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CHAPTER 1
Paradox Thinking: What Is It and Why Use It?
"The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function."
— F. Scott Fitzgerald, The Crack-Up
My new client had a lot on the line. It was no longer the golden years in which companies like his could hold on to the status quo and make profits. Money was tight, and he was feeling intense pressure to make changes that would boost profits immediately.
He started our first meeting with a story I'd heard many times before: "We're struggling. We need to cut costs, but if we don't invest in growth opportunities, the company will wither away."
"Let's look at the challenge through a different lens," I suggested. "There's no law that says you have to cut costs or invest in growth, is there?"
He laughed, "Maybe a law of business."
I told him a law like that was meant to be broken. And then I wrote the words "cut costs" on the left side of a paper and "invest in growth" on the right side. Between them, I wrote the word "and."
Cut costs and invest in growth. "How is that possible?" he wondered. "We're about to figure that out!" Welcome to paradox thinking.
Definition and Benefits
Paradox thinking is "and" thinking. It is thinking that identifies pairs of opposites and determines how they are interdependent relative to a key goal. In the previous example, the pair of opposites is "cut costs and invest in growth." They are interdependent because both are vital in achieving the goal of a thriving organization. Failure to manage the pair of opposites may result in the company going out of business; at the very least, it will result in its slow decline.
Paradox thinking enables balanced management of conflicting objectives. A company wants to be known for innovation at the same time customers embrace it for its stability, to thrill shareholders with strong short-term revenue results and concurrently take actions to ensure long-term health. From those two examples alone, it should be easy to see how failure to manage a critical pair of opposites results in the company stumbling and, perhaps, failing.
Adopting an appreciation for paradox ends the practice of viewing conflicting needs separately and addressing one over the other. Paradox thinking unravels the assumption that, if we analyze a situation thoroughly, one option will trump another in terms of problem-solving. Organizations do not reach their potential when they habitually use that kind of either/or approach to challenges. Their profit, morale, and ability to innovate suffer. Renowned playwright George Bernard Shaw addressed what it takes to make progress when he said, "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man."
Paradox thinking supplements the type of thinking many consider natural. So if you are a linear thinker, for example, you won't stop being a linear thinker and suddenly transform into a complete paradox thinker by reading this book. A linear thinker might look at the challenge of employee performance management like this: "First I will point out the employee's shortfalls, and then I will praise him for his accomplishments." The solution to the employee management problem is a step-by-step progression involving critique and reward — but the linear thinker wouldn't necessarily see critique and reward as a pair of interdependent opposites.
To that linear pattern, therefore, paradox thinking adds another way of looking at options and goals. It means looking at the divergent needs for critique and reward as linked and necessary in pursuing the goal of effective performance management. In other words, paradox thinking adds a level of understanding of the challenge, the ways to address it, and what the intended outcome is. In this example, once the linear thinker makes the connection between critique and reward, and consciously manages both to help the employee improve performance, he establishes an environment for faster behavior change and helps employees hit higher performance levels.
When paradox thinking becomes part of your problem-solving strategy, it has another benefit. It alerts you to when you are over-focusing on one part of the pair at the neglect of the other. That is, it helps your management of issues and actions stay balanced. In the performance management situation, it's possible that you may want focus on the reward more than the critique, of course. Doing that deliberately and keeping in touch with the outcomes of that action will help you in the future. But if you are unaware of that emphasis on reward over critique, then you may have just created a problem for yourself.
Paradox in the Language of Business
Many business-related concepts suggest opposing needs. For example, customer service implies the "push" of providing something to customers and the "pull" of finding out what the customer wants. Contract negotiation entails dual requirements: to listen/pay attention and talk/demand attention. More than any others, however, two elements stand out as embodying multiple, significant paradoxes: innovation and leadership.
In a business context, innovations tend to involve imagination and logic, a focus on what's different and what's familiar, being practical and stretching for the incredible, and many more interdependent opposites. Michael S. Dobson, author of Creative Project Management among other engaging business books, told me this story of innovation from early in his career:
I was at the toy fair with my boss, looking around the show floor for the next big thing. This was the year the Cabbage Patch Kids became a fad. We were in some Hong Kong importer's show room and they were selling Broccoli Patch Kids. They were a terrible knockoff. I made some disparaging remarks about them and my boss said, "You have to understand that it's not bad that it's a knockoff. It's just a dumb knockoff. There is a brilliant Cabbage Patch knockoff at this show. See if you can find it."
