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Groupthink

I always wondered why decision makers and groups in power such as governmental

policy makers make decisions that common sense tells us are not the right ones. How do these

people justify these decisions and proceed to carry them through. Arvin J. Lanis explains this

phenomenon by introducing the concept of Groupthink. Groupthink is a quick and easy way to

refer to the mode of thinking that persons engage when concurrence-seeking becomes so

dominant in a cohesive in-group that it tends to override realistic appraisal of alternative

courses of action (Janis). Her research suggests that one of the most common norms appears to

be that of remaining loyal to the group by sticking with the policies to which the group has

already committed itself, even if those policies are obviously working out badly and have

unintended consequences that disturb the conscience of each member. (Janis)

Once a Group has fallen into Group thinking, they develop negative characteristics in

their decision making process. This includes invulnerability, rationale, morality, stereotypes,

self-censorship, unanimity and mind guards. Invulnerability leads to over optimism, taking

greater risks and overlooking obvious signs of danger. Rationale exists when Victims of

groupthink construct justifications in order to avoid obvious signs of danger and other forms of

negative feedback. Victims of groupthink believe unquestionably on the morality of their in-

group, this inclination leads to ignoring ethical or moral consequences of their decisions.

Victims of groupthink also hold stereotypes of opposing teams which leads to ineffective

negotiation between the two. Victims of groupthink also apply pressure to any individual who

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momentarily expresses doubts about any decision approved by the group, this leads to an

illusion of unanimity. Victims of groupthink also tend to develop self-censorship or keeping

misgiving and doubts about previously made decisions to themselves. Victims of Groupthink

tend to appoint members to mind guard or back the decisions of the group regardless of

resistance and difference of opinions.

For instance, Sheldon Liber, a CEO from a small private investment company believes

that groupthink is applied in certain areas of Wall Street. Take for instance, the example of

Google, a lot of investment houses purchased this stock because it was and it is the hot story,

and if they are wrong they know that they would all be wrong together. This creates a feeling of

safety, after all, if the stock falls, they can say Hey, we all thought. Is simple logic, if you stand

by yourself, you get the blame by yourself and this is not a good place for fund managers or

portfolio analysts. This has led to the undervaluation and overvaluation of Googles stock based

on the purchase and selling habits of analysts victims of groupthink. Similarly, many trade

analysts follow a pattern of Groupthink when it comes to buying and selling equities.

Groupthink has also been part of corporate blunders such as the merger and acquisition

of AOL and Time Warner, the combination of Sprint and Nextel, and the acquisition of Daimler

by Chrysler. In the case of the Time Warner-AOL merger, the CEOs fell victims of Groupthink

for not taking additional measures considering the longevity of the internet growth and the

difference of corporate cultures while making one of the biggest merger deals in history. Soon

after the merger, AOLs over inflated stock plundered and some 200 billion dollars in market

value evaporated from its books. The CEOs involved in this decision (AOLs Steve Case and

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Timer Warners Gerald Levin), fell victims of overconfidence, lack of outside opinion and

underestimating the complexity of the deal.

Shiomo Ben-hur, Karsten Jonsen and Nikolas Kinley, define the phenomena of

groupthink as a concept that although challenged in many aspects is a true fundamental fact in

the business environment and is applied on a daily basis even by the best executives. The

following two challenges can be observed from executives when it comes to making a crucial

decision: decision making process and problem comprehension. I will explain my understanding

of these two challenges and discuss separate solutions.

The focus from team members to search group cohesiveness and the efforts of teams to

reach group unanimity eventually surpasses the motivation to evaluate alternative decision on

a realistic manner, this creates a problem in the decision making process. I order to avoid such

problems, the process must require feedback and deep thinking from each team member at

several phases of the decision making process. Team members should also provide alternative

solutions and give background to their reasoning at different stages of the decision making

process. This difference of opinion will lead to arguments in search of a more valid solution.

Another way is to have these decisions evaluated from third parties completely unrelated to

the team members and the organization. This will reduce the incentive to please a corporate

goal and will release arguments from an entirely different perspective; again the reason for this

approach is the hope of finding solutions that take into effect all external aspects of the

problem. A third approach is to always include a devil advocate who will propose a different

point of view in the decision making process, this needs to go hand in hand with a corporate

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culture that instead of punishing those who speak it like it is, promote new ideas and innovative

plans that go against the usual corporate culture as long as this ideas are within the boundaries

of ethical and profitable standards.

The second proposed solution to groupthink is that solution of problem comprehension.

This solution focuses on supporting the teams in charge of finding solutions, studying the

politics, behaviors and norms used when making decisions and most importantly the

individualistic leanings of the members toward one answer as opposed to another. The

principle here is that driving towards arguments and difference of opinions leads to unclear

results when the issues involved potentially threaten or embarrass the participant members.

Basically, every individual has its own behavioral factors that affect their lucidity when making

important decisions, therefore understanding all of these political and behavioral factors that

compromise the bias of these individuals at the time of making decisions becomes a key issue in

the process of decision making.

In conclusion, driving toward argument and debate among the team members needs to

be reinforced by a perfect understanding of the sociological factors of the teams cognitive

process. This way, the ruling authority (Manager or Director) can better understand the process

for which a specific solution was formulated and decide to request an alternative solution or

execute the proposed solution.