The right answers are the most dangerous

Lately, with the occasion of NATO Secretary General Rutte's message to Trump, familyandtrends drew attention to the risk of group conformity in family businesses. This is a phenomenon that occurs when a group of well-meaning people make irrational or sub-optimal decisions, driven by a desire to conform or by the belief that dissent is impossible due to the unequal distribution of power among the stakeholders. In later speeches, familyandtrends was able to ascertain that the phenomenon grows in times of uncertainty and instability such as the one we are currently experiencing and wondered why.

When an entrepreneur or a management group is exhausted by a context of great uncertainty, it reacts with a natural, but illusory, search for certainty: an article with a clear and indisputable vision, an unquestionably sure solution, a decisive advice from a consultant who suddenly becomes an oracle (professors are not oracles, let alone consultants) becomes 'the answer we were looking for'. At that point, having found the answer, group conformism sets to work and it is no longer allowed or convenient for anyone to question it.

One of the most obvious symptoms of this is the overestimation of short-term signals that are immediately made into further confirmation, if any were needed, of the goodness of the path taken. This symptom is even stronger when one has arrived at the 'answer we were looking for' after months or years of tense uncertainty in which every event or signal from the market, competitors, suppliers or the macro environment generated an overreaction of the organisation or its people. This overreaction generates the prostration that is then treated with 'the right response' at any cost. Internal or external signals should instead be treated for what they are: a further input to a longer series of inputs; they may or may not be consistent with what is expected but they should be read in this light, with a bayesian approach. Reacting quickly or too forcefully to every event or signal does not ensure greater effectiveness and often detracts from clarity.

When one does not have 'the right answer', one remains cautious, prepares Plan B and looks at the risks. One is not in a hurry to react, but one does not waste time in objectively interpreting each new input. When, on the other hand, group conformity has generated the conviction that one has the 'right answer' every new signal or fact is interpreted as a confirmation of what one wants to be the right answer and one goes full speed ahead. At familyandtrends a manager once said: "If you hit the iceberg, don't bother to ask where there are the lifeboats: too late" and he was not a manager known for going slow, he did however have in his brutal reading of reality and ability to change his mind and adapt one of his hallmarks.

What can be done to prevent group conformity from thriving in a highly unstable context? It is necessary to think about what is possible in a detached way, without falling in love with an answer or a solution but testing it continuously by being ready to change one's mind. In this way you look more broadly at various scenarios that could come true and not only at what you want to come true. The members of the board and the management team must be convinced that it is their duty to give opinions or take discordant positions and, when necessary, to say that facts and signs contradict what they believed to be the 'right answer', and when necessary, to do so as harshly, as brutally as the reality in front of them knows how to be.