The Simple Solution to Groupthink

January 15, 2021

Groupthink is a psychological phenomenon that occurs in a group that puts harmony and conformity over making good decisions. The outcome of groupthink is often poor decision making and can lead to great failures in business decisions as well as foreign policy decisions.

In an article published in the Fall 2020 issue of University of Toronto’s Rotman School of Management, Khalil Smith writes about groupthink and how the key to overcoming it is simple – have a diverse group.

When someone is in a group in which they value their membership, the accuracy of decisions fall behind their need to agree with one another. People tend not to raise concerns to go along with the group or leaders’ opinion leading to poor decisions that can have catastrophic repercussions. Research has found that less groupthink occurred in companies with a more diverse team. This occurs in gender, racially and ethically diverse groups. This phenomenon can also occur when an outsider is present. All of these factors change the behaviour of the group, adding fresh perspectives which can improve the critical thinking of the majority.

“McKinsey & Co. conducted a survey of 366 public companies and found that those with more ethnic and racial diversity among managers produced superior financial returns. In fact, the top 25 per cent most diverse companies generated 53 per cent more return on equity than the least diverse companies. Another study found that racial and gender diversity correlate with greater sales revenue, more customers, and higher profit.”

Human beings crave cohesion and similarity. Cohesion is easy and comfortable, which puts pressure on individuals to conform and to not disturb consensus. To upset the balance, diversity is crucial in order to create an uncomfortable environment where conflict may arise, leading to greater discussions and better decision making.

“At Massey Capital, diversity and inclusion are at the forefront of how we operate.” says Managing Partner, Roman Kocur, “we see our differences as assets and strive to create an environment where diverging opinions are heard and debate is encouraged.”

Read Khalil’s full article here.