Groupthink in bridging: The dirty, evil, robbing b**tard

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janice & ray groupthink

Have you ever met one of those unbearable couples who think their way is the ONLY way? Every family has one. Often living in suburbia. Driving something like a Vauxhall. Usually wearing the kind of clothes that make you want to throw yourself down a well.

Although they work in some drab governmental job and never leave the hotel on holiday, they’re experts on everything. Droning on about work-shy millennials, unacceptable neighbours or fake news like a vacuum cleaner that won’t unplug. And heaven help you if you have a different opinion.

Catherine Tate’s culturally-ignorant Yorkshire couple Janice and Ray fit the mold perfectly. Anything that didn’t match their narrow world view – including shitake mushrooms, grapes in a sandwich and goat curry – was branded the work of a “dirty, evil, robbing b**tard”.

As bridging lenders, we may think our boardrooms are lightyears away from Janice and Ray’s beige sitting room. The squishy sofa is replaced with study swivel chairs. And instead of smelling like cabbage soup, we breathe in clinical air freshener and l’eau de computer fan. But the similarities are stronger than you’d think.

Because, like this self-righteous pair, finance is rotten with groupthink. We reject and shut down alternative views faster than Ray spits out gazpacho. And often we don’t even know we’re doing it.

Groupthink is fatal… and not just for business

We’re all guilty of groupthink. It’s when we hang out with people who have the same opinions as ourselves. But it’s bad in business. Really bad. According to Alison Houghton-Corfield, National Relationship Director at Master Private Finance, groupthink can, “stifle innovation, strangle creativity, disengage teams and promote affinity bias”.

I’ve experienced it time and time again in my career”, she continues. “The YES people…The IT group who agree with everything leaders say, be it good, bad, or indifferent”.

Michael Gilmore, co-founder of the MAIAs, the Money Awareness and Inclusion Awards likens this to the story of the emperor’s new clothes. “The heart of the story is that false group-think often exists because we don’t actually know what everyone else is thinking, so we assume they’re thinking what it looks like they’re thinking”, he comments. “Or even worse, when we don’t have a clue, we just follow blindly. Until a little girl points out the obvious!

Groupthink goes beyond infuriating meetings; it can be fatal. The term was first coined in 1972 following a series of bizarre military decisions. It turned out that the decorated experts behind the unsuccessful strategies were simply too like-minded. With nobody playing devil’s advocate, they blindly led troops to their deaths.

We saw it again when investors lost $900+ million in Silicon Valley start-up Theranos. Despite having a world-famous board of politicians, venture capitalists and bankers, not one person thought to ask if the science was possible. Simply having an engineer on the board, or listening to the whistle-blowers, could have saved them from worldwide embarrassment.

Without critique or thorough evaluation”, explains Tiba Raja, Executive Director of MFS UK, “[leaders] may not come to the best solution.”

Over time, groupthink destroys livelihoods too, wrecking unimaginable damage. For example, groupthink has been attributed as the leading cause of the 2008 financial crisis.

Groupthink means lenders are missing opportunities

So, what’s the impact of groupthink when it comes to bridging loans and underwriting? Most senior positions are held by white middle-class men in the UK. Just a tiny 17% of decision-making roles in finance are held by women. A truly shocking statistic. When it comes to people of colour (both men and women), it’s even scarier. Less than 1% of investment managers are Black.

This has invariably led to product gaps in the market. Entire segments are getting missed. Badly. And it’s easy to see why.

How likely is it that a semi-retired guy from somewhere like Hemel Hampstead would pioneer a product for inner-city single mums? … Or Islamic households with strict religious principles? … Or a young Millennial family struggling with the cost of living crisis? It’s like asking Janice and Ray to cater for Eurovision night. They wouldn’t know where to start.

Money is getting left on the table. Even worse, potential clients could be suffering from ill-fitting products. That’s why we need more diversity among decision-makers. We need different perspectives. “By embracing diversity, we avoid the risk of missing out on underappreciated – yet potentially lucrative opportunities”, adds Raja.

And the lack of diversity is doing nothing for customer relationships either. “Client relationships can undoubtedly be affected by this type of leadership”, comments Houghton-Corfield. “And can often view autocratic businesses as old fashioned, lacking innovation and emotional intelligence”.

Lenders must welcome new voices

To overcome this systemic problem, bridging lenders need to listen to EVERYONE. Especially those they have the least in common with. “People shouldn’t be scared to speak up”, Raja emphasises. “Even if things go wrong, they should feel encouraged by being acknowledged and can contribute in the future.

Businesses need to embrace challengers, it can protect them from unseen risks”, emphasises Houghton-Corfield.

When you’re the only different person in the group, it’s hard to voice an objection. So, lenders should find a way to make everyone truly heard. Something as simple as asking a colleague their opinion over lunch can make a huge difference.

If there’s a minority in the group, they can often feel fearful of how the group will react to a suggestion or idea”, explains Houghton-Corfield. They will often remain quiet and not speak up for fear of encountering disdain or hostility.”

Avoid the awkward Hapsburg Jaw

Homogenous groups suck. It’s like a weird form of business inbreeding where certain characteristics become grossly exaggerated, while others disappear altogether. For lenders who don’t want the corporate equivalent of a Hapsburg jaw, it’s better to diversify the boardroom.

Welcome new people and new thoughts, and don’t let groupthink steal away valuable business opportunities. Because left unchecked, that’s exactly what it will do… The dirty, evil, robbing b**tard.