Download why the best executive teams sometimes make the worst decisions

WHY THE BEST EXECUTIVE TEAMS
SOMETIMES MAKE THE WORST DECISIONS
Beware of Groupthink
By Professor Shlomo Ben-Hur, Research Fellow Karsten Jonsen and Nikolas Kinley October 2010
IMD
Chemin de Bellerive 23
PO Box 915,
CH-1001 Lausanne
Switzerland
Tel: +41 21 618 01 11
Fax: +41 21 618 07 07
[email protected]
http://www.imd.org
WHAT’S THE FUTURE FOR INTERNATIONAL BUSINESS RESEARCH? I Introducing the concept of scientific mindfulness
Almost exactly two years ago the economic tsunami descended on the world. Its causes were
manifold and complex. It is widely accepted that many banks took risks that they shouldn’t
have. Somehow, the wrong decisions were made, the wrong risks were taken, and they
weren’t stopped. The antecedents of this undoubtedly included systemic causes, buried deep
and running through the entire financial and political systems. But what is also clear is that
specific protective structures and mechanisms that were established to secure these
institutions from bad risks and poor decisions – such as the banks’ boards – failed to deliver.
Good guidelines and motivations are rarely enough to ensure sound decisions. Indeed,
research has shown that it is entirely natural for decision-making groups, whatever their
motivations and guidelines, to tend to suppress information flow, have more extreme attitudes,
make more extreme judgements, and are less flexible in adapting their approach to changing
circumstances, and – amazingly despite all this – have greater confidence in their decisions.
This assessment is not a reflection on individual ability or motivation, but is due to natural
group dynamics. Put your best people in a cohesive group and chances are that sooner or
later, these group dynamics will emerge and get the better of them. These are not faults that
arise when someone does something wrong; but are instead natural occurrences that require
extra, unusual steps to avoid.
Traditional learning mechanisms are insufficient in addressing the pervasive and deep-rooted
challenges of good team decisions. The reason for this is that many of the causes of the
problem are what could be called default human behaviors – what most people are
accustomed to do in a given situation.
Consequently, merely establishing processes and providing guidelines and information is
unlikely to deliver improvement. To bring about change against the tide – to help people do
something other than what comes naturally to them – requires more than just imparting
awareness of how they should act and then leaving them to it. It demands hands-on help and
repeated practice and feedback: direct and individualized interventions that enable the
development and practice of new skills. This often requires the presence of an expert coach.
IMD – www.imd.org
Page 2/6
WHAT’S THE FUTURE FOR INTERNATIONAL BUSINESS RESEARCH? I Introducing the concept of scientific mindfulness
Groupthink: Why acting effectively in a group isn’t easy
The challenge facing executive groups in ensuring that failure does not reoccur is simple:
Groupthink. The term was coined by William H. Whyte in a 1952 Fortune magazine article, but
is perhaps most synonymous with the work of Irving Janis, who researched the subject
extensively. Janis (1972) defined Groupthink as:
A mode of thinking that people engage in when deeply involved in a cohesive in-group,
when the members' strivings for unanimity override their motivation to realistically
appraise alternative courses of action.
Through his research Janis identified three layers of Groupthink: key underlying causes,
common symptomatic behaviors and resulting decision-making flaws. The key causes
included group cohesion, directive leadership and ideological homogeneity. The common
symptomatic behaviors resulting from these causes included overestimation of the capabilities
of the group, close-mindedness and pressures for uniformity. And the consequent decisionmaking flaws included inadequate contingency planning, insufficient information search and
biased assessments of risk, cost-benefits and moral implications.
While some details of his model have been much debated, the concept of Groupthink has
remained intact and subsequent research has confirmed the existence of many of its aspects .
Generally accepted is that groups tend to suppress dissent; focus discussion on things that
they already agree about rather than things they disagree about; have more extreme attitudes
and judgements on a wide array of issues and decisions than the individuals within the groups;
have greater confidence in the correctness of their decisions and attitudes than individuals;
lead individuals to publicly endorse decisions and attitudes that they view as normal for the
group despite privately holding reservations. It should come as no surprise that group
decision-making is difficult.
What’s to be done: Processes, insights and psychological safety
IMD –www.imd.org
Page 3/6
WHAT’S THE FUTURE FOR INTERNATIONAL BUSINESS RESEARCH? I Introducing the concept of scientific mindfulness
Broadly speaking, two main types of solutions to the problem of Groupthink have been
suggested. The first are process solutions – solutions that seek to insert particular processes
into decision-making meetings with the aim of ensuring effective debate and discussion.