I looked around for hours and didn't see anything that fit his description. At the end of the day, he said, "What is the Cabbage Patch gimmick?"
That much I knew: "You adopt them."
"What else do you adopt?"
That was a gigantic clue. The brilliant Cabbage Patch knockoff at that year's toy fair was Pound Puppies. They are exactly like Cabbage Patch dolls, but completely different.
The ideal toy is brand new, completely original and just like everything else.
The paradox Dobson discovered applies to any company that tries to innovate, from toothpaste to smartphones. Integrating such paradox thinking into to new product development creates the kind of competitive advantage that companies profiled throughout this book enjoy.
In addition to innovation, leadership embodies myriad conflicting needs, such as confidence and humility, control and empowerment, grounded and visionary. Reinsurance Group of America (RGA) experienced major structural changes in 2008 and then again 2011. Because of these changes, new leadership paradoxes took shape for CEO Greig Woodring. Once owned by Metropolitan Life Insurance, RGA split off from MetLife in 2008 after expanding its global presence by adding new foreign offices. Then in 2011, it became a matrix organization and started to move toward more integrated systems instead of running like a loosely affiliated group of reinsurance companies. Control and empowerment emerged as central conflicting needs in his changing world. By exercising too much control, he could quash the entrepreneurial spirit of the individual company leaders. By empowering them too much, he would undermine the moves toward more coordinated behavior and goals.
Case Studies Prove the Power of Paradox Thinking
In this book, case studies of organizations help clarify the phases of a planning and implementation process that uses paradox thinking. Think of the process in terms of these macro steps:
1. Explore the types of paradoxes that your organization faces.
2. Evaluate when paradox thinking is necessary and when it's important to see choices as either one or another.
3. Envision the Aim, the Miss, and the possible positive and negative outcomes for your organization when you focus on each need separately and then together.
4. Energize the solution. Move out of the analysis stages and into actionable implementation to manage and leverage your paradoxes.
5. Equalize the execution. That is, put qualitative and quantitative measures in place to help indicate risk as you gauge progress.
Now visualize how these steps are connected and flow from one to the other, with the process repeating again and again. The steps have an energetic relationship. When practiced over time, this thinking becomes fluid and brings value instantly to your work life and your whole life.
The case studies vary in size from a local not-for-profit to a global, multi-billion-dollar company. Exposure to their struggles and ultimate successes gives specific insights into how to put the process captured in the image to work in your own organization. You will see how real companies identified critical interdependent opposites and applied paradox thinking to them. As the stories develop in later chapters, you will also see how well they leveraged relationships between the two and implemented paradox thinking on an ongoing basis.
The four case studies introduced in this chapter and referred to in other parts of the book are a financial services company, an upscale hotel chain with annual sales of $2 billion, a not-for-profit healthcare organization with annual revenue of $20 billion, and a technology-related services company with annual sales of $5 million.
St. Louis–Based Financial Services Firm
A St. Louis–based financial services firm, which we will call St. Louis Finance, consists of more than 15,000 financial advisors who came together over the course of years through mergers with regional and national firms. The group provides asset management, estate planning, and related services.
A lot of change in the company occurred with upheaval in the financial services industry, and that had a tremendous impact on external opportunities and threats, and internal strengths and weaknesses. On the internal side, "Who's doing what?" bounced off the walls in many offices, with people wondering who had responsibility for creating the marketing strategy and who had responsibility for execution.
I provided guidance to the marketing executive team of St. Louis Finance throughout their 2013 and 2014 strategic planning effort. One of the fundamental elements at play in an organizational paradox is its ongoing nature, so in addition to an outside-in look at directionally where they needed to take their strategy, we discussed chronic issues and challenges for the group. This is the point at which we entered the "explore" stage of the process and determined that paradox thinking is necessary.
"What causes confusion and chaos for you?" I asked them.
I wanted them to look at their struggles and then accept that strategic planning would help them understand their struggles, not just rise above them. They needed to see what causes the struggles and then what sustains them — that is, what keeps them ongoing. Zeroing in on paradoxes is the way to do that.
