How ‘groupthink’ ruins decision-making and how you can safeguard your startup
“Oh my God,” exclaimed one of the scientists at the ground station monitoring the flight path of NASA’s Challenger in January 1986. He stared in horror as the rocket disappeared into a hot red explosion merely 73 seconds after lift-off.
The cause of the tragedy was a malfunctioning joint — specifically the rubber O ring component — between two stages of the shuttle. What’s most horrifying is that this tragedy could have been avoided. In the preceding months when engineers had raised the safety issue with the O ring, NASA personnel discounted their concerns and urged them to reconsider. After more deliberation, engineers reversed their position and announced that the rocket motor was good to fly.
This is “groupthink.” A common pitfall in group-based decision making where members try to lower conflict and strive for consensus without rational evaluation of alternative viewpoints. As a result, the team considers few alternatives, does not re-examine them, ignores negative, and sometimes even expert opinion.[link]
“But we need to solve our cash cycle first”
A few months ago I was meeting the top management of an Indian consumer tech startup, let us call it ‘ABC’, to assess the prospect of venture investment. It was clear that the consumer experience was not great, leading to obvious loss of paid users. Despite spending an hour passionately discussing alternatives, the writing was on the wall. “We need to solve our cash cycle first” said the ops lead, and the rest of the management nodded in unison. This is groupthink for startups.
Rx a contrarian
This team needed a devil’s advocate. An independent thinker who has the perception to spot differences, bring new points of view, and put forth alternatives constructively. This is especially relevant for startups — and even more so at the early stages — when information is scarce and many decisions are based on gut and intuition of the founding team. By the time I had intervened with ABC’s management, it was too late and the team was set in its opinions.
In two studies, including one with 571 students at a top Indian business school, Lindred Greer, Associate Professor at Stanford Graduate School of Business, found that “teams — including startup teams — do better when a member in the team disagrees about the content of the work. This means that a startup will do better if someone in the team challenges the other co-founders about the strategy of the company, product decisions etc.”
Even within leading venture capital funds, diverse opinions lead to better investment decisions. Andy Rachleff, previous Partner at the successful Benchmark Capital and my professor at Stanford GSB, speaks passionately about how big venture returns come from non-consensus deals. i.e. where even the Fund’s Partners are divided on the decision to invest or not. If all partners agree to invest in a deal, it is most likely that the opportunity is too obvious for everyone to see. Thus there will be too many startups, intense competition and lowered returns in the long run.
So how to build this agree-to-disagree culture?
1. Build team diversity: People from different educational and professional experiences add variety and depth to evaluation of an issue. Among many startups I’ve come across, women are missing from decision-making rooms, even when women constitute a significant consumer segment. What does a 35-year-old IIT-educated, McKinsey COO know about the shifting fashion preferences of 20-year-old ladies? Homogeneous groups tend to disagree less from each other.
2. Build a safe space and promote honesty: The ‘no idea’s too stupid’ policy goes a long way in building trust during brainstorming big decisions. Incentivising individuals to be absolutely intellectually honest — versus presenting a manicured viewpoint and cherry-picking evidence to support it — eliminates confirmation bias. This ensures that business decisions are rooted in honest reality.
3. Eliminate hierarchy: In India, where students are not taught to debate and question professors freely, or even disagree openly with seniors, it is particularly important for founders to promote free thought while brainstorming. The ability to think at the 30,000ft level while keeping ears to the ground has served many great founders well.
4. Designate a devil’s advocate: Assigning the role formally to a group member could be helpful in nurturing the new culture. This role definition lowers the risk and provides protection for someone who steps up and voices divergent views. Shifting the role from person to person, and carefully insulating criticism of one’s opinion from their personal self will prevent any lasting damage to a person’s reputation.
5. Conversation leadership: If you did not have the founder’s role, why should anyone listen to you? Dynamic situations need quick adept handling: What happens when there is an open conflict in the room? Or how do you make a decision when there are 20 alternatives on the board? Founders should seek opportunities to learn and practice leadership in conversations. They should reflect on different strategies of managing these situations — and derive a personal style through experimentation. Most importantly, have fun listening to different points of view, and relish the passionate debates with your team mates!
If you have a story or experience to share, leave it in the comments below. I’d love to continue the conversation.
