In his seminal text Experiences in Groups, the late psychoanalyst Wilfred Bion said healthy groups shared the following characteristics:

1. A common purpose, either in overcoming an enemy or pursuing a goal.

2. The ability to accept new members, or even lose them, without feeling that the group itself is under threat.

3.All members of the group recognize their boundaries and the role of the group.

4. The ability to value each member for his or her contribution and allow each member to move around the group, provided that they follow the rules that the group has developed.

5.Tolerance of sub-groups, as long as they are not too rigid, introspective or isolated from the main group.

6. The capacity to deal with dissent within the group.

Working backwards from that, and going on my observations and countless interviews with business leaders, lawyers, corporate recovery specialists and accountants, I can identify five warning signs of psychotic, dysfunctional organizations:

1. Disorganization of thought processes inside the organization, particularly from its leaders. Their boards and managers jump around from strategy to strategy, one as incoherent as the next.

2. Individuals within the organization share a delusion. Their view of the world is completely out of whack with market reality, and often it's reflected in their accounts and annual reports.

3. Different components of the organization lose the capacity to communicate with each other, resulting in fragmentation, turf wars, destructive politics and sometimes even sabotage.

4.The organization is unaware of its fragmenting, disintegrating state.

5. Significant deterioration in the organization's capacity to deal with the outside world and its demands, and in some cases, even ignorance of the external environment's demands. In those cases, there are serious rifts and problems with regulators, customers, suppliers and shareholders.

Just about all organizations will have pockets demonstrating one or two of these traits. But in places where it's rife, or where there's three or more of these conditions, you know there will be trouble.