Groupthink in entrepreneurship: How it can impact your startup

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Groupthink is the tendency for individuals in a group to all express the same opinion. Opinions reinforce one another – if you are surrounded by others who believe a particular thing will happen, you may also start to believe this will occur, further reinforcing the belief within the group.

Groupthink within your startup

If you have a group of individuals, who all likely have similar backgrounds and a disposition to see the world in a similar way, groupthink can further reinforce similarity in opinions. It can result in everyone in the firm convincing themselves that a particular view of the world is the correct one and that a particular event is almost certain to occur. 

It is first worth noting that this may have some positives associated with it – you may need alignment between individuals, and there may be innovation opportunities by perusing ends that most individuals assume are impossible. Having a group of individuals all convince themselves of the importance of a particular objective may be of benefit in actually achieving that objective. 

However, groupthink can dangerous for startup decision-making. If everyone thinks the same way it can result in blind spots, without consideration given to examine possible outcomes that go against the prevailing belief. If no one has raised concerns, it is possible that the firm plows on without taking the necessary steps to reduce the risk that the firm is taking. The firm may also miss opportunities to improve their product or service – the lack of discussion and debate may mean that improvement opportunities are missed. 

Groupthink between firms

While groupthink is most associated with alignments in beliefs between individuals in close contact, a similar phenomenon can occur at the industry level. Companies operate in uncertain environments, and sometimes the decisions made by one firm can be used as justification for taking similar action at a different company.

In effect, by monitoring what is going on at other firms, the management at all firms can indirectly convince themselves of a particular state of the world, for example, that certain technology is the future or that demand for a particular product is likely to substantially increase. By monitoring the actions of other firms – mirroring technology investments or increases in production capacity, a type of groupthink can occur across firms. 

Groupthink in the investor community

Groupthink can also occur among investors – and maybe especially common in instances of new technologies. The dot-com bubble is a good example of this – investors getting caught up in the excitement of the prospect of new technology, with each individual investor’s excitement further verifying reinforcing other investor’s interest.

Final thoughts: Breaking the groupthink tendency

When there is broad agreement (and particular before substantial discussion), it can be useful to play devil’s advocate – to explore the question from different directions and verify that it actually makes sense. Sometimes this will reveal problems or improvement opportunities that needed some discussion to come to light. Other times it will reveal that the consensus is largely superficial – that there are individuals with significant doubts in a particular direction that didn’t want to express their concerns for fear of rocking the boat.

It can also be useful to try and take a step back from others’ thoughts. To consider whether you would genuinely believe in the issue at hand were it not for others also expressing their opinion. Recognizing that there are times that the consensus opinion is largely a result of individuals reinforcing the consensus can be useful in avoiding falling into that trap.