Read Online at: https://hbr.org/2016/05/both-and-leadership
Wendy K. Smith
Marianne W. Lewis
Michael L. Tushman
EXPLORE THE ARCHIVE
Jack Welch once claimed that great leaders are “relentless and boring.” Management thinkers largely agree: Good leaders, so the narrative goes, are consistent in their decision making, stick to their commitments, and remain on-message. The trouble is, much as we may value consistency in our leaders, we don’t live in a world that rewards it—at least not in the long term.
We all know that leaders face contradictory challenges. They may be under pressure to improve their existing products incrementally at the same time that they invent radically new products based on new business models. Or they may be striving to reach a global network while also serving distinct local needs. Some CEOs respond by prioritizing one challenge over the other; some seek an integrative middle ground, negotiating acceptable trade-offs that all stakeholders can abide by. What those approaches have in common is that they aim to provide a stable resolution of the conflicting challenges—the implicit assumption being that stability is what organizations need in order to prosper.
We disagree profoundly with this image of leadership, because it is rooted in a mischaracterization of the business environment. The challenges we focus on in this article are not conflicting goals that invite a calculated choice or a compromise. They are fundamental paradoxes that persist over time, as today’s “long term” becomes tomorrow’s “short term.” Too much focus on one goal triggers a demand for the other. And as the business environment and the actors in it change, stability breaks down, often destroying a great deal of value and eventually culminating in a crisis that prompts a leader to impose a different order—fueling the start of another cycle.
In the following pages we propose a new model—one in which the goal of leadership is to maintain a dynamic equilibrium in the organization. Executives with this goal do not focus on being consistent; instead they purposefully and confidently embrace the paradoxes they confront. Senior teams build dynamic equilibrium by separating the imperatives that are in conflict with one another in order to recognize and respect each one (creating a separate unit to develop a new business model, for example), while at the same time actively managing connections between them in order to leverage interdependencies and benefit from their synergies.
The Paradoxes of Leadership
In our work with corporations over the past 20 years, we have seen that senior leaders constantly grapple with the same sets of opposing goals, which often polarize their organizations. These tensions or paradoxes fall into three categories related to three questions that many leaders perceive as “either/or” choices:
Are we managing for today or for tomorrow?
Tensions around time frame are especially salient, because a firm’s long-term survival depends on experimenting, taking risks, and learning from failure in the pursuit of new products, services, and processes. However, firms also need consistency, discipline, and steady attention to make the most of the products, services, and processes they already have. These innovation paradoxes involve tensions between today and tomorrow, existing offerings and new ones, stability and change.
In the late 1990s, for example, senior leaders at IBM saw the internet wave cresting and realized that the company’s future depended on harnessing the new technology. But IBM was also committed to sustaining its traditional strength in client-server markets. The two strategies demanded different structures, cultures, rewards, and metrics, which meant they could not be easily executed in tandem. Pursuing both involved addressing conflict between executives, as those committed to the old world and those championing the emerging world each felt their identity threatened.
Do we adhere to boundaries or cross them?
Leaders are always making and unmaking decisions around boundaries—geographic, cultural, and functional. A geographically dispersed supply chain can be wonderfully efficient, but it may lack flexibility. Dispersed innovation can produce a diversity of ideas, but certain benefits get lost when your best and brightest aren’t together in one place. These globalization paradoxes surface tensions between global interconnection and local needs, breadth and depth, collaboration and competition.
In 2009 NASA’s director of human health and performance, Jeff Davis, began pushing to generate new knowledge through collaborative cross-firm and cross-disciplinary work. Yet over the next 18 months, he faced stiff resistance from scientists protecting their turf and their identities as independent researchers. The more that technology enabled open, collaborative research, the more concerned NASA’s scientists became about recognition of their individual achievements. Both collaboration and independent work were needed for the creation of new ideas, but they were organizationally and culturally incompatible.
Do we focus on creating value for our shareholders and investors or for a broader set of stakeholders?
All firms exist to create value, but leaders may be torn between maximizing profits for the firm and trying to generate wider benefits—for investors, employees, customers, and society. These tensions have mounted as public concerns about poverty and climate change have grown, as technology has helped enable and empower consumer activism, and as human capital has been increasingly recognized as the major driver of value. But being socially responsible can bring down share price, and prioritizing employees can conflict with short-term shareholders’ or customers’ needs. Companies struggle to address these obligation paradoxes.
For example, in 2010 Unilever CEO Paul Polman launched the Unilever Sustainable Living Plan, aimed at doubling the size of the business by 2020 while improving the health and well-being of more than a billion people and cutting the company’s environmental impact in half. Polman argues that over the long term, social and environmental investments will lead to greater profits, whereas a singular focus on short-term profits can fuel decisions that harm our society and the environment. That is persuasive to many, but Polman faces ongoing challenges in executing the plan. Its inherent uncertainty and ambiguity have caused senior team leaders to feel a high level of anxiety and to fight about resource allocation.
Over time, committing to multiple strategies can enable more resources for each. That was the case at Zensar Technologies, an India-based provider of IT services, where leaders of the extant software franchise eventually realized that their exploratory software product could increase sales of existing products. Similarly, the coffee division of a large European food group overcame its initial resistance to an innovative proportioned-serving brewing system after seeing success in the new niche and using the new product design to increase sales of its existing brands.
From stability and certainty to dynamism and change.
Leaders seek to reduce their followers’ discomfort with uncertainty by asserting control—making decisions that minimize complexity and emphasize stability. This, too, is understandable: Traditional leadership and management theory was heavily influenced by studies of the military, which prizes regularity. Therefore, business managers have long been encouraged to build a common culture, where everyone is headed in the same direction, speaks the same language, and shares best practices.
Executives must be able to appreciate multiple, often conflicting, truths.
But when the strategic environment changes, this approach often results in defensive and detrimental actions. As we’ve discussed, NASA’s leaders resisted open innovation methods because scientists were invested in individual research and felt threatened by the idea of collaboration. Polaroid famously lost the battle for the digital-imaging market partly because company leaders committed to applying their successful analog-camera strategy—making money on the film, not the camera—to a market that no longer printed out pictures.
Rather than seeking stability and certainty, paradoxical leadership depends on embracing dynamism and change. Leaders must be emotionally and cognitively open to the new, developing a management strategy of coping with, rather than controlling and minimizing, ambiguity. They must be humble, even vulnerable, admitting that they might not know what the future holds. This approach emphasizes the value of experimentation and failure, spurring critical feedback to enable learning and ongoing adjustments.
For example, in the early 2000s Lego’s middle managers faced tensions amid ongoing organizational change. Subordinates felt anxious and raised concerns about how their familiar practices, rules, and expectations would work in the new world. Rather than respond to these specific concerns, middle managers posed questions. They asked which parts of the current organizational approaches they should keep. They explored ways of meshing the existing world and the new one. Their questions opened up conversations that allowed both managers and subordinates to move away from seeking permanent solutions and instead develop temporary “workable certainties” that helped them move forward but were understood to be subject to future modification.
Read More: https://hbr.org/2016/05/both-and-leadership