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If you’ve paid attention to the modern business landscape in recent years, you’re probably familiar with the concept of groupthink. Closely related to circular reasoning’s logical fallacy, group think exists when a faction of like-minded people does not allow enough outside information to enter into their collective decision-making processes. As you might imagine, the results can be catastrophic for an organization.

 

The fallout from groupthink is also a bit counterintuitive: After all, you might think that having everyone on the same page within a business environment would be a good thing: Don’t people who think alike tend to get along better with one another? Unfortunately, however, closing out dissenting viewpoints can leave us vulnerable to our logical errors. 

 

The Rise and Fall of a Successful Company

Suppose, for example, that an executive team at a successful company is preparing to launch a service via a sterling new mobile app. Everyone on the c-suite team has little doubt that the service will be anything less than a resounding triumph. A few years ago, a video game delivery service developed by the company was hyped up beyond belief by a dedicated customer base and a smattering of industry journal headlines. 

 

And people do genuinely love the company’s business model: At this point, many fans are even making laudatory memes about the company and posting them on social media!

 

Of course, no one in the company’s executive class is happy to learn that this month’s service tests aren’t going according to plan. According to company leaders, this should be a positive environment. Who needs the negativity of undue criticism when you have a company to run? Isn’t that how the power of positive thinking is supposed to work

 

Things Start Going Wrong

Unfortunately, early reviews of the new service aren’t entirely positive. The turnover rate for coders at the company has also become something of a problem. 

 

However, the company’s fans are merciless to reviewers who question its new app’s efficacy. Employees who leave the company are mocked on Twitter. The fans simply don’t want to hear that their favorite company might be creating a subpar service. The executives of the company don’t want to listen to it either. And the consultants are saying that everything is going well!

 

The Inevitable Happens

 

There is no happy end to this story: After two years, the company is all but forgotten by the public. They are snapped up by a predatory conglomerate for pennies on the dollar. Investors are happy not to have to deal with the company any longer. In one of their most popular courses, Harvard Business School uses the company as a case study of what not to do when running a business. 

 

Diagnosing a Problem

So what happened to this once-promising firm? 

 

The company started losing its bearings when executives created a closed channel of information for itself to wit. Executives thought that one success with customers meant that every service or product launch headed by the company would be equally successful. Any information that contradicted that view was ignored. 

 

Moreover, the company’s customers and a handful of business journalists told them from the outset that they were great; riding high on public praise, executives were only too happy to coast on their previous successes. It didn’t help that journalists or former employees asking difficult questions were iced entirely. Executives may have also wanted to justify spending on expensive consultancy fees by privileging consultant opinions over common sense.

 

Lessons Learned

At base, this is the danger of groupthink. In a business environment, honest criticism is a lot like oxygen: Without it, no company can survive. Human beings thrive on positive reinforcement; no one wants to hear bad news. Unfortunately, bad news has a way of finding us one way or another. When we put off dealing with bad news for months or years at a time, we might just find that things have gotten much worse in the interim. 

 

To succeed in business, we have to be comfortable with honest assessments of our strengths and weaknesses. This is particularly difficult when we’ve gotten a taste of success. Too often, board members and investors of promising companies don’t want to hear about underlying issues affecting strategic initiatives. 

 

To succeed in business, however, we must embrace our mistakes and learn from them. When we fall into the trap of groupthink, we may never have the chance to get out.