The Resolution

How to combat groupthink on Australian boards

Every director brings their own experience and ideas to the table. But it’s not always easy to stand behind your perspective when it’s different from the rest of the group.

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Every director brings their own experience and ideas to the table. But it’s not always easy to stand behind your perspective when it’s different from the rest of the group. Directors might accept the majority decision without challenging it, or a board might make a decision based on collective misunderstanding. Most of us commonly call this groupthink, and here’s my thoughts about why it occurs and how you can avoid it in your boardroom.

There are two potential risks:

  1. Directors rely on other directors’ understanding, to plug the gaps in their own knowledge. If every director does this, it’s possible no one at the table really understands the issue.
  2. Directors are afraid to speak out to support a different perspective. They might worry about appearing ignorant or uninformed, because everyone else seems to understand.

Imagine: a group of directors is sitting at the board table, discussing an important issue. All the directors appear to understand it, and its various complexities and implications for the organisation. But in reality, they might be relying on other people to understand the issue. It’s possible they all misunderstand the issue in their own unique way.

This often happens with technical topics. For example, User Access Control is a common point of discussion in board rooms. It’s such a regular topic that directors might see it come up in an agenda and think they must understand it because they’ve talked about it so much. But that means they might not question the underlying concept. Do they really understand the potential impact on the organisation? Do they understand why delegated authority and separation of duties are actually important? Or are they just rolling their eyes and thinking, “this again!”, without ever taking the time to understand the risk profile.

When everyone has a different understanding of a topic, it’s called plural ignorance. It happens because people don’t – or can’t – share their true understanding. Perhaps they are not prepared to be uncomfortable, or to question what they perceive to be the group understanding.

Groupthink can’t be challenged unless the directors challenge it. So why do they feel like they can’t?

By the time a director is sitting around an ASX50 board, she’s likely feeling that she should be at the top of her game. She should be performing well in every board meeting. Practically, that makes it hard to be vulnerable, because you’re worried it makes you look incapable.

No one wants to come off as not being up to speed on an issue, and that is where a board starts to have a real problem. If no one around the board table feels comfortable speaking out, or saying, “I don’t understand,” that’s when bad decisions get made. It’s plural ignorance – the whole group is collectively misinformed.

The solution is to foster a culture where it’s okay to be vulnerable. This might be as simple as having a chair who offers a different perspective, or more information. If an issue is complex, it might be valuable to start by offering a refresher on it before making a decision. There is no need to call out individual directors, but instead to make sure they are all well-equipped to contribute knowledge and differing understanding.

In fact, the best boards are those with directors who understand the benefits of being vulnerable. When they feel supported to ask questions, directors explore more diverse lines of questioning, create opportunities to challenge existing beliefs, and introduce new information.

A fearless board is a well-informed board. It creates its own opportunities to think broadly, to question loudly, and to understand fully. Groupthink is the enemy of good decision making. The greatest weapon is speaking out.