Groupthink

It tends to appear in groups that are cohesive, under time pressure, led by a strong personality or cut off from outside views. Members read silence as agreement, hold back objections to avoid friction, and treat the group's past success as proof it is right. On boards, it shows up as short discussions on large decisions, little dissent and directors of similar background. Governance rules aim to counter it. Independent directors, a mix of skills and experience, a chair who invites disagreement, a designated person to argue the other side and outside advice all help. Some boards ask for a pre-mortem, imagining the decision has failed and asking why. Boards that saw no reason to disagree approved many of the deals later written up as corporate failures.

A hospital board has approved every proposal from its long-serving chief executive for years. When he proposes a large overseas acquisition, nobody asks about the price or integration, since earlier deals worked. The newest director has doubts but stays quiet. After a loss, a review recommends a devil's advocate role and external advice on future large deals.