2

Jumping Over the Line

People who honestly mean to be true really contradict themselves much more rarely than those who try to be “consistent.”

—Oliver Wendell Holmes¹

We often hear rising leaders lament: “If I can just get to the next level, then I can solve this problem.” The comment tells us that the speakers believe they will then have the power, authority, and control to implement the solution that will work. No more fooling around, they think. With the right hand on the tiller, the ship can be properly steered into port.

But the idea that a promotion, to any level of power, will give anyone that kind of control is an illusion. Those who succumb to it believe that all the problems they face are puzzles with fixed, permanent solutions. And they think that as they get more power, they will have the control to solve these puzzles a whole lot better than their predecessors.

But the reality is the reverse. In any organization, the higher leaders get, the less direct control they tend to have over solutions and outcomes. Studies even show that CEOs generally have far less control than most people realize. For example, Alison Mackey at California Polytechnic State University used a sample of ninety-two CEOs and fifty-one firms across ten years to analyze how much variance in firm performance was attributable to the industry, firm, and CEO. She concluded: “The CEO effect is estimated as 29.2 percent of the variance in corporate profitability while only accounting for 12.7 percent of the variance in business-segment profitability.”²

This is a whole lot less influence than you might have guessed.³ Contrary to what many people believe, CEOs and top-tier leaders are not masters of the universe. In fact, none of us has as much power to control things as we think.

One executive we worked with was reminded of this fact in a blunt way. Barbara, as we'll call her, was CEO of the U.S. unit of a global pharmaceutical company. For years, she ran her own shop and was a great success. And then a few years ago, company bosses in Europe decided to centralize finance, marketing, information technology, and other services around the world. Barbara no longer supervised the key members of her team—the CFO and the heads of R&D, information technology, manufacturing, and human resources—nor the people reporting to them.

This raised a ruckus among her U.S. leaders, who felt decapitated by a foreign power. One of them was outright hostile to her European manager, calling him an idiot and refusing to comply with his orders. Others disliked reporting to their European bosses because of their “management styles”—code for authoritarian. The U.S. head of regulatory affairs responded to an order from Europe by complaining that devising a single regulatory platform that would work in more than twenty countries was nonsense.

We can all become unhinged when we lose control like this, and it is especially likely for leaders who have not jumped over the line, for whom the difference between puzzle-like and paradoxical problems remains a mystery. Barbara was not one of them. A natural head-heart-and-guts leader, she knew from experience that she faced more paradoxes than any other kind of problem—paradoxes she could not control and would have to manage as opposed to solve permanently. She coached her reports in doing the same, assuring them that together they would reconcile the contradictory forces of centralization versus decentralization.

The case of Barbara and her direct reports leads to the message of this chapter: After distinguishing between puzzles and paradoxes, you need to take a next step and engage in self-examination. That examination should include a look at three premises that form a touchstone for people who have not jumped over the line. The first is the belief that you can control the outcome of all the problems you face. The second is the belief that you can stick with your solution as times change—that is, remain consistent. The third is the belief that you must have closure—deal with the problem once and move on.

Control, consistency, and closure. Those three premises underpin most people's success in solving puzzle-like problems—problems like that of the traveling sales rep. But when you face the paradoxes that leaders like Barbara confront, a white-knuckled grip on control, consistency, and closure holds you back both from collaborating with people and managing the decision process productively. As you advance to the next level, to manage paradoxes like the world's best CEOs, you have to recognize the limits you have put on yourself by sticking with those premises alone. To be a complete leader, you have to go beyond them.

Desperately Seeking Control

The thirst for control comes naturally to most of us. We desperately seek it to solve any problem. One leader we recently worked with told us that, throughout his career, he thought of climbing the organizational ladder as climbing the floors of a building. He assumed the people at the top exercised all the control. But when he got to the top floor himself, he realized nobody was there. Nobody was pulling all the strings.

The urge for control comes out in different ways. We want to take control, for one thing—find a way, say, to fire the idiots who talk nonsense. We want the person in charge to be in control—we think, thank goodness the boss knows how to fix the jam we're in. And we actually feel better when the leader reinforces the impression that everything around us is in a state of control—the economy is down but our company has a plan to thrive.

