt and change much more effectively.
Alignment with the mission of the organization is critical as well. How often do you think the mission of an organization should be reviewed and how do you ensure the strategies of the organization are aligned with the mission?
Dr. Faulkner