“What A&P did is not uncommon, whether in business, in science, or even in the wilderness. Behavior like that, seemingly contrary and nonsensical, stems at least in part from a phenomenon that psychologists call “groupness.” Coined by a social psychologist at Oxford University named Henri Tajfel, the term refers to the tendency of various animals, including humans, to form in-groups.
“When the in-group encounters individuals from outside the group, the default response is hostility. People protect their group from outsiders and from outside influences. For example, we will reject information, habits, and culture from other groups.
“The power of groupness is not to be underestimated. If a group invests a lot of effort in a goal and succeeds, its boundaries become stronger, and it tends to become even more hostile to outside influences. This may not be overt hostility. It may simply be a subtle and unconscious tendency to reject anything from another group.
“NASA has lost two space shuttles, costing the lives of 14 crew members, and groupness was at least partly to blame. The astounding effort and success of the Apollo program had created a culture like that at A&P. NASA defined itself as technically excellent—“the perfect place,” as one researcher called it. They put a man on the moon, and it was hard to argue with success. The insidious message was: We know what we’re doing. The corollary to that is: You can’t tell me anything I don’t already know.”
- Laurence Gonzales, National Geographic Blog
Traders can profit from “groupness” in different ways — shorting companies headed for strategic disaster, for example, or spotting telltale signs of groupness in high-stakes situations.
Central bankers are exceptionally prone to groupness (Federal Reserve, BOJ etc). Government administrations can get swallowed by it (Iraq war). Tight knit analyst teams can too (ahem, Ackman Pershing Herbalife, cough).
If you work with a team, how do you avoid groupness in your own shop?
If you routinely share views within a close-knit circle, how do you filter for groupness in your perceptions?
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