If you knew a replacement part would add an extra 90 cents in costs and yield only ten cents in warranty savings, would you authorize use of the more expensive part?
Probably not. Managers would crunch the numbers and find the spending increase unjustified since only a correlation exists between the increased costs and accident prevention.
If you ran Starbucks, would you have made the decision to close 8,000 stores, put 175,000 employees through racial bias training, and forego an estimated $16.7 million in lost sales?
Both/and or either/or?
The leadership team at GM focused on costs in making their decisions.
Those at Starbucks measured both costs and benefit (which has yet to be determined)—they practiced the business of business as BOTH watching the bottom line AND doing the right thing.
Some are passionate that the sole responsibility of business is making money. Others say business should measure a triple bottom line, focusing on environmental and social dimensions as well as financial ones.
Friedman’s focus on economics is measured by profit and loss, which is fairly clear-cut and unambiguous. Elkington’s push for the triple bottom line is more complicated. As he says, “success or failure on sustainability goals cannot be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of billions of people and the health of our planet.”
Friedman’s approach can work with mostly an either/or style of thinking; Elkington’s requires the use of both/and paradoxical thinking. Either/or thinking is less complicated and more explicit. Both/and paradoxical thinking is more involved and requires deeper analysis.
Managing a paradox requires managing conflicting yet complementary forces, dynamics like cost and benefit, results and relationship, competition and collaboration, and so on.
Today’s successful business leaders will be those who are most flexible of mind. An ability to embrace new ideas, routinely challenge old ones, and live with paradox will be the effective leader’s premier trait. Further, the challenge is for a lifetime. New truths will not emerge easily. Leaders will have to guide the ship while simultaneously putting everything up for grabs, which is in itself a fundamental paradox. ~Tom Peters, Thriving on Chaos
4 ways to be a better thinker
In “Learning to Thrive on Paradox,” Peter Stroh and Wynne Miller outline four ways to manage a paradox, all of which require moving beyond the simplicity of either/or thinking. Here’s how they describe the four methods:
- Both/and thinking
“Managers must continuously brainstorm the question: “How can two incompatible values be true?” For example, increasing quality in the long run requires a short-term investment; therefore, improving quality costs money while it saves money.”
- Best of both thinking
“Managers must strive to create conditions that allow simultaneously for the emergence of contradictions through creative tension. Examples are loosely coupled structures, controlled entrepreneurship, and conservative innovation. The idea is to make personal values explicit by inquiring into both the positive and negative qualities of two seemingly contradictory paradigms and to develop a synergistic solution or a synthesis.”
- Expanding the construct space and time of a paradox
“When profits are down, managers tighten controls, and when sales are up and profits are soaring, managers increase responsiveness to customers. Thus, current market conditions require that managers simultaneously use belt-tightening and creative responses. Similarly, expanding the time frame should help managers optimize the management of paradoxes by concentrating on aligning short term with long term goals.”
- Neither/nor thinking or choosing a third option.
“Paradoxically, this way of thinking replaces “both/and” by focusing on the outcome instead of the choice. Should management base its product development decisions on existing organizational technologies or on customer needs? Sometimes companies understand what will best serve customers before the customers know it themselves. In these cases, technology pushes the company. The paradoxical forces of both “technology push” and “market pull” help drive the company along the road.”
Either/or thinking will always have a place in our management practices. However, it shouldn’t be the default method for critical thinking, decision-making, and problem-solving.
The art of managing and leading organizations today lies in embracing incompatible forces, rather than choosing between them. Organizational leaders must learn to deal with ambiguity and paradoxes through a new mindset; one that combines and optimizes rather than splits apart and differentiates. ~Alan T. Belasen, management professor SUNY
Businesses fail when they over-invest in what is at the expense of what could be. ~Gary Hamel, Professor, consultant, and Director of the Innovation Lab
Ready to expand your styles of thinking repertoire and make better decisions?
Image credit before quote: Pixabay