1. Teams: A Blessing or A Curse?

2. The Wisdom of Crowds (James Surowiecki)
Francis Galton and the poor Ox (1906)
Crowd (median estimate) better at estimating weight of slaughtered ox than separate estimates by a number of cattle experts
The elements of a wise crowd:
Diversity of opinion
Independence
Decentralization (specialization and local knowledge)
Aggregation mechanism

3. A Terrible Group Decision
Jan Challenger Disaster
Hardware: “O” ring failure
Environmental factors:
Operational demands from multiple users (political, commercial, military, international and scientific communities)
After spending billions to go to moon, Congress wanted to see financial self-sufficiency: culture of conflict, stress, shortcuts.
Group Factors
Thiokol engineers concerned about O ring failure at temps below 53 F
NASA asked for a definitive recommendation given that this temp. would not be reached for several days: “My God, do you want me to launch next April?” Lawrence Molloy
Thiokol went off line: asked chief engineer: “Take off engineering hat and put on management hat”: decision was given to launch

4. Group Decision Making in Shuttle Disaster
Thiokol had data on O ring failures but downplayed it as goal was to stay on schedule
Polarization: decision to launch met with support from group
Thiokol engineers wanted to live up to the norms of the group
Thiokol decision to think privately created groupthink pressures
Fear of public response if no launch
NASA dominated meetings; conflict suppressed– agreed to cancel but only if Thiokol insisted.

5. Desert Exercise 15 minutes: Rank by yourself
30 minutes: Decide as a group
15 minutes: Discussion as a class

6. Desert Survival Debrief
What processes did your team use in coming up with the consensus decision?
When you changed your ranking, what factors caused you to change your ranking?
Did you like or resent the group?

7. Zimbardo on Asch Experiment
On the power of the group:

8. The Asch Effect Comparison Lines Card Standard Line Card
Asch Effect: the distortion of individual judgment by a unanimous but incorrect opposition.
In Asch's experiment, group pressure was created by asking a naive subject to indicate which line on the left was equal to the standard line. Thus, they were asked to make an obvious perceptual judgment, but in doing so he or she must make a different judgment from the rest of the group. All of the other “subjects” were actually confederates who purposely chose the wrong line.
1 2 3

9. Asch and Social Conformity
37 of 50 subjects (74%) conformed to the majority at least once
14 conformed on more than 6 of 12 trials
Several reported actually misperceiving the answer after being confronted by the opposing majority.
“The tendency to conform is so strong that reasonably intelligent well-meaning people are willing to call white black…. This raises concerns about our ways of education and about the values that guide our conduct”
People conform because:
- they want to be liked by the group
- they assume that the group is better informed/wiser than they are.
- they “see” differently

10. Asch Effect: What are the implications of the Asch effect for managers?
Strong social effects on what we see and do.
How to organize meetings; how to create debate.
The power of presumed majorities.
The power of whistleblowers and nay sayers.
Research indicates a decline in conformity among Americans since the 1950s. Internationally, collectivist countries produced higher levels of conformity than individualistic countries.
Implications of the Asch effect for managers?
Managers striving for ethical conduct need to be aware of the Asch effect. Pressures to conform may exist that reward unethical behavior. For example, a recent study (2003) found that 30% of employees would engage in unethical conduct if coworkers behaved unethically and experienced no repercussions.

11. Asch Effect: What are the implications of the Asch effect for managers?
Strong social effects on what we see and do.
How to organize meeting and debates:
Find ways of getting people to express their views and opinions in ways that prevent those views being swayed by perceived group opinions.
Emphasize that you are not interested in “yes men.”
The importance of people who don’t get along with others– Socrates was turned into an outcast… but should not have been.
Crucially: Once one person dissents, the likelihood of others speaking up goes up dramatically.
Research indicates a decline in conformity among Americans since the 1950s. Internationally, collectivist countries produced higher levels of conformity than individualistic countries.
Implications of the Asch effect for managers?
Managers striving for ethical conduct need to be aware of the Asch effect. Pressures to conform may exist that reward unethical behavior. For example, a recent study (2003) found that 30% of employees would engage in unethical conduct if coworkers behaved unethically and experienced no repercussions.

12. Zimbardo Prison Experiments

13. Milgram: Obedience to authority (1974)
Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear, and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority
What percentage of ordinary, law-abiding, Yale students would deliver the maximum 450 volt shock?
< 10% < 50% > 50% > 60%

14. "the essence of obedience consists in the fact that a person comes to view themselves as the instrument for carrying out another person's wishes, and they therefore no longer see themselves as responsible for their actions. Once this critical shift of viewpoint has occurred in the person, all of the essential features of obedience follow"

15. [People] have learned that when experts tell them something is all right, it probably is, even if it does not seem so. (In fact, it is worth noting that in this case the experimenter was indeed correct: it was all right to continue giving the "shocks" — even though most of the subjects did not suspect the reason.)
Robert Schiller writing about Milgram’s experiments