In some ways, the search for control is conspiratorial. Leaders and followers are locked in interdependency: The leaders want to be viewed as silverbacks. The followers want the same. Nobody wants to admit to a lack of control, and certainly not to the shortage of skill it implies.

The belief in our ability to control things has a tenacious hold on us—so tenacious that we regularly fall for what psychologists call the “illusion of control.” Experiments have long shown that people attribute good results to their skill—something they can control—even when chance plays a major or total role in outcomes (as in gambling).⁴ It's human nature to think we succeed because we're so talented, but in fact we always succeed at least in part because we're lucky.

As experts at Columbia and Rutgers Universities recently wrote, “Belief in one's ability to exert control over the environment and to produce desired results is essential for an individual's wellbeing.”⁵ The researchers noted that studies show the perception of control over stressful situations is a good thing. It actually inhibits the release of stress hormones, prevents immune system suppression, and averts behaviors like “learned helplessness.”⁶ Their findings suggest a biological basis for the need for control.

The drive for control can serve managers in organizations well until they rise to the position of leaders, where—like the CEO at the top of that building—they can't actually control what happens, both because of luck and complexity. At that point they are forced to find solutions to paradox-like problems, and in trying to control them like puzzles, they either fail or cause gross unintended consequences.

We see unintended consequences frequently bedeviling large companies with matrix organizations. In one of them—a major hospital supplier—the CEO fielded complaints from hospitals that had tired of as many as ten different company sales reps making sales calls. One rep might be selling surgical instruments, another hospital gowns, a third diagnostic products. All came from different business units, none coordinated. They each competed for business to meet their own sales targets. The customer would bark: Can't you just send one rep?

The CEO held many meetings to set up a new service in which one salesperson would represent the entire company to each hospital. He wanted to make sure that customers would no longer have to face a cast of characters from the same company but different divisions, each with an unrelated menu of products, each driven to fulfill different targets. He hired consultants to prescribe in a thick manual every detail of desired behaviors and rewards. If someone created a lead, they got one kind of credit. If they made a referral, they got another. If they closed the sale, they got a third. After every big sale, the central sales office divvied up credit and commissions among many business units.

The new coordinating service aimed to control the entire sales process to make it easier for the hospitals. But the fight for business by sales reps that once took place in the open at hospitals simply went behind the scenes at the company. People fought over who did what, who deserved credit, how to apportion sales to each unit. People gamed the system. They accused each other of stealing customers. Disenchanted employees left for greener pastures. As it turned out, legislating control became self-defeating. The CEO finally ditched the new arrangement, replacing it with a call to all employees to fulfill a new vision: Everyone in sales would coordinate with others to do the right thing for the customer in the long run.

Desperately Seeking Consistency

Another pervasive unspoken assumption is the desperate need to maintain consistency. The implication is that the actions of a mature personality are forever. Subsequent actions must fall in line right behind the first one. Politicians caught changing their minds like to proclaim: “I'm wiser now than I was then”—which makes sense, even if it is often expressed duplicitously. But the media and pundits rail against this “flip-flopping,” bent on holding the leader to consistency with past actions.

The worship of consistency has deep roots. Ralph Waldo Emerson, in his essay “Self-Reliance,” referred to people's “reverence for our past act or word, and we are loath to disappoint them.”⁷ He ridiculed “the man . . . clapped into jail by his consciousness. As soon as he has once acted or spoken with éclat, he is a committed person.” He then penned his famous line: “A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

Recent research shows just how much we are committed to consistency by human nature. In one set of experiments, people were asked to choose the best restaurant based on six criteria—ambience, amenities, dining guide description, hours of operation, location, and menu. Again and again, they biased their judgment of each successive criterion in favor of the restaurant they leaned toward after examining the first criterion. The same results emerged with people evaluating spaghetti sauces based on three criteria and hotels based on six criteria. Whichever spaghetti sauce or hotel they started out leaning toward, they biased their judgment of successive criteria to stick with that choice—no matter the equivalence of the data.

The results were surprisingly clear, wrote the researchers. “The main result of all three experiments is that the desire for consistency between units of information leads to the distortion of that information to support the leading alternative.”⁸ So the evidence suggests we slavishly favor consistency even when no logic supports it.

