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The Groupthink Trap: How Conformity Can Break Your Business


A painting of people in thought, symbolising groupthink

Groupthink” is a term coined by psychologist Irving Janis in 1972 to describe a situation where the desire for group harmony overrides rational decision-making.


Essentially, it happens when people in a group value consensus over the quality of the outcome, leading to less-than-optimal decisions.


Or, to put it another way, a group can value an easy-to-digest self-told lie more than a hard-earned truth.


The psychological phenomenon can lead to poor decision-making, stifled innovation, and ultimately, sabotage a team’s success.


Janis suggested there were eight main forms of groupthink;

  1. The Illusion of Invulnerability: Members of the group have an overconfident belief that their decisions are beyond reproach, leading to excessive optimism and risk-taking.

  2. Collective Rationalisation: Group members ignore warnings and do not reconsider their assumptions, rationalising away any challenges to their shared beliefs.

  3. Belief in Inherent Morality: Group members believe in the inherent morality of their group and its decisions, ignoring the ethical or moral consequences of their actions.

  4. Stereotyped Views of Out-Groups: Those who oppose the group's decisions are labelled as outsiders and assumed to be incapable of making useful contributions.

  5. Direct Pressure on Dissenters: Group members apply direct pressure on anyone who questions the validity of the arguments supporting the group’s decisions, causing most members to remain silent or to change their views to align with the group.

  6. Self-Censorship: Members withhold their dissenting opinions and counterarguments due to fear of rejection or ridicule, leading to a loss of individual creativity and independent thinking.

  7. Illusion of Unanimity: Silence is interpreted as agreement, leading to the erroneous belief that everyone in the group is in agreement.

  8. Mindguards: Some members take on the role of protecting the group from dissenting opinions or from information that might disrupt the consensus.


Recently, I’ve witnessed a public organisation (not one I’ve worked with, so don’t panic!) fall into the groupthink trap. It was so pronounced, absolute, and catastrophic as an example of group decision-making that I wanted to tackle the concept here because I see it all the time in all kinds of forms, in all aspects of life.


This article aims to provide an in-depth understanding of groupthink, explain its psychological underpinnings, and explore its detrimental effects on businesses.


Moreover, it will offer actionable steps for avoiding this common pitfall.


So, what is Groupthink?

Sometimes, we think that team cohesion is the golden ticket to success. However, that cohesion does come with its pitfalls, chief among them being the phenomena of "groupthink.".


In a business context, groupthink manifests in various ways. It might range from disregarding risky strategies due to the fear of failure to rubber-stamping a proposal simply because it comes from senior management.


Later, I’ll explore some high-profile examples, but let’s look at the mind cogs.


The Psychology Behind Groupthink

The psychological mechanisms driving groupthink are deeply rooted in our need for social cohesion to belong to a harmonious collective.


It feels like it's unravelling bit by bit every day, but generally, it's what we desire: to be part of the wider group and be accepted. With that in mind, here are a few root causes that can lead us down a path of conforming to group thinking.


Conformity

One primary factor is conformity, where individuals align their beliefs and actions with those of the majority, often due to social pressure. It’s that ‘what is everyone else thinking’ first mentality.


In a study by Solomon Asch in 1951, participants were asked to match line lengths. Approximately 75% of participants conformed at least once to a clearly incorrect majority opinion.


This pressure is especially potent in a corporate setting where job security and career progression are at stake. These are the meetings when we see everyone looking around the table and looking to see what the CEO’s opinion is before we offer one ourselves.


Do keep in mind that most CEOs are looking for decision-making support, so just looking at them before giving a viewpoint is not great for fostering a good image of yourself in that environment.


Harmony

Harmony as a concept in groupthink

Another driver is the human desire for harmony and the avoidance of conflict. Most of us don't want conflict or drama, so we take steps to avoid it.


I experience this every night when cooking several different meals for the family. But, within a working team, this can manifest as suppressing dissenting opinions or criticism out of fear of rocking the boat.


This aversion to conflict can turn constructive debate into an echo chamber of agreement. That is to say, the group will kid itself into a particular course of action.


We’ve all seen it, maybe even gone along with it. We know people in a group have voiced strong opinions in private, but when it comes to the crunch, they say nothing. That’s the avoidance of conflict kicking in right there.


Cognitive Bias

Our old friend cognitive bias also plays a role, such as confirmation bias, where we tend to favour information that confirms our existing beliefs and ignore data that challenges them.


This bias can lead to overconfidence in the chosen course of action in a group setting, often without proper vetting or scrutiny.


The Dangers of Groupthink in Business

The adverse effects of groupthink are not limited to mere suboptimal decisions; they can have far-reaching implications for businesses that extend beyond the meeting room.


Let’s look at some of the more critical dangers of groupthink.


Ineffective Decision-Making

When a team prioritises consensus over critical analysis, they risk overlooking viable alternatives or disregarding potential pitfalls.


Such lack of scrutiny inevitably leads to decisions that may not stand the test of time or reality.


For example, several times now, I’ve seen scenarios whereby organisations have launched new products without adequate market research first, resulting in significant financial losses and a major impact on staff morale. So, they had the consensus but didn’t have the data to support their decisions.


