In some cases the grouping analysis will not be able to converge on a solution. The tool will try 100 times, and if no solution is found, it will stop trying.
The algorithm will likely be resolved if you use different seed features. If you are using FIND_SEED_LOCATIONS for the Initialization method, just running the tool again will likely result in a solution. If it doesn't, try creating a Seed Field and use GET_SEEDS_FROM_FIELD for the Initialization method. If you are already using a Seed Field, try changing one of your seed features. Getting this error is rare, so if you continue to have problems with this, report the problem to Esri Technical Support for the Spatial Statistics team.