Are we victims of ‘group think’?

"Group think," a powerful and controlling force, was present as the Capital Improvement Board built Lucas Oil Stadium and Eli Lilly and Co. developed and marketed Zyprexa.

I am well-acquainted with group think. In late 1992, my wife and I joined a flotilla to sail between Newport and Bermuda. We did not properly evaluate that most members of the group were professional captains operating with delivery deadlines. Despite known weather threats, the group decided to leave, and we joined it as friends waved from shore. The result was four days of 60-foot waves, thousands of dollars of damage, and risk to life. We had delegated thought and decision-making to the group, as did CIB and Lilly.

Our city, acting through CIB, was enthralled with the vision of a new stadium having modern conveniences. Voices of moderation and caution were not heard as budgets were developed to make the project appear financially feasible. Newspapers and television stations reported on the construction. Enthusiasm peaked when more than 100,000 free tour tickets were offered so football fans could get an early view.

Somewhat hidden, however, was the reality that no projection could show that annual income would cover operating expenses. Except during periods of rampant inflation, the costs of operation are easily projected and usually accurate. Sources of income also were known, including fees to be paid by the Indianapolis Colts and income from special events and conventions. Within limits, sales tax revenue also was predictable, although, according to one report, some projected revenue was to have been derived from a proposed casino, itself a controversial project that never was likely to be an early source of income.

I have no doubt some people within the development organization were worried about operating shortfalls, but their views were hidden by the giant political and economic steamroller that was driven by so many interests, including contractors, unions and suppliers, as well as sports entrepreneurs and enthusiasts.

According to an extensive story in Rolling Stone (Feb. 5), executives, researchers, contract physicians and sales personnel became enthralled with the potential curative powers of Zyprexa, an "atypical antipsychotic." Based on early positive results, Lilly announced that Zyprexa could be a $1-billion-a-year drug, even though the market for its predecessors was only $170 million. Using aggressive sales techniques, billions were generated, some illegally, as Lilly acknowledged by paying $615 million for promoting the drug for "off label" (unapproved) applications.

As in the CIB circumstance, many people knew the risks of Zyprexa, but their views were hidden by a steamroller powered by economic interest, including the expiration of patent protection for Prozac. The "group" promoting Zyprexa believed its cause was just and positive, exactly as I believed a flotilla of sailors must know what it is doing. The power of the group is daunting. A negative view is ignored.

Every action has positive effects. For example, I feel now that our trip to Bermuda was an important experience both in teaching sailing techniques and encouraging me to independent thought. After our city fathers figure out how to pay for the stadium, we will forget the crisis, and enjoy the building. Zyprexa appears to have had positive effects on some patients.

However, these experiences have a cost that is hard to measure and somewhat intangible. That cost is loss of confidence in our leaders, and furtherance of the popular belief that politicians lie and that corporate executives cannot see beyond the bottom line.
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Guy is a local certified financial planner.