We talk a lot about ‘data driven decisions’, but the reality is that its rarely actually done.


Lack of Critical Thinking

A culture that encourages groupthink stunts individual cognitive processes.


It suppresses the ability to question, challenge, or even think outside the box. Without these capabilities, a business risks remaining stagnant and unresponsive to market changes. Thus, it becomes more susceptible to being outmanoeuvred by more innovative competitors.


This is particularly a problem for mid-sized organisations, in my experience. Smaller ones have shorter decision-making paths, fewer decision owners, and fewer stakeholders seeking to ‘add value’ (do you note how I added apostrophes there to show I didn’t mean that they add value?)


So, as organisations get larger, the decision-making framework usually becomes less clear about who is empowered to make the decisions, and people start looking for democratic decision-making, which I’ve written about in an upcoming article for the Project Management Institute.


Ignoring Alternatives

In a group environment, members tend to zero in on a single course of action, often neglecting to explore other avenues.


This blinkered view can lead to missed opportunities and potentially better solutions. In more severe cases, it can even mean overlooking critical ethical considerations, thereby compromising the integrity of the business.


This isn’t necessarily tied to only groups; we do it as individuals as well, but it IS noticeable that in groups, we can look more widely at options because we have different minds coming together to solve a problem, yet we fall into a trap that we should be able to avoid.


Overconfidence in Choices

One of the most treacherous aspects of groupthink is the false sense of security it imparts.


When everyone agrees, it can be easy to assume that the decision is sound. This overconfidence can be perilous, particularly when it leads to inadequate risk assessment or failure to anticipate market responses. We’ll dig into some meaty examples of this in a moment with historical examples.


Stifled Creativity and Innovation

In a groupthink scenario, homogenisation (like the word?) of ideas is almost a given.


Creative and unconventional solutions are often suppressed, as they could disrupt the harmony within the group.


This is particularly detrimental in industries where innovation is key to staying ahead of the competition.


A company bound by groupthink will likely be a laggard rather than a leader in its field.


The other day, during a radio debate about the role of freedom of speech in relation to journalism and truth, the UK broadcaster Nick Robinson was saying how he felt that if there was an unconscious bias in the established UK mainstream media, it was in this area that they accepted the conventional wisdom too readily, and sometimes that wisdom changes as a society or organisation matures. What he was alluding to was the mainstream media typically does try to be impartial (you may scoff, and fair enough) but is biased in its impartiality towards the accepted social belief rather than seeking to dig in and challenge it factually.


Ethical Risks

The desire for unanimity can sometimes overshadow ethical considerations.


When everyone is aligned, and dissent is frowned upon, decisions that compromise integrity can slip through the cracks.


This negligence of social responsibility can manifest in various forms, from poor environmental practices to exploitative labour policies.


Reputational Damage

The implications of groupthink extend to how a business is perceived externally.


Public relations disasters stemming from poor decision-making (Coca-Cola, I’m coming back to you) can lead to significant backlash.


Whether it's consumer boycotts or tarnished relationships with stakeholders, the long-term harm to brand value can be incalculable.


Case Studies: Groupthink Gone Wrong

In order to better understand the destructive power of groupthink, let's delve into some historical examples where this psychological phenomenon has led to disastrous outcomes in the business world.


The Fall of Enron


enron as an example of groupthink

Perhaps one of the most notorious instances of groupthink leading to catastrophic failure is the case of Enron.


Enron Corporation, founded in 1985, was an American energy company headquartered in Houston, Texas.


It rapidly became one of the world's leading electricity, natural gas, and communications companies.


However, behind the scenes, Enron hid massive debts and losses through complex accounting loopholes.


By the late 1990s, a culture of excessive risk-taking and an absence of internal checks and balances led the company to increasingly dubious financial practices.


It wasn't until 2001 that whistleblowers and investigative journalists began to expose the financial irregularities, leading to a sharp decline in stock prices and, eventually, bankruptcy in December 2001.


The energy company's high-risk accounting practices were not questioned due to a culture discouraging dissent.


Even as red flags began appearing, employees and the board ignored the warning signs. They included wildly fluctuating financial statements, complicated and opaque accounting methods, and a series of off-the-books partnerships designed to hide debt.


Skilling and Fastow, key figures in the scandal, implemented financial tactics to keep massive debt off Enron's balance sheet, thereby misleading investors and regulators.


External auditors, who were supposed to act as gatekeepers, did not question the company’s accounting practices.


Furthermore, whistleblowers were largely dismissed or ignored, stifling internal dissent.


These ignored warning signs collectively contributed to the blind approval of high-risk accounting and investment practices, leading to the eventual implosion of the company.


The fall of Enron resulted in an estimated loss of $74 billion for shareholders, thousands of employees losing their jobs and savings, and stricter financial regulations, including the Sarbanes-Oxley Act of 2002.


Source: McLean, B., & Elkind, P. (2003). The Smartest Guys in the Room.


