Pearl Harbour

Analyzing the “Pearl Harbor” case, it could clearly be seen that the military exhibited some of the classic symptoms of groupthink.

Illusion of invulnerability:

-The military developed excessive optimism that blinded them from seeing the warnings of danger. The US navy felt superior and believed that the Japanese wouldn’t risk the attack.

-The Commander in Chief eliminated the possibility that his home naval base Pearl Harbor would be the target and neglected all the evidence that was relevant in showing that there is a high possibility in the launch of the attack to be at Pearl Harbor.

If this symptom did not exist there could have been an eye opener to the relevance of the “Pearl Harbor” attack and a strategy could have been put in place. Collective Rationalization:

-It could be seen that the group norm is that “Pearl Harbor is safe”. Therefore, when warnings from outside the group suggested otherwise, officers focused on reasons to reject the warnings rather than on reasons to accept and react to them.

-Officers filtered out facts that do not fit with their existing interpretation and emphasized any piece of evidence that reinforces it.

This symptom could have been eliminated by looking at the alternatives, reading the indicators and not neglecting any piece of evidence. The US navy should have re-examined the course of action initially favored by the majority, to look for non-obvious risks and drawbacks that had not been initially considered. By doing so, the officers might have detected evidence that is contradicting to their findings and this could have changed their decisions.

Stereotypes view of Opponent:

-The US navy viewed their opponent as “weak” and cannot possibly defend themselves against the planned initiative.

This symptom could have been overcome by “expecting the unexpected” approach. The US navy should have viewed their opponent as “strong and unbeatable” in order to build up an undefeatable strategy of attack.

Mindguards:

- Failure to report important information (the finding of a submerged submarine) and assuming it is unnecessary in order to protect it from being passed on to superiors so that it doesn’t interfere with the initiative strategy resulted in disasteric ending. The loss of 2,340 people and 19 vessels destroyed. This symptom could have been avoided by the reporting of such crucial information and by doing so immediate action to deal with the finding and upcoming attack could have taken place.

K-Dow -a deal that did not get signed.

Named K-Dow, this joint venture (JV) represented one of the most talked about deals in the country back in 2007/2008. Petrochemical Industries Company (PIC), a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), announced a multi-billion dollar joint venture with the Dow Chemical Company (Dow) in December 2007, in which Dow would contribute its Oil and Gas arm totally into the deal, creating the largest Polyethylene provider in the world. Polyethylene is the main ingredient in plastics. K-Dow would be larger than the JV between GE Plastic and SABEC and Chevron Phillips.

The venture would employ more than 5000 people (Kuwaitis and non-Kuwaitis) and have annual revenue of about $15 billion. Agreements were signed on November 28th 2008 after approval from Kuwait’s Supreme Petroleum Council, the highest authority in the Ministry of Oil.

So where’s the problem? Sounds like a great deal for Kuwait and Dow.

As of December 28th 2008, the Kuwaiti government cancelled the deal following weeks of opposition from parliament. Lawmakers stated that the deal was overpriced and that the deal shouldn’t be undertaken during these troubled times.

Looking at the groupthink symptoms and its relevance to this case:

llusions of invulnerability: The KPC board members thought that they had the power to make this decision and sign a multi-billion contract with Dow without having second doubts.

Rationalizing: All members and parties involved in the decision of this major investment neglected any external factors that could have an influence on their decision (political factors in this case). They were blinded by their assumptions of the profits yet to be made and failed to see the major role MP’s play in the making of this decision.

Stereotyping: The board members and Kuwait’s Supreme Petroleum Council viewed the MP’s as impotent. They saw them as powerless and had in mind that the end decision would be theirs.

Direct pressure: There was direct pressure placed on certain board members who questioned higher authority decision makers within the group. Therefore, this led to the approval of the deal without questioning.

The deal that took more than 2 years to structure fell apart in less than 3 weeks. This was due to the groupthink decision made without reading external indicators correctly. All board members were going in one direction which was to sign the deal and gain tremendous profits. The end result was miscalculating the power of MP’s on this decision. The cancellation fee for breaking the deal is $2.5 billion which is almost 28% of the deal itself. The court case is still pending, if Dow wins the lawsuit the government will be subjected to paying the cancellation penalty. In my opinion this decision has caused a major opportunity loss in the oil sector.