Startups, decision-making, and how to avoid groupthink
According to a number of studies, the no.1 reason for start-ups failing is because they fail to achieve product market fit. A primary cause for this occurring can be groupthink. In my previous article Brand Values – Making a Pact discussed team-based values being at the heart of a brand, and how important values alignment is for team success and decision-making. However, when does alignment become groupthink, and how can a team or leader sense check, and ensure they’re not missing the target because team agreement has unintentionally become the priority?
First an overview of the concepts:
What is consensus voting in a team environment?
When teams face decision-making on substantive issues, one leadership method is to seek group consensus. In a constructive and honest team environment, having everyone “buy in” to the agreed action should mean a team with diverse perspectives and experiences has come to an aligned outcome.
In a negative environment, consensus can mean simply concession of validly held positions to the mood in the room or a perception of the leadership’s position, fear of repercussions, or apathetic agreement.
What is groupthink?
Groupthink is a need to conform being so strong that it overwhelms the pursuit of knowable truth and results in irrational decision-making. Where Groupthink dominates, people are so concerned to achieve a consensus that they set aside their valid personal views and critical analysis. In fact, they so value the short-term security to be found in consensus, that they trade off product market fit, organisational and individual wellbeing. Groupthink then can be seen as one of the most significant organisational risks impacting start-ups and scale-ups and well-established groups in different ways. It effects groups at all levels and isn’t tempered by experience, with company boards frequently demonstrating groupthink.
What causes it?
A number of factors can create a circumstance where teams fall into groupthink. These include:
stress
lack of clarity over purpose, intention or plan
pressure to perform, especially in a culture that doesn’t tolerate or value mistakes or failures
having a team or leadership that is insular
insufficient primary information and preparation
All this meaning, perspectives are based on narrowed views, perceived consequences and context including group dynamics and the history of leadership behaviour.
What are the potential consequences?
Among the worst consequences can be a failure to achieve product market fit; launching in market products that fail to meet customer need.
This is the killer of start-ups, and scale-ups. Mature companies aren’t immune, the failure to see the opportunity cost of the status quo is why they fossilise.
Another serious consequence is failing to identify, assess and prioritise risk mitigation. When the boss, peer pressure to conform, or the board are a clear and present risk, who is going to speak up?
It’s clearly critical to set an internal dynamic that not only avoids this outcome but has the inverse effect.
An incumbent’s groupthink creates the precise opportunity for a great start-up team that manages risk, produces compelling products, and leverages business model innovation to win the market through disruptive thinking.
How to sense check important decisions
Has all available and relevant information been shared with the team on which to base the decision?
Has adequate time been given for them to develop a valid, informed position?
Have the team been given a sense of responsibility and ownership over outcomes?
Do the team feel safe enough to make mistakes?
Have all avenues of potential negative outcome been explored?
Has there been rigorous and respectful argument?
While there’s some truth in a joke, there can be some insight in a crazy idea. Have all the crazy ideas been considered for opportunity?
Does the decision meet the strategic objective, or lead to an outcome that achieves a strategic goal?
Does the decision meet the immediate requirement in a way that is consistent with the brand and the purpose of the company?
How to avoid groupthink
Setting the right environment includes having the right cross section of thinkers in the team allowing problems to be viewed in different ways. People talk about “hiring for cultural fit”, or not. Hiring for values alignment and hiring for varied approaches to problem solving are quite different, and while a company might hire with values alignment in mind, individuals can have very different ways of thinking that materially benefit the team as a whole.
There are many models for profiling personality types, so a team can have a balance of thinkers, e.g. Dalio’s PrinciplesYou, Enneagram, Myers-Brigg, Six Thinking Hats, etc. It’s useful to get a profile of your team and consider widening the net from the larger team if possible
Including people in the team who are scattered across the neurological spectrum provides different ways of seeing problems and drawing out irrational conclusions. Inversely, including generalists in discussions with primarily specialist teams can help reveal more efficient or practical outcomes
Diversity in learning background, culture, geographic origin, age and sex. Varied world experience can impact the quality of critical analysis in decision-making
Take counsel from trusted advisors who, hopefully, have been contracted because they complement in-house strengths
What is an alternative to consensus decision-making? Some ideas:
In a small team, allow each person to voice their opinion, with the CEO or lead speaking last. A great team should be able to tease out underlying concerns and risk factors with appropriate reference points to support these concerns
In a large team, if the team lead is particularly strong, have them reserve their opinion, or stay out of the room for the discussion
If appropriate, bring in an expert facilitator to help maintain perspective and inclusivity and draw out any bias
Break into smaller groups with a nominated speaker from each group to summarise the small group view to the larger group.
Creating the decision-making environment that promotes opportunities for teams to conduct critical analysis and question action plans essentially must be based on trust. Fostering the confidence to speak up, voice ideas, make mistakes and learn quickly is fundamental to survival. Without this foundation, it is easy for groupthink to develop. Keeping shared goals as the priority in all discussions reinforces purpose and ensures decisions are in the best interests of the market, the consumer, the business, its team and shareholders.
