Groupthink in companies

This survey of executives in the McKinsey Quarterly suggests that groupthink contributes to  bad decision-making: 

Only about a third of respondents, for instance, say executives frequently disagree about the attractiveness of future growth opportunities—hardly a topic that would seem to lend itself to unanimity. What’s more, a majority of respondents say it’s at least “somewhat” important to avoid contradicting superiors.

This can be expensive. Executives think that 19% of their firm's capital investments should never have been made.  That suggests that firms waste around £25bn a year in the UK alone.
And this could be an understatement:

Roughly 40 percent...don’t have a point of view on how many investments should be terminated. This figure could be a warning sign that postmortem analysis is infrequent at many companies.

This might be the disconfirmation bias at work; people don't like to look for evidence that might prove them wrong.
All this is striking because the survey contains a selection bias in favour of finding executives who approve of their firm's behaviour. An executive who thought his colleagues were all ignorant toadies who wasted millions of pounds on crack-brained investments would probably not stay with his firm for long.
So, perhaps this shows that traditionally-organized firms are a poor way of making decisions.
Or am I  guilty of the confirmation bias?

Comments

[Matt Munro]

Groupthink or brainstorming has been long established as a waste of time. Meetings are only effective where there is a clearly defined decision to be made from a small range of alternatives (e.g should we paint the product red, green or blue) for anything else individuals working in isolation are far more effective, as it is too early in the process to groupthink.
McKinsey are the spawn of hell BTW, my organisation spent 5 painfull years trying to make their "advice" work and another 5 getting back to where we were before they got their snout in the trough. If we were a private company it would have put us under.
I wouldn't consult them on when to take a dump. Laughable.

[dearieme]

"It's better to be wrong in the right company than to be right on your own", said someone or other who didn't get promoted to the board.

[dreamingspire]

"An executive who thought his colleagues were all ignorant toadies who wasted millions of pounds on crack-brained investments would probably not stay with his firm for long."

Heard this morning that the English public sector is having trouble recruiting and retaining skilled staff... Indeed early this week I read the same in a departmental Capability Review.

[Steve]

But it doesn't matter, does it?

Won't the invisible God of the free-market make all the companies that make these silly decisions go out of business and replace them with efficient organisations run on an econonically rational basis?

[Kevin Carson]

Steve,

That should be "wouldn't," not "won't." The dominant firms are far, far larger than would prevail in a free market. The state cartelizes industry through regulations designed to protect big business from free market competition, and it subsidizes the operating costs of big business. Because each industry is dominated by a handful of oligopoly firms with the same pathological internal cultures, the competitive penalties for being a corporate version of Gosplan are minimal.

We don't have a free market. What we have is state capitalism: a system of political economy run in the interests of big business, with the help of the state.