Groupthink and organisational success: friends or foe?

Striking the right balance when it comes to groupthink can greatly improve the innovation capability of your executive team as well as its efficiency

There are tactics that boards can implement to minimise groupthink and encourage cognitive diversity around the table – but this kind of mentality won’t go from zero to ‘hero’ overnight, writes Judith MacCormick

Diversity is by no means a new consideration for boards and management teams alike. Read any organisation’s annual report and you’re bound to see diversity as a key focus, be it from a reputation, legislation or compliance perspective.

Increasingly, boards consider diversity solely in terms of gender diversity. Of course this is important not just for women, but society and the economy as a whole. However, if an organisation wants to better succeed they need to go one step further. They need to bring people onto their board that not only appear to be diverse in the physical sense (e.g. age or gender), but are also diverse in the cognitive sense. People that think differently as a result of unique experiences and ways of seeing the world.

Through my experience advising Chairs and C-Suite leaders on board composition, and translating this into designing the Leading Boards program at the Australian Graduate School of Management, UNSW, it is clear that achieving cognitive diversity within organisations is not as easy as it may seem. A major barrier to this is the existence of ‘groupthink’, which occurs when people in a group start to think in the same way in an effort to achieve harmony.

Risky business
In the days of the industrial era, groupthink worked to the advantage of organisations. A collective mindset influenced by cogs and wheels, production lines and efficiency meant boards could make decisions quickly. But now businesses operate in a world that is increasingly volatile, uncertain, complex and ambiguous. As such, they need to comprise people with diverse problem-solving skills to stretch their thinking into a new, disrupted environment.

“Time and time again I’ve seen people who have a different way of thinking succumb to the power of groupthink out of fear of standing out and the human desire to move forward as a group – be it consciously or subconsciously”

However, a key risk of groupthink is the stifling of innovation even before the decision-making process begins. Take, for example a strategic decision such as deciding on a new product. The board may appear to begin with a wide funnel of possibilities. They’ll move through a process of narrowing them down to the best options, testing the market, iterating this, making a decision and eventually launching the product. But if the top of the funnel is already tainted by groupthink (causing some possibilities to be left out of the consideration set to begin with), then no matter how many ways the board tries to encourage diverse thinking down the track, they won’t have considered all the options.

Not only can this phenomenon restrict boards from reaching their full potential, it can strain relationships, causing some board members to feel isolated. Time and time again I’ve seen people who have a different way of thinking succumb to the power of groupthink out of fear of standing out and the human desire to move forward as a group – be it consciously or subconsciously.

When the time is right
All of this isn’t to say that organisations should sound the alarm bell and try to shut down groupthink every time a decision needs to be made. Groupthink can be useful to organisations – but only when harnessed correctly.

When it comes to decisions that are low cost, low risk and high volume, groupthink can actually enhance the efficiency of decision-making. In these instances, where a proven process has already been established, cognitive diversity may not add anything other than more time.

Cognitive diversity and its ability to bring new ways of thinking to the table has proven to be extremely effective for innovation. But it is not so easy to execute. When board members look through multiple lenses and negotiate the decision-making process, it takes longer to come to a decision, although that decision is often ultimately better.

The real challenge for boards today is to strike the right balance between diversity of thought and efficiency in action.

“Cognitive diversity and its ability to bring new ways of thinking to the table has proven to be extremely effective for innovation”

Mitigating groupthink
There are tactics that boards can implement to minimise groupthink and encourage cognitive diversity around the table. But this kind of mentality won’t go from zero to ‘hero’ overnight. The board needs to find the confidence to work through decision-making processes and challenge each other without the process spiralling out of control.

This can be as simple as asking questions that deliberately critique the decision at hand. The key is to play devils advocate to challenge existing assumptions and to look for holes. Because if current and aspiring board members want to succeed in a disrupted world, they need to engage in respectful conflict and never take an idea for granted, no matter who or where it has come from.

Exercises such as de Bono’s six thinking hats are also a proven way for boards to encourage diverse thinking. Group members each metaphorically ‘put on a different hat’, challenging them to view the situation through a different lens. This will result in richer, more innovative decision-making and a more effective board.