How to avoid groupthink complications in entrepreneurship

Many of us have heard about groupthink, in which the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives. The most memorable mention of this phenomenon was the Challenger disaster in 1986. The findings of the Rogers Commission, a special commission appointed by US president Ronald Reagan to investigate the accident, pointed out the shuttle’s failure to groupthink. The commission found that Nasa’s organisational culture and decision-making processes had been key contributing factors to the accident. It reminded the world that even though these smart people are capable of orbiting the planet, they are no different from other common people (who make mistakes).

Besides the Challenger disaster, there are several entrepreneurial examples that are connected to groupthink. For example, Aaron Hermann and Hussain Rammal in their article, “The grounding of the "flying bank,” provide the role of groupthink in the collapse of Swissair, a Swiss airline company that was thought to be so financially stable that it earned the title the "Flying Bank." According to these authors, Swissair carried two symptoms of groupthink: the belief that the group is invulnerable and the belief in the morality of the group. In addition, just before the debacle, the size of the company board was reduced, subsequently eliminating industrial expertise. This resizing may have further increased the likelihood of groupthink. With the board members lacking expertise in the field and having somewhat similar background, norms, and values, the pressure to conform may have become more prominent.

Some other examples of groupthink are provided by Jack Eaton in his article, “Management Communication: The threat of Groupthink.” These examples connect to the UK based companies, Marks & Spencer and British Airways. The negative impact of groupthink took place during the 1990s as both companies released globalisation expansion strategies. Researcher Jack Eaton’s content analysis of media press releases revealed that all eight symptoms of groupthink were present during this period. The most predominant symptom of groupthink was the illusion of invulnerability as both companies underestimated potential failure due to years of profitability and success during challenging markets. Up until the consequence of groupthink erupted they were considered blue chips and darlings of the British Stock Exchange. During 1998 - 1999 the price of Marks & Spencer shares fell from 590 to less than 300 and that of British Airways from 740 to 300. Both companies had already featured prominently in the UK press and media for more positive reasons, to do with national pride in their undoubted sectoral performance.

Recent literature of groupthink attempts to study the application of this concept beyond the framework of business and politics. One particularly relevant and popular arena in which groupthink is rarely studied is sports. The lack of literature in this area prompted Charles Koerber and Christopher Neck to begin a case-study investigation that examined the effect of groupthink on the decision of the Major League Umpires Association (MLUA) to stage a mass resignation in 1999. The decision was a failed attempt to gain a stronger negotiating stance against Major League Baseball. Koerber and Neck suggest that three groupthink symptoms can be found in the decision-making process of the MLUA. First, the umpires overestimated the power that they had over the baseball league and the strength of their group’s resolve. The union also exhibited some degree of closed-mindedness with the notion that MLB is the enemy. Lastly, there was the presence of self-censorship; some umpires who disagreed with the decision to resign failed to voice their dissent. These factors, along with other decision-making defects, led to a decision that was suboptimal and ineffective.

Today groupthink continues to be a prolific and popular topic in psychology research. More than twenty major studies focusing on some aspect or application of Groupthink have been published since the beginning of 2010. One of the more popular current research trends includes comparing the prevalence of groupthink in a diverse corporate environment to that of a less diverse firm. Another ongoing study by Duval frames groupthink in the context of a small group social network. Young entrepreneurs must watch out for groupthink while making collective decisions.


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