What’s more dangerous than a poor financial forecast? A leadership team that all thinks the same way.
In finance, decisions carry significant weight - fromcompliance and regulatory requirements to investments and risk management. But the real risk isn’t always in the numbers; it’s in the way teams reach them. When we value consensus over candour, we create space for Groupthink to creep in.
The term Groupthink was made famous by the American psychologist Irving Janis. His research showed how cohesive and homogenous groups, from governments to businesses, can suppress cognitive challenges, overlook red flags, and sometimes make catastrophically poor choices.
The symptoms of Groupthink are easy to spot in hindsight:
Overconfidence (“We couldn’t possibly be wrong”)
Silence mistaken for agreement
Peer pressure to conform rather than challenge
Teams (and leaders) ignoring alternative scenarios
For finance teams, that silence can be costly.
A tale of two teams
Imagine a scenario where an important budget model contained a significant flaw. Several analysts spotted it, but no one felt safe enough to question the CFO. Six months later, the error became painfully public.
By contrast, imagine a team that created space for challenge in their forecasting meetings. Team members are asked,“What could we be missing?”One junior analyst flags an assumption that didn’t hold. Correcting it early averts a costly error.
The difference isn’t talent. It is psychological safety.
Diversity of thought needs safety
We know diverse teams outperform homogenous teams; McKinsey famously found organisations with greater leadership diversity are 36% more likely to outperform competitors, and Harvard Business Review showed cognitively diverse teams solve problems 60% faster.
But diversity of thought is wasted if people don’t feel safe enough to speak up. That’s where psychological safety comes in. It is the belief that you won’t be embarrassed, ignored, or punished for sharing an idea, raising a concern, or admitting a mistake, regardless of your job, experience or level of seniority.
Dr Timothy Clark describes four stages of psychological safety: inclusion, learner, contributor, challenger. In finance, it’s that final stage,challenger safety– the safety to speak up, that prevents groupthink from taking hold.
Why it matters in finance
For finance professionals, building psychological safety isn’t a “soft skill”, it is a commercial imperative:
·Sharper risk management: fewer blind spots, more robust decision-making
·Clearer thinking: diverse perspectives tested openly, without fear
·Innovation: fresh ideas surface in areas like ESG, fintech, and digital strategy
·Retention: top performers stay where they feel valued and heard
As one CFO told me recently:“I don’t just want people who agree with me; I want people who stop me from walking into a wall.”
The next step
At Inventum, we’ve seen first-hand how fostering psychological safety reduces bias, unlocks diversity of thought, and drives innovation.
We’re running a free masterclass for professionals on Psychological Safety and Groupthink exploring how to spot the signs, create inclusive environments, and enable smarter decision-making.
If you’re ready to move beyond consensus culture and unlock clearer thinking in your team, we’d love you to join us.
Get your free ticket here: https://www.eventbrite.co.uk/e/1508915289249?aff=oddtdtcreator