Groupthink: The American Auto Industry

Groupthink
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Groupthink
Groupthink is a psychological phenomenon that occurs when team members make decisions that preserve the status quo without critical reasoning or evaluation. In meetings and conversations, group members think that consensus reflects the strength of the idea or opinion (Lunenburg, 2010). However, the truth is that consensus can form quickly when groupthink manifests itself, meaning that the first reasonable idea becomes universally accepted, and some members become uncomfortable giving alternative ideas. This creates an atmosphere of unchallenged opinions, reducing the group's creative decision-making ability. Employees abandon critical thinking when groupthink occurs and avoid expressing doubt in the majority's decision. According to Janis (2020), groupthink follows a common desire not to upset the status quo. This desire creates a dynamic that stifles creativity and individuality to avoid conflict. It can ultimately result in substandard decisions with negative outcomes for the business. In a business environment, groupthink causes employees and supervisors to overlook potential problems in pursuing consensus thinking (Frazi, 2012). Due to the de-emphasis on individual critical thinking, employees may feel uncomfortable suggesting alternatives for fear of upsetting the majority.
Group Think Example: The American Auto Industry
A groupthink tendency has been a chronic problem in the American auto industry since the mid-1950s (Steve, 2019). This was a primary factor in the dramatic decline of domestic automakers from the late 1960s onward. Recently, foreign manufacturers have fallen into the same trap (Steve, 2019). Groupthink manifested by slavishly copying General Motors' structure and strategy. The automobile expert Peter DeLorenzo noted that the American automobile industry is plagued by an oppressive layer of rote thinking and lemming-like behavior that has routinely wreaked havoc on the proceedings over the decades (Steve, 2019). Within the automobile market, groupthink is evident in individual failures, such as the Edsel and AMC Pacer. However, this phenomenon has heavily colored how domestic automakers have been managed. Steve (2019)argued that in the 1970s and 1980s, foreign automakers made significant inroads into the American automobile industry because of the cultural conformity premium placed by the Big Three management. This explains why the American auto industry cannot maintain parity with the Japanese and the Germans, even in the simple design area.
The consensus of the American auto industry is that American vehicles are the best in the world. The group members of these companies felt a moral imperative that auto manufacturing is the backbone of the American market (Frazi, 2012). Additionally, these decision-makers downplayed the abilities of their competitors to deliver more appealing products to American consumers, claiming that Europeans and Asians lacked engineering knowledge, a grasp of the American mind, and appropriate resources to match US automobile companies (Steve, 2019). Confronted with the likelihood of revising its attitude towards fuel economy and safety, the group declared that Americans would never surrender the security and status of possessing large, high-end vehicles in favor of smaller, lighter cars (Frazi, 2012). The group’s utterances displaced a sense of invulnerability and a fear of interjecting unanimity. As a result, the US automakers continued to produce gas-guzzling cars they believed were best for Americans.
In 2009, the US government introduced the Car Allowance Rebate system scheme to help combat climate change (Frazi, 2012). Consumers were offered $3,500 to $4,500 to trade in an old car for a new one with a higher fuel economy (Frazi, 2012). Surprisingly, the top ten trade-ins were all American-made Sport Utility Vehicles (SUVs) and mini-vans, while all small, economical, and environmentally friendly cars made by Toyota, Hyundai, and Honda were the top-ten new car purchases, accounting for 60% of the purchases (Frazi, 2012). In this case, auto production decisions were made by individuals who talked themselves out of raising objections or prevented others from asking challenging questions (Frazi, 2012). Instead of seeking expert opinions regarding the trend of car purchases and consumer preferences, American automakers continued to manufacture and market gas-guzzling cars when the public shifted to smaller and energy-efficient models. This led to a decline in sales of American SUVs.
Decisions Made and Decision-making Process
The American auto industry believed that groupthink was relevant to business. Companies decided to manufacture car models that were in demand decades ago. The management of the companies perceived that Americans would highly cherish these gigantic cars (Frazi, 2012). However, it was a mistake considering the income level, trend, and purchasing patterns. The rise in the middle class increasingly changed consumer taste and purchasing behavior. Demand for smaller and energy-efficient models continued to rise, rendering the group’s decision ineffective and irrelevant.
The decision-makers also conducted an outdated process. The auto industry had a bounded rationality decision-making process where individuals made satisfactory decisions instead of optimal decisions based on research and facts. A lack of idea optimization made the manufacturers make decisions along the consensus line. The industry attempted to make sacrifices as opposed to optimizing ideas. Some good decisions were influential in the short run but became outdated in the succeeding years. The outdated groupthink resulted in a bounded reality since all decision-makers accepted the SUV idea. This acceptance limited th...