There is no crisply defined formula for strategic planning, but there is one element every strategic planning exercise needs as it gets underway, and that is a common language. The one fundamental word when integrating paradox thinking into strategic planning is "and." Some elements of strategy are so interconnected, so dependent on one another and yet opposite, that they are like breathing. Examples are logic and creativity, deliberation and emergent action, revolution and evolutionary change, a focus on markets and consideration of internal resources.
Identifying key stakeholders and key partners set the context for articulating the main reason for coming together to tackle strategic issues — in a business environment, it's what I call the Aim. The Aim and its negative counterpart, the Miss, are discussed more in-depth beginning in Part II of the book. These are the absolute markers of whether an organization is managing to success or failure.
The Aim we identified for St. Louis Finance was "client growth." The Miss was "slow decline of business."
Fast-forward to several meetings later, where the executives identified six strategic priorities:
1. Growth through acquisition of successful financial advisors and their clients.
2. Direct, corporate cultivation of clients (customers).
3. Mining client/prospect data in order to know customers better.
4. Recruiting/developing talent in the company.
5. Exhibiting client/prospect data in order to share knowledge and demonstrate success.
6. Improvement and standardization of core services — that is, a focus on efficient processes.
At this point, we entered the "evaluate" part of the process; three sets of tensions took shape immediately. Through questions that guided conversation, my goal was to help them to look at those tensions and see them holistically. It was important for them to think of the list in terms of:
Growth through financial advisors and growth through direct contact with customers.
Emphasis on people (talent) and emphasis on process.
Gathering data to understand customers and sharing data to demonstrate success.
The group involved in the strategy process grew and no longer consisted of only the marketing executive team. Nine new people joined the group. Their job was to help build out the strategy and to be ambassadors of the strategy within the organization, as well as to act as key players in the implementation of the strategic plan.
In order to raise awareness of the fundamental "and" and to get buy-in from those who were new to the team, I expressed the three, opposing — yet linked — strategic pairs on a flip chart using the infinity loop, a symbol first used by Barry Johnson in his model to represent ongoing energy within the pair: 8. So, for example, "talent" occupied the left side of the loop and "process" occupied the right, with the loop suggesting they are energetically connected. At the same time, I made it clear that the word "tension" had crept into all their conversations about these pairs.
And then I invited them to do a simple exercise:
"Inhale."
"Exhale."
"Inhale."
"Exhale."
"Inhale, and hold it."
Obviously, at some point, they wanted to exhale, but I didn't give them that instruction. Yet they exhaled because they couldn't continue to hold their breath. They got the point: You can't do one or the other if your Aim is to live. You have the same dynamic requirement with your company when it comes to these interdependent sets of opposites.
Particularly in strategic planning sessions, but also in meetings, participants tend to use "trap words" that hold them back from both/and thinking. Two of them are "priorities" and "agenda."
Priorities and agenda can get you stuck in either/or thinking because, by the nature of the words, they conjure up a this-then-that order, a first-then-second perception. That establishment of a hierarchy assigns more value to one possibility, which means another possibility has less value. I'm not saying that's invalid in all circumstances, but when you are considering paradoxes, it's essential to keep in mind that they are neither positive nor negative. They are equals — interdependent pairs. Priority thinking can take you to a choice, and that choice can imply either/or thinking and undermine your entire meeting or your entire strategic planning process.
The first success in the process of working with the St. Louis Finance group involved a change in their list of goals from six to five, with the two growth goals officially linked with an "and." Of course, the process must continue with action steps to move toward the Aim and a system of measuring how well you are managing the process. There are the "envision," "energize," and "equalize" steps that are covered in depth in Part II.
Livli Hotels
The context for this case study (in which the company name has changed and selected details have been disguised to protect confidentiality) is the recession that began in 2008. A company of any size faces radical changes if it loses 40 percent of its revenue stream overnight. That's essentially what happened to the Livli Hotels, a world-class hotel chain founded by a Scandinavian-American and headquartered in the U.S. Midwest. It had generated about $1.5 billion in annual sales prior to that year. Livli Hotels specializes in high-end services for business and leisure travelers; all locations offer some level of spa services as well as two or more restaurants.
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Excerpted from "The Power Of Paradox"
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Copyright © 2014 Deborah Schroeder-Saulnier.
Excerpted by permission of Red Wheel/Weiser, LLC.
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