In spite of Emerson's widely read words of caution, the commitment to consistency remains prevalent, whether among leaders or followers. “I hope in these days we have heard the last of conformity and consistency,” Emerson wrote in 1847. “Why drag about this corpse?” he asked. But drag about the corpse of consistency we do—now going on two hundred years later.

In our consulting work, we see this regularly. In one case, a manager in a global logistics company was asked by the board to define the ideal leader for the company. What attitudes and attributes should that leader have? What skills and behaviors? The manager brought in a consulting firm, and six outsiders did a six-month study, interviewing 150 executives, studying their behavior, analyzing their comments, preparing a complex model of the ideal leader. When the manager presented the model to the executive committee, the group rejected it out of hand: The model represented current leaders, not leaders the firm would need tomorrow.

The commitment to consistency, solving the puzzle of leadership, led the manager to stay the course of thinking in terms of current leadership. But he unwittingly created a prescription for the stagnation of behavior and skills. He made a mistake common among companies doing this exercise: Creating a map to develop more leaders like the current ones. The corpse of consistency was holding him back.

That's not to say there is no place for consistency. Emerson did not write, “Consistency is the hobgoblin” as he is often misquoted. He wrote instead, “A foolish consistency.” Emerson was for consistency of purpose. If you stay consistent in your principles, you create harmony in the long run, if not a record of predictable actions in the short, he believed.

The result: “There will be an agreement in whatever variety of [your] actions, so they be each honest and natural in their hour. . . . One tendency unites them all. The voyage of the best ship is a zigzag line of a hundred tacks . . . [but] your genuine action will explain itself, and will explain your other genuine actions. Your conformity explains nothing.”

Desperately Seeking Closure

The third unspoken assumption that drives people is a desperate need to bring about closure. Social psychologists argue that this arises out of an aversion to ambiguity and uncertainty, as well as a preference for firm, definitive answers to questions.⁹ Like control and consistency, closure is a hallmark of effective puzzle solving. Who doesn't want to solve a problem once and for all? Close the door so you can move on.

Arie Kruglanski, a professor at the University of Maryland and pioneer in the field, has found that, in racing to closure, people often go in two steps: “seize” and “freeze.”¹⁰ To simplify, you first seize on a certain understanding of a situation, eager to take the shortest route to closure. You then “freeze” on that understanding and become impervious to new understandings. Depending on the situation, everyone does this two-step cognitive dance. It is a fact of life, especially at times of high stress and urgency.

Although everyone has a penchant for closure, its intensity does vary by person. Kruglanski and his colleagues even created a “need for closure” scale, using a forty-two-item questionnaire to assess individual differences.¹¹ The questionnaire grades responses to statements such as “I like to have friends who are unpredictable”; “I don't like to go into a situation without knowing what I can expect from it”; and “I think that I would learn best in a class that lacks clearly stated objectives and requirements.”

Follow-up studies have confirmed the individual variability in the need of closure. In one study, studio-art majors rated relatively low on need for closure; accounting majors relatively high.¹² In another study, this one of professionals at Deloitte & Touche, Ernst & Young, KPMG, and PricewaterhouseCoopers, novice accountants generally rated significantly higher than partners.¹³

Over the last twenty years, Kruglanski and his colleagues have found that a need for closure is associated with intolerance for ambiguity, dogmatism, impulsivity, need for structure, and authoritarianism.¹⁴

In our consulting, we once came upon an unfortunate case of this common rush to closure in an executive we'll call Leanne, the head of a large health care company's consumer business. Leanne was a decisive leader, intuitive, with great judgment. She had the capacity to take complex information and quickly cut to the chase, making smart decisions about global brands, product designs, or even advertising copy. Give her a swamp full of alligators, and Leanne drained the murky water, chased out the problem reptiles, and led her team on a straight line to solid ground for future action. Her strength was closure. In some ways, Leanne was captain of her universe.

As part of her development, Leanne asked us to conduct a 360-degree assessment of her skills. We interviewed her bosses, subordinates, and colleagues. And that's when the bad news surfaced. Leanne remained open to new developments and judgments only to a point. In particular, she was legendary in her rush to closure with people. She thought of people management as a puzzle to solve and dispense with. She weighed people's abilities at the first meeting. If you met her approval, she was protective and nurturing. You were in her in-group. If you did not make the cut on your initial go, she wrote you off.