16. Milgram’s experiments: Implications for Managers
Theory of conformism: A subject who has neither the ability nor expertise to
make decisions will leave decision making to the group and its hierarchy. The group becomes the person’s behavioral model
- Don’t mistake conformism for conformation
Agentic state theory: The essence of obedience consists in the fact that a person comes to view himself as the instrument
for carrying out another’s wishes, and therefore no longer sees himself as responsible for the action
- I’m just doing my job…

17. Groupthink
Groupthink: When you feel a high pressure to conform and agree and are unwilling to realistically view alternatives
What are some of the reasons or factors that promote groupthink?
What can be done to prevent groupthink?
Groupthink: this occurs most often in highly cohesive groups who want to agree with each other.
Examples: Bay of Pigs fiasco. JFK an his cabinet decided to invade Cuba because they believed they were “right” and that the opposition army would join them and that there was no way the Cuban gov’t could fight back. They made lots of assumptions and none of them came true.
1985 Challenger Shuttle Disaster – controversy over whether launching the shuttle was safe in
The manufacturer of the O-rings, Thiokol, warns that launch should be delayed because until the weather gets warmer because it could leak gases at temperatures colder than 53 degrees. The engineers were criticized for their concerns and were overturned by top management at Thiokol. Information about the potential faulty O-rings was withheld from upper management of NASA. There was immense pressure on Thiokol to launch by NASA. The decision makers were under pressure to make the launch so that the shuttle program would be a success.
Factors promoting groupthink:
Homogeneous groups
Highly cohesive groups
Groups where the status of one of more group members affects the evaluation of their opinions by others (i.e., high status – must be right, low status – may not be right)
Norm exists to not “make waves”
Groups with little contact with others outside of the group
Research revealed that groups with moderate cohesiveness levels produce the best decisions and highly cohesive groups make the poorest decisions, despite high confidence in those decisions.
Groupthink prevention techniques include:
a. Assign each group member the role of critical evaluator.
b. Top-level executives should not use policy committees to rubberstamp decisions that have already been made.
c. Different groups with different leaders should explore the same policy questions.
d. Introduce fresh perspectives with subgroup debates and outside experts.
e. Someone should be assigned the role of devil's advocate when discussing major alternatives.
f. Once a consensus has been reached, everyone should be encouraged to rethink their position to check for flaws.

18. Symptoms of Groupthink and Decision Making
Figure 10-6
Symptoms of Groupthink and Decision Making
Decision-making Defects
Few alternatives
No reexamination of preferred alternatives
No reexamination of rejected alternatives
Rejection of expert opinions
Selective bias of new information
No contingency plans
Symptoms of Groupthink
Invulnerability
Inherent morality
Rationalization
Stereotyped views of opposition
Self-censorship
Illusion of unanimity
Peer pressure
Mindguards
The left box shows indicators of groupthink occurring in a group and the right box shows the detrimental impact these effects can have on the decision making of a group.

19. Groupthink: Implications for Managers
Assign to each member the role of critical evaluator– this role involves playing “Devil’s Advocate” by actively voicing doubt and objections.
Use subgroups and bring in outside experts for exploring the same policy decisions.
Use different groups with different leaders to explore the same question.

20. Shoreham Nuclear Power Plant
GE plant in NY, 60 miles from Manhattan
Designed to produce megawatts
Initial estimated cost: $65 million
Final cost: $6billion
After 11 years (’73-’84), never opened!
Construction flaws
Labor unions
Public concerns over safety
Escalation of commitment, or failed persistence?

21. Escalation of Commitment: The Flip Side of Persistence

22. Reducing Escalation of Commitment
Set minimum targets for performance, and force decision makers to compare against these targets
Stimulate opposition using “devil’s advocacy”
Rotate managers through roles
Reduce ego-involvement
Provide and study more frequent feedback about project completion and costs
Reduce risk and penalties for “failure”
Make explicit the costs of persistence

23. Simple but Powerful Advice
Give views in advance, in private.
Pick who will speak first at random (US Supreme Court Justices start with junior-most member)
Encourage and reward disagreement.

24. Delusional Optimism
Due to both cognitive biases and organizational pressures:
- exaggerate own talents; downplay luck
- self-serving attributions: in annual reports
- scenario planning tends to reward most optimistic appraisals.
- anchoring
- competitor neglect.
- pessimism often interpreted as disloyalty

25. How to Take The Outside View
Select a reference class:
choose a class that is broad enough to be statistically meaningful but narrow enough to be truly comparable to project at hand-- movies in same genres, similar actors
Assess the distribution of outcomes:
Identify the average and extremes in the refer- ence-class projects’ outcomes--the studio executive’s reference-class movies sold $40 million in tickets on average. But 10% sold less than $2 mil- lion and 5% sold more than $120 million.
Predict, intuitively:
where you fall in the distribution– executive predicted $95 million
Estimate reliability of your prediction
correlation between forecast and actual outcome expressed as a coefficient ranging from 0 to 1.
Correct the intuitive estimate for unreliability
less reliable the prediction, more needs to be adjusted towards the mean.