Managing Business Paradoxes

Look around you and I’m sure you will have the same nagging feeling I have. Every new crisis or challenge seems to amplify polarities. It feels like we live in a world of blacks and whites. Yet, deep inside, we all know that life is much more nuanced. And this is especially true in business where decisions should take into account the diverse and sometimes conflicting needs of stakeholders.

Complex paradoxes (not simple problems)

Polarities or paradoxes are situations we encounter every day. Take, for example, being customer-focused and driving operational efficiencies. If you are entirely customer-focused, then each customer would be treated as an individual and their preferred way of engaging with your organization would have to be considered. This would make your processes very inefficient and your Chief Financial Officer very unhappy. If, on the other hand, you are entirely process-efficient, then no customer would receive special attention and they would be given what everyone else gets in order to serve the processes you have in place. This will make your Customer Relationship Officer very unhappy.

In a healthcare setting, consider the common issues of patient care and managing healthcare costs. Healthcare companies are increasingly pressured to provide the best possible care at the lowest cost — a real paradox if I’ve ever seen one!

In business, they are often described as problems, and though problematic, these are instead tensions that simply cannot be solved. Each side of a paradox has advantages and disadvantages. We instead must be able to tackle both and not choose one over the other. But how do we do so? I can almost detect your urge to respond that it’s not possible, and yet there is a way. If you’re patient enough to read through the rest of this article, I may have a simple technique to help you out.

Tackling paradoxes by using a 2-by-2 matrix

A good way to think of paradoxes is to map them in a 2-by-2 matrix. At each end of the horizontal axis, we have the two poles of a paradox (in our case customer focus and operational efficiency). At each end of the vertical axis are the advantages and disadvantages. Using our previous example, we can easily recognize the advantages and disadvantages of customer focus. We obviously stand to increase customer satisfaction, create more loyal customers, and ultimately generate more revenue. But by moving further on the customer-satisfaction axis, we also run the risk of becoming increasingly inefficient. We may end up wasting time and money in our attempt to be very responsive. A similar thought process (in reverse) applies to operational efficiency: We get to be efficient, but we end up forgetting about the needs of our customers, etc.

Unlock your brain's ability to respond

Now that we have mapped our paradoxes, it’s time to reveal the key to unlocking your brain’s ability to respond to paradoxes. Here goes: Your job is not to solve paradoxes, but to minimize the disadvantages of each side of the paradox, while maximizing the advantages of both!

Let’s go back to our customer focus and operational efficiency paradox. We have discussed the advantages and disadvantages of customer focus. Let’s think of ways to minimize the disadvantages. One option is to group customers with similar needs and structure our operations to address those groups; another option is to streamline our response to our least valuable customers, etc.

I am sure you can complete the rest of this exercise now that you understand how it’s done. One suggestion I have is to pick a paradox that you and your colleagues are working on and map it out to reduce the disadvantages you are experiencing. Remember life in business is not made of blacks and whites, but opportunities for improvements and value creation; your ability to manage paradoxes can unlock a whole lot of value for you and your organization.

To gain more insight into managing paradoxes and problem solving, contact Joe Carella at executive@eller.arizona.edu.