“Nobody is as smart as Everybody” – Kevin Kelly
Crowd sourcing is all the rage – use the collected knowledge and wisdom of a large population to review choices, assemble information and make connections. In the business world, many leaders believe that if you put a smart, diverse group of passionate people around the table you elevate the discussion and end up with quality decisions.
While good discussion and decisions are the intent, it’s important to note that groups are influenced by a variety of behavioral science biases that have the potential to short circuit quality discussions and lead to flawed outcomes. In their book Billion Dollar Lessons, my friends Paul Carroll and Chunka Mui review massive business failures and the events that lead to those failures. One highlight, over and over, is the lack of effective discussion and decision making despite often having the best and brightest brains in the room. Why?
Many factors influence the effectiveness of group decision making. Here are five of the most pernicious:
- Confirmation Bias – We tend to give excess weight to information that appears to confirm our position. We further downplay information that challenges those existing positions and then we frequently misinterpret neutral information in a manner that supports our position.
- Availability Cascades – The knowledge that is contributed first is unduly favored and drives the discussion. This tendency is even more powerful when the first contribution comes from one of the more senior members in the group.
- Over-Optimism – Organizations tend to hire optimistic individuals and senior team members almost always have a track record of making things work. This tendency to lean toward optimism leads to excessive risk taking as new information is often discounted or ignored (see Confirmation Bias –above!)
- Escalation of Commitment/Sunk Cost Fallacy – The team is usually reluctant to change course when significant resources have already been expended – even in a poorly performing situation. This inability to stop continued investment can lead to a prolonged and expensive mistake.
- Group Think – Perhaps the most dangerous tendency of all is Group Think. This is the tendency for cohesive groups to move toward unanimity, effectively preventing individuals from expressing descent. A related group attribute is Pluralistic Ignorance, which is when members who don’t agree with an emerging decision keep quiet because they assume that other members of the group possess additional facts and information.
Recognizing these factors is an important step in facilitating effective group discussion and decision making. In addition, there are a number of simple things you can do to counteract their effect. Here are a few examples:
- Early in my career I worked for a brilliant woman who had a real sense for the power of the Availability Cascade effect. She would have a member of her team outline in a neutral fashion the issue and then asked the most junior person on the team to start the discussion. She continued to move up the ladder and was almost always the last person to speak. Very powerful. How often do the most senior people on your team set the tone and agenda for the discussion, only to complain later that they heard no new ideas or different perspectives?
- One way to counteract the risk of Escalation of Commitment is to imagine the interest a new player might have in the continued application of resources to the project. Would they recommend another option?
- As a veteran Chief Strategy Officer I am a big fan of a third way to counteract any of the natural biases above. It’s the Devil’s Advocate Approach. You can use this process to make sure your strategic plan or business solution gets ‘stress tested.” By being the Devil’s Advocate, alternative approaches are considered, assumptions and facts are challenged, and all the questions, especially the really hard ones are asked. Sometimes this can be done with internal resources; some circumstances demand external players.
Behavioral insights do not just focus on the seemingly irrational behavior of individuals as they analyze choices and make decisions. Behavioral economics provides real insights into the dysfunctions that often manifest themselves in group dynamics and decision making. Understanding those insights helps you identify them in real time and provides ways to effectively counteract them and take full advantage of the skills, experience and insights of the team you’ve assembled. Don’t be a case study in the second volume of Billion Dollar Lessons!