The reality of group decisions: for better or worse?
The majority of business decisions are taken in groups. Does this have any implications for the outcome of your decisions?
This article will look at the perceptions of group decisions, the reality and how behavioural insights can improve decision-making.
This article is part of a series on how to design a better approach to taking decisions.
The perception of group decisions
The rationale behind group decisions is sound and has many advantages: it fosters collaboration, shared responsibility and commitment to a common purpose. Moreover, its members can contribute a broader range of views, experiences and expertise.
Team discussion is considered a core activity. It promotes aggregation of information, it can facilitate a shift of perspective and greater creativity. It can also identify the best solution.
Are there any pitfalls in how we take group decisions?
The reality behind group decisions
This is a very important question because many decisions turn out badly, sometimes irreparably so. An estimated two-thirds of decisions are based on tactics that are questionable or likely to fail. This estimate is based on the analysis of 400 strategic decisions by top managers (Nutt, 2002).
How often do you read about a company who took a ‘bad’ decision? The negative impact on the bottom line, reputation and sometimes even its survival, seems so obvious. And you ponder “How did they get it so wrong?”. And then you may think “Can my own company be a risk?”
The intrinsic problems in group decisions
Research and experience show that human being are subject to many influences.
Subconscious influences are magnified when people are in a group situation, which can lead to worse outcomes.
You may already be familiar with some of these influences:
Biases: even if we don’t like it and know it is unfair we all have subconscious inclinations towards or against other people and groups
Emotions in thinking: sometimes we need to rely more on facts and logic
Familiarity: we naturally choose options and solutions we can easily connect with
Overconfidence: we did well so many times in the past, what can go wrong?
Escalation of commitment, we naturally want to continue supporting an idea or project which has already started
Let imagine…. Steve is in a room together with his colleagues and they need to take an important decision: should they invest in a new product? It is a costly and will impact the future of the company.
Steve is committed to the best results for the company, but what about these influences:
“The product manager looks so much like John from my previous job and I could never trust him’ = biases
“The new product looks so much fun to use” (but very costly to produce) = emotions in thinking
“I know how to use this product and I like the colour” = familiarity
“We launched some many good products, this is bound to be a success” = overconfidence
“We have already invested in design, we ‘have’ to keep going” = escalation of commitment
Some of these influences may not have any negative impact, but what if they jeopardise the future of the company. Are you willing to take this risk?
How to find out more
My research has identified three sources of behavioural influences which have a negative impact on quality of decisions: unshared information, social pressure and cascades.
Recognising these influencing factors is the first step towards improving the decision process.
The subject of my next post is unshared information. If you want to be a step ahead, and discuss decision-making and behavioural change in your organisation, contact me firstname.lastname@example.org
References and further reading:
Kahneman, D. (2011). Thinking, fast and slow. In. London: Allen Lane, Penguin Group.
Nutt, P. C. (2002). Why decisions fail: Avoiding the blunders and traps that lead to debacles. Berrett-Koehler Publishers.
Sunstein, C. R., & Hastie, R. (2008). Four Failures of Deliberating Groups. University of Chicago Law & Economics.
Sunstein, C. R., & Hastie, R. (2015). Wiser. Getting beyond groupthink to make groups smarter. Boston, Massachusetts: Harvard Business Review Press.
Surowiecki, J. (2005). The wisdom of the crowds. London, Great Britain: Abacus, an imprint of Little, Brown Book Group.
Thaler, R. H., & Sunstein, C. R. (2009). Nudge. Improving decisions about health, wealth and happiness. London: Penguin Books.