Groupthink in the boardroom: Clarence Darrow said, 'To think is to differ.' Good boards encourage both coherence and dissent.

• Author: Horton, Thomas R.
• Position: Some Things Considered - Brief Article

THIRTY YEARS AGO psychologist Irving Janis was struck by how often a group of otherwise intelligent people sometimes has great difficulty in reaching a good decision and named this phenomenon "groupthink." It is practiced by members of highly cohesive groups whenever their strivings for unanimity override their desire to consider alternatives. Examples abound: the Bay of Pigs, NASAs launching of the Challenger, and CocaCola's initial strategic abandonment, in 1985, of its original secret syrup formula.

Groupthink in government has caused the loss of innumerable lives, and in business, countless billions of dollars. Nowhere is it more perilous in business than at the level of governance.

Sadly, I have recently watched closely and with incredulity three financial and human disasters, each still unfolding, caused by the actions, and inactions, of three very different boards. Since I know some of the directors on each board, I can find no other way to comprehend their decisions than to point to this groupthink excuse, as lame as it is.

The first governs a mammoth telecommunications company with, at one time, a market cap to match. Its board approved such an aggressive growth plan that it should have been seen, even while it did so, as completely unrealistic. To help force that growth it authorized large loans to customers, some even to startups. Yet the makeup of this board was golden, its directors virtually household names. The group was cohesive to a fault, some so close that they served on each others' boards (not a great idea). Could such a group develop an illusion of invulnerability, a typical groupthink symptom? With the benefit of hindsight, one of its directors said, "We all went along. It sounded great at the time, crazy as it may look now.

The second is a large nonprofit organization, established 80 years ago, whose trustees simply failed to provide oversight. When confronted by signs of impending financial catastrophe, when warned time and again of imminent failure, they rejected such news. Its trustees neglected their most fundamental duty: the duty of care. Some enjoyed "director benefits" such as spouse-accompanied tours of the Far East. Nonprofit directors hold a special trust, though none appears ever to be held accountable to anyone. How seriously were their duties regarded? Some months ago, when I called to congratulate its new chairman on his election, he...