Members of Leanne's staff talked about being on her shit list, making observations such as “She has a tape she plays on me.” They said Leanne would always remember if you screwed up. The tape of your sad performance, even if a rare exception and years in the past, played the same dirge forever.

And that was her Achilles heel as a leader. She didn't allow herself to see change in people. She couldn't recognize that C players could turn into A players. “Leanne stopped knowing me three years ago,” one person complained. Leanne was good at making initial decisions but bad at adapting to new information. She would sit in on talent reviews and profess open-mindedness, but she demonstrated such closed-mindedness that her bosses wouldn't elevate her to the top ranks of the company.

All this was unconscious on Leanne's part—and she denied the problem. So as part of our coaching, we asked, “Can you name one person who went from zero to hero among your reports? Give us one example of a person that has made it out of your doghouse.” She couldn't name even one. That question cracked her certainty about her habit of jumping to closure in decision making. Did she really know what she didn't know? Gradually, she opened up. She began to see that rather than retrofitting data into her preconceived opinions, she could challenge her opinions based on new information. And with this new attitude, acquired over six months, she refashioned her view of one person who had developed into an A player, and then another.

We could draw a familiar lesson from people like Leanne: “Foolish closure is the hobgoblin of little minds” (with apologies to Emerson). Closure has its place, but it can be foolish in the solution to problems with paradoxical nature—and problems with people almost always overflow with paradoxical elements. Many of us have trouble accepting that closure can sometimes be a bad thing. Keeping a foolish grip on closure—along with control and consistency—prevents would-be great leaders from jumping over the line to managing paradoxes that have the largest potential to improve our lives.

Getting Ready to Cross the Line

If you're one of those people who has jumped over the line to face paradoxes, you have discovered that you start with three more nuanced premises: Let go of total control, value inconsistency in action, and forget about closure. These three givens are the new priorities for leaders who fully employ their heads, hearts, and guts as paradox leaders. A slavish tendency to seek control, consistency, and closure is not an immutable fixture of your personality. You can make yourself aware of these new nuances and, as a complete leader, integrate them in your skillset. You are then ready to transcend puzzle-solving thinking and behavior.

Again, that's not to say you should swear off the three Cs, only that you can learn to apply them in measure and at times when they make sense. Control, consistency, and closure in management are akin to the same in raising our children. Sometimes they are the answer. Sometimes they are the problem. Parents know well that, during their children's upbringing, too much control can backfire. So can too little control. As with any paradox, no single right, enduring answer exists. The best answer on Saturday night may not be the best answer a few weeks or months down the line.

Once people recognize the new ground rules for solving paradoxes, they visibly relax. When we work with leaders, we can see the relief, or as we said earlier, we can almost hear “aha” burst in their minds. Success doesn't depend on the premises for solving simple problems. It calls for new premises and more skillful leadership. Knowing this gives you more breathing room, more creative space. If you have been holding back on letting go because you didn't know how to cope with paradoxical problems, you can now break free of your shackles. If you felt unsafe even edging across the line, you can now jump across it.

Beyond a Thirst for Control

Barbara, the health care CEO, showed the effectiveness of letting go of control to solve paradoxes. True, she had no choice, but she also had the maturity to recognize the paradoxes she faced. As headquarters severed her direct control over R&D, manufacturing, finance, regulatory affairs, and other central functions, she wrestled with a host of contradictory forces: Centralization and decentralization, long-term versus short-term goals, speed versus responsiveness to customers, product cost versus quality, and simultaneously satisfying both her direct reports and her bosses in Europe.

How did she manage the contradictions? She acknowledged she didn't have control and didn't have all the answers. She shared control for problem solving with colleagues and collaborators. Together, they worked to manage the paradoxes. Barbara couldn't cede accountability or responsibility for performance, of course. She and her team committed to a host of performance measures—costs versus revenues, product cycle time, reduced regulatory challenges, employee satisfaction measures, employee mobility numbers, expense reductions, new product development. But they worked to deliver results as a group, in a consensus-making way.