 

The New Coke Debacle


new coke vs old coke as an example of groupthink bias


In the mid-1980s, Coca-Cola faced stiff competition from its arch-rival, Pepsi (my personal favourite. Go team Pepsi!).


Market research seemed to suggest that consumers preferred a sweeter taste, similar to that of Pepsi. To counter this trend and rejuvenate its brand, Coca-Cola executives decided to reformulate their century-old beverage. Then-CEO Roberto Goizueta championed the initiative and it was internally dubbed "Project Kansas."


After conducting blind taste tests, which they believed confirmed their hypothesis, the executives were convinced that the new formula would be a hit. However, this is where groupthink reared its ugly head.


The decision to change the formula was met with unanimous approval within the company, despite significant historical brand loyalty from consumers and the fact that the taste tests were flawed in not considering the emotional and cultural attachment to the original formula.


Several red flags were overlooked in the process:


The taste tests did not account for consumers' sentimental value attached to the original Coca-Cola.


There was a glaring absence of market research exploring the potential backlash from changing a century-old, beloved formula.


Internal concerns or questions about the move were suppressed, and a general atmosphere discouraged dissent.


The new formula was launched in April 1985 amid much fanfare but was met with immediate public outcry. Consumers stockpiled the original Coke and protested outside the company headquarters. The public’s emotional attachment to the original recipe was grossly underestimated, and the groupthink within Coca-Cola had blinded them to potential pitfalls.


Within a few months, the company made an about-turn, reintroducing the original formula as "Coca-Cola Classic."


The New Coke debacle remains one of the most striking examples of how groupthink can lead to a costly, embarrassing, and completely avoidable business failure.


Source: Oliver, T. (1986). The Real Coke, the Real Story.

 

Each of these cases serves as a cautionary tale, underscoring the dire consequences of groupthink in a corporate setting.


They emphasise the importance of encouraging dissent and diversity of thought to foster a more resilient and adaptable business environment.


How to Mitigate Groupthink

While the dangers of groupthink are apparent, the good news is that its detrimental effects can be mitigated through various strategies designed to foster open dialogue and critical thinking.


Encourage Dissent

a picture of the devil to represent a devil's advocate in the process

One effective way to combat groupthink is to encourage dissent within the team actively.


I’ve sometimes heard of it as ‘bear pitting’, whereby an idea is deliberately explored from contentious angles to prove it has legs. It’s a process that can explore the validity and reasoning behind something.


In a similar manner, you could alternatively appoint a 'devil’s advocate', where one team member is tasked with challenging prevailing assumptions and presenting alternative viewpoints.


Both approaches disrupt the comfort zone of unanimity and force the group to examine the issue more thoroughly.


Anonymous Feedback Mechanisms

Anonymity can embolden team members to voice their genuine thoughts without fear of reprisal. Twitter is proof of that.


Anonymous surveys or suggestion boxes can be useful for gathering diverse opinions, especially when dealing with sensitive or controversial topics.


I’m not suggesting, for one moment, that you do this with a team, but you can do this with stakeholders and those impacted by a decision to see if there are aspects of the decision that need further exploration.


The problem can be, that if you wait until too late in the decision-making process, the group will have effectively made its mind already, and then it becomes just a task, the outcome of which cannot change the groupthink. So, ultimately pointless.


Promote Diversity

Diversity is not just a buzzword; it’s an essential component for avoiding groupthink. Teams of individuals with varied backgrounds, experiences, and perspectives are less prone to falling into the groupthink trap.


Foster an inclusive culture that values different viewpoints, as this can enrich the decision-making process.


Leadership Styles

The role of leadership cannot be underestimated in combating groupthink.


Adopting an open-door policy and actively listening to team members can go a long way in promoting an open and healthy dialogue.


Leaders should aim to facilitate rather than dictate discussions, making it clear that dissenting opinions are not just tolerated but are actively encouraged.


A 2009 study by Elizabeth A. Mannix and Margaret A. Neale found that leaders who encourage debate and dissent were more likely to avoid groupthink and make better decisions.


In Conclusion


Groupthink is a pervasive and often insidious challenge that can hamper a business's ability to make sound decisions, innovate, and maintain ethical standards.


The risks range from poor decision-making and stifled creativity to ethical lapses and severe reputational damage. Fortunately, understanding the psychological mechanisms behind groupthink and recognising its symptoms can pave the way for effective mitigation strategies.


Promoting an environment that values dissent, diversity, and open dialogue is crucial. Leadership also plays an especially significant role in setting the environment's tone.


By being vigilant and proactive, businesses can avoid the groupthink trap and instead harness the collective intelligence and diverse perspectives of their teams to drive success.


The dangers of groupthink cannot be ignored or underestimated, making it essential for companies to take active steps to counteract its effects.


After all, the strength of a group should lie in the diversity of its members' thoughts, not in the uniformity of their agreement.


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About the author

Hi, I'm Alan, and have been working within the IT sector for over 30 years.

For the last 15 years, I've focused on IT Governance, Information Security, Projects and Service Management across various styles of organisations and markets.

I hold a degree in Information Systems, ITIL Expert certificate, PRINCE2 Practitioner and CISMP (Information Security Management).

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