Organizational Behavior (Stephen Robbins)

• Illusion of unanimity.If someone does not speak, it’s assumed that he or she is
  in full agreement. In other words, abstention becomes viewed as a yes vote.


• Mindguards.One or more members of the team become self-appointed
  guardians to make sure that negative or inconsistent information does not
  reach team members.


• Peer pressure.Group members apply direct pressure on those who momentar-
  ily express doubts about any of the group’s shared views or who question the
  alternative favoured by the majority.
  As the Bre-X scandal was unfolding in early 1997, many people who possibly should
  have known better refused to accept the initial evidence that there might not be any
  gold at the Busang, Indonesia, mine. Because investors and the companies involved
  had convinced themselves that they were sitting on the gold find of the twentieth cen-
  tury, they were reluctant to challenge their beliefs when the first evidence of tampered
  core samples was produced. More recently, forecasters seemed to be suffering from
  groupthink as they pronounced the economy in recession, as this OB in the Streetshows.

304 Part 4Sharing the Organizational Vision

The Bre-X Saga
http://www.canoe.ca/MoneyBreX
Saga/home.html

OB IN THE STREET

Recession: Are We There Yet?

How many economic forecasters does it take to change the economy? In early

2002, economic forecasters were absolutely astonished by all the good news they

heard on the economic front in Canada and the United States. They were surprised

that the economies of both countries had grown in the fourth quarter and by the

job growth in Canada during January and February. They were even surprised that

Canada’s manufacturers and exporters had had a great January. They were surprised

because they had been predicting either a recession at worst, or a recession with job-

less recovery at best.

Forecasters started painting a gloomy picture after September 11, 2001, anticipat-

ing that the US national crisis would have a long-lasting impact on the world econ-

omy. Even as evidence failed to support this gloomy picture, forecasters struggled to

find evidence that they were right.

Groupthink may well explain the forecasters’ lingering negative predictions. The fore-

casters were from the financial industry, which was harder hit than most industries,

except for the technology sector. Wall Street economists also lived next door to the

World Trade Center, so this had a greater impact. Rather than search more widely for

evidence, they looked more locally, at the economy right around Wall Street.

Stock prices and corporate profits fell significantly during much of 2001, and this

is what they focused on. Meanwhile, housing prices and consumer spending con-

tinued to rise. The analysts figured this was a temporary upturn before the large

downturn they were predicting. They also failed to notice that personal income con-

tinued to rise throughout the year.

In short, forecasters were calling for a recession. They convinced each other it was

coming. “[Those] who didn’t buy the line and suggested that maybe this was only a

very sharp slowdown, invited ridicule.”^39

The forecasters were suffering from some of the symptoms of groupthink. They

rationalized resistance, suggesting it was everyone else who did not understand the eco-

nomic numbers. They applied peer pressure to each other, ridiculing those who sug-

gested that a recession might not occur. This might have led some analysts to minimize