Conflicts between her European bosses and her U.S.-based team were inevitable, but they didn't have to be debilitating. Barbara took several steps to reconcile differences, even though she no longer had direct control. First, she took care to empathize with the concerns of her former reports, who now reported to her only via a dotted line. In one case, she appealed directly to the board in Europe for a global change in sourcing policy to ease a burden emerging for one of her colleagues. Second, she persuaded her colleagues to meet as they once did as an executive team, even though she was no longer everyone's boss. She felt that, when people aired their views, they would influence each other in shaping an agenda in which everyone was aligned. They still could function as a team to address those conflicts related to talent, U.S. policy, managing change, and so on.

And this helped when, for example, her CFO in Europe advocated a new global information system. The new system would require new process and investment that would disrupt U.S. operations and hurt profits. Barbara got the entire finance staff in a tense meeting that was nonetheless productive. Together, by focusing on the good of the global business, they saw their way to adopting a new system that was technically complex, would demand long work hours, cost a lot of money, and anger many finance staff people resistant to change. The system would also lead to layoffs of 10 percent of the finance organization.

Barbara played diplomat with her colleagues in Europe, gathering viewpoints in a roundtable discussion, and ultimately negotiating a transition that extended over more time. Her conversations earned her respect from colleagues in Europe and in the United States—even though she was no longer in charge. As Barbara showed, relinquishing control doesn't mean you're out of control. And the rethinking turned out to benefit everyone, enabling fixes of glitches that cropped up in other countries. Barbara showed the mindset that, in today's world, allows leaders to be comfortable in the many situations in which they simply can't master their destiny.

Beyond a Thirst of Consistency

Letting go of consistency also proves necessary for managing paradox. The voices demanding consistency are all around us, of course. In fact, we seem to insist on it in others, although not so clearly in ourselves. Why the obsession with the corpse of consistency? In our consulting with leaders, we have come to a simple explanation: People too often don't discriminate between different kinds of consistency.

So we have our own obsession: Distinguishing between consistency of principles and consistency of action. The first remains imperative, whether in puzzling or paradoxical situations. But the second remains disingenuous when dealing with problems rife with paradox. Ironically, the U.S. Congress almost always deals with paradox-ridden problems, and yet pushes its members to solve them like puzzles. The public and media crave to see this consistency, but it comes at the expense of our leaders honestly managing paradoxes.

One leader we interviewed who transcends the consistency obsession is Pam Cheng, chief operating officer of MSD China (Merck). Like many leaders in non-Western markets, Pam has confronted a particularly vexing local-global paradox. Leaders in countries like Russia, India, and China talk about local ways of doing business that clash ethically with their organizations' global principles. Pam gives a simple example. She notes that, in China, it is an act of courtesy and respect to offer a gift of moon cakes during the Moon Festival. Yet Merck has a policy of no gifts to doctors. In China, failing to offer this gift to their customers would be seen as a sign of disrespect.

“We needed to stop looking at this situation from a black-or-white or right-or-wrong perspective,” Pam told us. The approach MSD decided on was buying $20 boxes of moon cakes centrally and distributing them to reps with directions to give away only one per doctor. The number given to each rep was limited. This was a good example of consistency of principle—Merck certainly respected its customers—but inconsistency in action. Leaders who have jumped over the line see this distinction clearly.

While this decision was a trifle, Pam showed that approaching situations that seem irreconcilable with a new perspective really works. Too often, leaders facing this paradox opt for a rigid adherence to the letter of corporate ethics policy, or worse, they turn their backs on policy and adopt a “when in Rome . . .” perspective. In the former instance, they doom critical projects because they fail to grasp the paradox. In the latter, they lose their ethical moorings, risking harm to their firms. Pam chose a third course, one that reconciled both sides of the paradox.

We all know from our own lives that consistency in the face of opposing forces—forces whose nature and strength change over time—can put us in untenable positions. Consider gradual changes in work-family balance as children grow older. What works when your child is an infant or toddler won't necessarily work for a tween or teenager. This doesn't mean we are flip-floppers. It means we are thinking parents, struggling with contradictions.

Not everyone remains a slave to consistency to the same extent. A series of studies to validate individual differences in the preference for consistency showed that a large percentage (at least half) of college students participating demonstrate no strong inherent preference for consistency.¹⁵ It is plausible the finding wouldn't hold for everyone, since college students often grapple with many paradox-loaded problems in their classwork. But it shows that we have the ability to overcome the need for consistency—a subject that should get more press, but one that now gets less understanding than it deserves.

