Group Therapy

For optimal brainstorming, Paulus advocates a combination of individual contributions and group work. Prime a group beforehand, he recommends, so members will bring ideas into the meeting. Then let people express ideas, but aim to create a flow — don't allow explanations or interesting anecdotes to distract from idea-making. Hold back on judgment, or comments like "we did that already," since, says Paulus, "even stupid ideas can lead to better ideas."

Plan on 30 to 40 minutes of hard work, with short breaks (no phone calls or E-mail checking), and press the group to come up with more ideas, even after they say they are tapped out. Ask people to keep thinking about the discussion after the meeting, and schedule a follow-up to see if you can gain any improvements.

Digital River, a $308 million E-commerce company based in Minneapolis, follows Paulus's model to an extent in its brainstorming sessions. Several times a quarter, CFO Thomas Donnelly bats around ideas about how to drive growth and save money with up to 100 other senior employees. While they try not to follow any one structure slavishly, one common method is to have attendees write down ideas on Post-it notes, but without signing their names. Sometimes participants are prepped ahead of time with teasers, and sometimes they are asked to start fresh in the meeting, depending on the task. Once the individual work is done, the ideas are posted in the front of the room and discussed. "It forces engagement but also protects people who are more reserved," says Donnelly. "If you had me or the CEO directing it from the front of the room, you'd get input from a very small subset of people."

That type of brainstorming has led to some important innovations at Digital River, Donnelly says. Close to his own heart was a new cost-saving method for transaction processing. And brainstorming led to a solution for a customer problem that is almost as common — and damaging — as groupthink. The software that Digital River sells can now be copied onto a backup server, says Donnelly, "in case a customer drops his PC in the bathtub" or otherwise destroys it.

Alix Nyberg Stuart is a senior writer at CFO.

Recognizing the Causes

These five conditions are "especially conducive" to groupthink, according to Hersh Shefrin of Santa Clara University's Leavey School of Business:

1. The group dynamics feature amiability and esprit de corps.
2. A powerful, opinionated leader runs the group.
3. Group members operate under stress.
4. Group members are strongly influenced by a desire for social conformity.
5. There is no explicit decisionmaking procedure.

Source: Hersh Shefrin, Behavioral Corporate Finance (McGraw-Hill Irwin, 2007)

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