” If you have a ‘yes man’ working for you, one of you is redundant.”

Barry Reid, CEO Avis

The recent Nyberg Report on the Irish Banking Crisis stated on page 48 that:

” The Commission both detected and inferred signs of widespread herding and groupthink (including “disaster myopia”) in Irish Banks during the Period.”

So, what is Groupthink – it is a term coined by social psychologist Irving Janis (1972) and occurs when a group makes faulty decisions because group pressures lead to a deterioration of “mental efficiency, reality testing, and moral judgment” .  Groups affected by groupthink typically ignore alternatives and can take irrational actions.  A group is especially vulnerable to groupthink when its members are similar in background, when the group is insulated from outside opinions, and when there are no clear rules for decision making.

Janis identified eight symptoms of groupthink:

Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks.

Collective rationalization – Members discount warnings and do not reconsider their assumptions.

Belief in inherent morality – Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.

Stereotyped views of out-groups – Negative views of “enemy” make effective responses to conflict seem unnecessary.

Direct pressure on dissenters – Members are under pressure not to express arguments against any of the group’s views.

Self-censorship – Doubts and deviations from the perceived group consensus are not expressed.

Illusion of unanimity – The majority view and judgments are assumed to be unanimous.

Self-appointed ‘mindguards’ – Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.

( Disaster myopia is the tendency of people to greatly underestimate the chance of catastrophic events. Here’s how it works. You get a big disaster which serves as a wake up call for people that bad things can and do happen. For a while, people  start to behave more prudently.  Then as the memory fades most people get a bit complacent. And then another disaster strikes…)

Decision experts have determined that groupthink may be prevented by adopting some or all of the following measures:

a) The leader (eg Board Chairman or CEO) should assign the role of critical evaluator to each member

b) The leader should avoid stating preferences and expectations at the outset

c) Each member of the group should routinely discuss the groups’ deliberations with a trusted associate and report back to the group on the associate’s reactions

d) One or more experts should be invited to each meeting on a staggered basis.  The outside experts should be encouraged to challenge views of the members.

e) At least one articulate and knowledgeable member should be given the role of devil’s advocate (to question assumptions and plans)

f) The leader should make sure that a sizeable block of time is set aside to survey warning signals from rivals; leader and group construct alternative scenarios of rivals’ intentions.

” If everyone is thinking alike, then someone isn’t thinking.”

General George Patton

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Financial success can often be as hazardous to business owners as financial failure. When demand exceeds supply, the SME business owner is kept scrambling to produce inventory or provide services with limited resources. Often small business owners must weigh long-term growth against infrastructure costs, and hope they get it right, or face overheads they cannot sustain during leaner times.

All businesses operate in cycles – revenues go up when demand is high, and revenues go down when demand wanes. How do you manage the ebb and flow of your business?

One of the key elements for successful long-term planning is having the experience to recognize business cycles, and to manage flexible internal resources for both the ups and the downs. If this is your first or second ride on the upswing of revenues, you may feel elated and at the same time you can’t decide where to invest your profits to improve your business… or even if you have the time to develop a plan beyond the next quarter!

Business Mentors provide the stability you need in such situations, with the ability to recognize the business cycle, your company’s needs for growth, and provide sound advice on how to reinvest your earnings. When you’re feeling both elated and slightly terrified at where your business could go in 2011, this is the time to hire a business Mentor.

- Cheers, Mentors.ie

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Give us 2 hours and we'll give you answers. Now you can experience the Mentors.ie approach FREE with a complimentary business review session. There is no cost or obligation for this session. We go through your business needs with you and identify the areas we can add value and improve your business. If we can't we will still buy the coffee!

Your business might not have left tens of millions of customers worried about their privacy, but you've probably had some customer relation embarrassments.  What can you do to fix them?

First of all, give your customer service people the support they need.  Clear guidelines, protocols and escalation plans for angry customers or (if the error was a really big one) inquisitive media folk will not only let your employees handle things as smoothly as possible but will prevent customers from getting mixed and inconsistent messages that might make them angrier.

Secondly, express your understanding of the customer's frustration.  This doesn't necessarily mean you immediately take the blame for something; after all, that can invite more problems than it solves.  But a surprising amount of egg can be wiped off your face simply by being sincere and saying “We know you're frustrated, and we want to solve the problem so you'll be happy with us again.”  

Third, take responsibility, but don't take the blame, at least right away.  The greatest example of using this strategy was Johnson & Johnson's brilliant response to the Tylenol poisonings of 1982.  While they did not take the blame for the poisonings (and indeed it was found that the product tampering happened long after the drugs left the factory) the company took full responsibility for fixing the problem, both reactively and proactively: recalling the drugs, destroying them at company expense, and creating new protocols for tamper-proof packaging.  Public confidence in the Tylenol brand was restored with amazing rapidity; although Tylenol's market share plummeted during the crisis, within a few years it was higher than ever.

Once you have dealt with the initial rush of anger, shown the customer you understand their frustration, and assumed responsibility for fixing the problem, your company can be in a position to control the customers' and public's perception of the problem, rather than reacting to their perception.

In short, your marketing response to customer service problems – even ones much smaller than the Playstation fiasco or Tylenol tragedy – should be quite similar to the way you market in good times; make sure your message is clear, try to connect with your customer by demonstrating that you understand their concern, and then make them confident that you can solve the problem for them.

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