Therefore, organizations should set up several independent groups, working on the same
problem; the board should invite outside experts into meetings to discuss key issues; each
member should discuss the group's ideas with trusted people outside of the group (i.e. a coach
or mentor).
Subsequent research has added to this list. First, and unsurprisingly, simply having a debate
helps, as can just extending the time available for discussion. Likewise, assigning at least one
group member the role of Devil’s Advocate can have a positive impact on decision-making, an
idea that has been developed and extended in Edward de Bono’s popular ‘Six Hats’ process
for decision-making discussions.
The second type of solution to the problem of Groupthink is insight solutions. These are
solutions that focus more on helping decision-making teams to understand how they make
decisions and the politics and biases involved. The ultimate goal is to help teams improve their
decision-making process. This is the approach championed by Chris Argyris, who argued that
simply creating debate is of uncertain use when the issues involved are potentially threatening
or embarrassing to the participants. He thus sought to surface the cognitive biases, personal
politics and emotional undercurrents that lurk behind and underpin so much organizational
decision-making. He described a method for improving the thinking and decision-making of
executive groups that are involved engaging them both collectively and individually as a
coach/facilitator, giving them feedback, challenging their thinking, and using focused exercises
to help them reflect on how they operate. His purpose here was to help executive groups to
understand their patterns of behavior, what they both individually and collectively did to
maintain them, and what they could do to change them.
There is of course substantial merit in both types of solutions. However, the best way forward
is combining these: using simple processes to encourage certain behaviors and working with
teams to help them understand their default behaviors and the social-political context which
IMD –www.imd.org
Page 4/6
WHAT’S THE FUTURE FOR INTERNATIONAL BUSINESS RESEARCH? I Introducing the concept of scientific mindfulness
breeds them. At the same time, any intervention aimed at improving decision-making
processes should be utilized.
The ultimate goal is to help organizations create a culture in which ideas, challenges and
concerns can be freely voiced: what is called a culture of psychological safety – where
individuals believe that it is safe to take interpersonal risks, such as asking for help, admitting
errors and challenging. It is pointless sending leaders to a course on ‘articulating challenges’
and pushing them to have the ‘courage to lead’ if they then get shot down for doing so. If
organizations really want to ensure good decision-making for tomorrow, they need today to
start creating an environment in which speaking up can not just survive, but actually thrive and
is encouraged and rewarded. It is just one way to help avoid the next financial crisis.
Shlomo Ben-Hur teaches leadership, organizational behavior and corporate learning at IMD.
He is the faculty member responsible for the leadership stream in IMD’s Advanced Strategic
Management program.
--Janis, I. L. (1972). Victims of groupthink. Boston: Houghton Mifflin.
--Baron, R. S. (2005). So Right It's Wrong: Groupthink and the Ubiquitous Nature of Polarized Group Decision Making. In Zanna, Mark P (Ed.)
Advances in Experimental Social Psychology, Vol. 37. (219-253). San Diego. Elsevier Academic Press.
--Brodbeck, F.C., Kerschreiter, R., Mojzisch, A., Frey, D., & Schulz-Hardt, S. (2002). The dissemination of critical, unshared information in
decision-making groups: the effects of pre-discussion dissent. European Journal of Social Psychology, 32:35–56
--Edmondson, A. (1999). Psychological Safety and Learning Behaviour in Work Teams. Administrative Science Quarterly, 44:350-383
IMD –www.imd.org
Page 5/6
WHAT’S THE FUTURE FOR INTERNATIONAL BUSINESS RESEARCH? I Introducing the concept of scientific mindfulness
RELATED PROGRAMS
PROGRAM FOR EXECUTIVE DEVELOPMENT - http://www.imd.org/ped
Building global leaders
Program Directors Bala Chakravarthy and Stuart Read
− Learn to drive performance in a fast-changing global environment
− Discover how to build a better business: gain skills, create networks and inspire others
− Reach your leadership objectives with personal coaching
− Get ready for IMD's Executive MBA degree
ADVANCED STRATEGIC MANAGEMENT - http://www.imd.org/asm
Driving sustainable business results
Program Director Arturo Bris
− For executives taking on new and significant leadership responsibilities, who are looking
to sharpen their analytical skills and strategic leadership effectiveness – as business-unit,
region, division, function or country leaders
− Prepare to boost performance at individual, team and business-unit levels
− Ensure that your organization is keeping ahead in a constantly changing business
environment
IMD –www.imd.org
Page 6/6