Ralf HallerRalf Haller October 14, 2010

Why small decision-making groups in business fail so often

In today’s business world small groups of decision makers typically decide on what will be done. This is far away from any broadly organized decision making process and noone seems to have a problem with this tyipcally as long as the group making the decisions does so in a highly competent way using expert inputs when needed. And of course as long as things work out well.
Unfortunately as numerous scientific researchers have shown, small groups are by nature not making good decisions at all and that has a multitude of reasons. Question becomes then of course how can small groups maybe still made to work?
Some of the reasons why small groups might not work:
  • they have an identity of its own even if they are formed ad hoc for a single project
  • the influence of the people in the group on each other’s judgement is inescapable
  • “confirmation bias”: this s what psychologists mean when decision makers seek those bits of information that confirm their underlying intuitions
  • small teams also tend to believe much more than they really do and reinforce this mis-judgement even further making more extreme decisions e.g. more risky or very risk-averse
  • verdict-based juries (vs. evidence-based) see their mission as reaching a decision as quickly and decisively as possible, votes are taken before discussions even
  • small groups tend to start the discussion with its quick conclusion already. as a result every new information that is coming in was reinterpreted to fit that conclusion. this is a very common problem for small groups who have as a consequence a hard time incorporating new ideas and information
  • social psychologist Garold Strasser has also shown that in unstructured, free-flowing discussions, the information that tends to be talked about the most is, paradoxically, the information that everyone already knows
  • the order of when someone presents is very critical as well since it has a clear impact on how the group members frame and judge subsequent talks
There are even more shortcomings in small group decision making but I think the above list (taken from the book The Wisdom of Crowds, by James Surowiecki) is convincing enough.
So what can be done to still make small groups work and with that improve the decision making of so many companies and organizations?
  • have a “devils advocate” role assigned whose job it is to find critique for anything that is being discussed and suggested by others making sure that both the presenters and the others critically question things.
  • one of the consistent findings from decades of small-group research is that group deliberations are more successful when they have a clear agenda and when leaders take an active role in making sure that everyone gets a chance to speak
  • use software tools that allow to vote – anonymously – subjects under discussion, that also help both prepare a meeting as well as discuss further later on when new ideas and information comes to mind, in addition it archives the discussion so one can revisit it at a later time without having to start totally from scratch. also important is the fact that time pressure to make a final go/no-go decision in a meeting is reduced. and lastly others outside the group could be invited to comment, vote and also provide own ideas and opinions.
If groups are made to work they are genuinely smarter though than the smartest people within them so it is the right thing to aim for. (other research work: Cass Sunstein in “Why Societies Need Dissent”, Alan S. Blinder and John Morgan did studies on small-group performances which was modeled later on by a Bank of England study)
One additional comment from James Surowiecki’s book:
if an organization sets up teams and then uses them purely for advisory purposes, it loses the true advantage that a team has: namely, collective wisdom.