Alienate Customers? Forgo Sales? Lose Investors?

Alienate Customers? Forgo Sales? Lose Investors?

By David L. Dotlich, Peter C. Cairo, and Cade Cowan

David L. Dotlich is chairman and CEO of Pivot Leadership and co-author of eleven books; Peter C. Cairo is a consultant and co-author of six books; Cade Cowan is head of Pivot Leadership’s global leadership practice. Cairo and Dotlich co-wrote the feature “Embracing Ambiguity,” in the Summer 2009 issue. From The Unfinished Leader: Balancing Contradictory Answers to Unsolvable Problems. Reprinted by permission from Jossey-Bass, a Wiley brand. ©2014 by Dotlich, Cairo, and Cowan.

In recent years, problems in work, life, and leadership have come to bristle with complexity. Complexity comes from the greater number of systems that run our lives, the greater interdependence of those systems, the greater scope and scale of systems locally and globally, and the greater number of people—all with their own interests in how the systems should work and what they should achieve. All of this means that leaders need to consider a greater number of outcomes—especially unintended ones—for any solution they develop. The growth in complexity is proportional to the multiplication of paradoxes.

In fact, in industry, you can almost mark your calendar, decade by decade, with the layers of accumulating complexity. After World War II, business aimed largely at building a lot for a little—the imperative was to achieve material and labor efficiency. In the 1960s, the imperative grew to include safety and health for workers. In the 1970s, it grew to include environmentally friendly operations. In the 1980s, world-beating quality systems and products came on strong. In the 1990s, so did demands to deliver unparalleled design, speed, profitability, and global reach. In the 2000s, it became imperative to include transparency, community consciousness, and on-the-job meaning.

We oversimplify, of course. But the layers of complexity have mounted relentlessly, along with opposing forces that can define the paradoxes in management and life. Consider Indra Nooyi, chair and CEO of PepsiCo. Until recently, Pepsi, like McDonald’s, Kraft, and Nestlé, could focus on creating products that tasted good without being overly concerned about whether they were also good for their customers. They could produce their products without fear of coming under attack from politicians or consumers accusing them of fattening up the populations of the developing world for profit.

No more. When Nooyi took over, she managed a portfolio of products that had long included salty snacks and sugar-filled beverages. But increasingly, activists attacked the company for plying customers with high sodium and sugar, the villains in illnesses such as atherosclerosis, heart disease, and diabetes. On top of all the other forces in business today, Nooyi has encountered this new one. She faces a new paradoxical situation, though she doesn’t stand as a neutral party. She is chair of the Healthy Weight Commitment Foundation and clearly concerned about obesity, diabetes, and other problems caused by unhealthy eating. Which direction does Nooyi turn? Does she risk alienating customers by taking the salt and sugar out of beloved products? Does she risk forgoing sales as the company revamps its product lineup? Does she risk losing investors who believe she should stick to her tried-and-true success formula? Nooyi has made a public commitment to create products that are “fun for you” and “good for you.” Now she has to figure out how to negotiate so many paradoxical forces.

Managing the paradox of good taste versus good health is challenging for many reasons. For one thing, existing products provide the revenue stream the company is using to research and develop healthier products. For another, if Nooyi goes too slowly, she risks political fallout. When he was mayor of New York City, Michael Bloomberg insisted that New York ban super-size beverage containers, and the echo of his message still reverberates nationwide. Third, as a global company, Pepsi is aggressively pursuing markets in developing countries, which makes Nooyi vulnerable to charges of selling unhealthy products to countries with nutritional challenges.

She has taken the first step to managing this paradox effectively: acknowledging it exists. She recognizes that good taste and good health are opposing points on a continuum—and yet may be reconcilable. She also believes the choices should be transparent to consumers, allowing them to make informed decisions. As a result, she is trying to anticipate the sensitivities of various groups and approach these dilemmas with a different mindset. So part of her solution is to invest heavily in new “better for you” products.

We can assume that our problems will only grow more and more paradoxical the way Nooyi’s have, and probably not at a slower rate. Unlike their predecessors, leaders of today can often come up with six or eight options instead of just a couple. All may be of apparently equal value. And informed employees and publics argue vehemently for their varied positions, each opposed to one or more of the others and all sure of their own rightness. As outside stakeholders weigh in with more force, no amount of research will clarify the truth—because there is no clear, single truth to be found. Meanwhile, data overload will make it harder, not easier, to locate unbiased information in time to make clear decisions.

The volatility of our times adds to complexity. Consider what happens when, eager to increase flexibility, you flatten your company’s structure to foster close-to-the-customer innovation, accelerate decisions, and reduce costs. As you broaden the span of control, reorganize into teams, and encourage participatory decision-making, you encounter new inefficiencies. Execution may become bogged down. That creates pressure on you to change processes and thinking, highlighting the paradox of execution versus innovation. As change catalyzes the need for managing new paradoxes that didn’t even exist eight or ten years ago, it will become clear that recognizing and understanding paradox has become a critical skill at any level of the organization. If you approach a problem as a paradox and you really have a puzzle, no harm done. If you approach a problem as a puzzle and you really have a paradox, you will waste untold time and money fighting for a solution that may not exist and an outcome that is not possible.

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