In a 2012 IBM Global CEO Study, CEOs cited “flexible” and “creative” as two of the top four characteristics needed for employee success.¹⁶ A second tier of desired characteristics included “analytical/quantitative” and “technology savvy.” We can infer that the CEOs first want people who can change with the world of business. Only secondarily do they value consistency and puzzle solving. Interestingly, the top two characteristics cited by CEOs were “communicative” and “collaborative”—just the skills needed, as Pam and Barbara showed, to resolve complex paradoxes.

Beyond a Thirst for Closure

Letting go of closure ranks just as high as a priority for people who want to manage paradoxes. In the same way that a commitment to control and consistency thwarts reconciliation of multiple opposing forces, so does the desire to tie up each problem with a neat bow. Paradoxes just don't succumb to neat solutions. They are messy and impermanent. Each new tide of work and life washes away former line-in-the-sand decisions. We all naturally seek closure, whether we are studio-art majors or partners in accounting firms, but success at bringing about closure always recedes from our grasp in a paradoxical world.

That was what happened with the CEO of the major hospital supplier we introduced earlier. He couldn't, no matter how much effort went into developing a complex pay and reward system, bring closure to the problem of showing a single sales face to the customer. In its place, he called on his people to manage the paradox in the interest of the whole company, making judgments case by case to serve customers.

Cameron Clyne, CEO of National Australia Bank, faced the same issue. He explains how business unit leaders once owned their customers—customers in commercial accounts or the private bank, for instance. Clyne worked hard to create processes for sharing credit, cross-selling, and customer tracking, bringing closure to the problem of motivating, evaluating, and rewarding people for work that brought in revenue. But eventually he threw in the towel. He could not bring closure to the problem purely through bureaucratic controls. Like the hospital-supplier CEO, he pressed his people to shift their perspective. Customers don't belong to units, he said. No matter how they come to do business with the bank, they belong to the enterprise.

Clyne brought us in to teach hundreds of his leaders about the paradoxical challenge of meeting both enterprise and business unit needs. He worked to build his direct reports into a team, driven to achieve enterprise goals. He identified intramural squabbling over territory as a paradox rather than a conflict. By getting his leaders to acknowledge the paradox, he opened them up to new solutions.

Though we all seek to see problems through to a happy ending—just as in the movies—we find that both happiness and endings are elusive when the problems are packed with paradox. Most problems in business—and life—defy our efforts to bring about closure. With children, with community, with government, with business, closure of even a limited kind doesn't remain for long, certainly not forever. The pressures to revisit solutions are relentless. No sooner than you think you've wrapped something up, the neat folds of the packaging unwrap. As people joke: “I was finally getting over being pissed off this morning, and here we go again!”

The Costs of Mishandling Paradox

We incur heavy costs by mishandling paradoxes. When we strive for control, consistency, and closure and can't get them, we get confused and frustrated. This then confounds us, whether at work or at home, and compounds the problem. Delays in recognizing the true nature of the problem lead to many dysfunctions:

• Becoming paralyzed
• Being inflexible
• Getting hit by ignored forces
• Deciding too quickly
• Failing to understand trade-offs
• Failing to be transparent
• Failing to learn

Becoming Paralyzed

Paradox leads to decision-making paralysis when you see that, no matter what you do, someone will say you chose the wrong solution. Unfortunately, that's a fact of life with paradoxes, especially for leaders. Every solution is wrong in some way. You risk feeling vulnerable, being accused of weakness, or worse. And you may hesitate to jump over the line to recognize paradox as a result, which simply turns up the heat, building stress and anxiety and reinforcing a decision to do nothing. On the upside, you might avoid offending or alienating people if you sit on your hands. And you might avoid making an obvious mistake. But you fail to move things forward, essentially offering no leadership at all.

Jan Singer, head of global apparel for Nike, says, “[Paradox] is energizing if you like change because it may not be solvable and is a challenge. It can be paralyzing if you like things to be solved; for some it may be scary.” To solve paradox, she believes, “You cast [paradoxical problem solving] as a place where there is no resolve, but as a place with the openness to think and learn.”¹⁷

Being Inflexible

Paradox can also prompt people to freeze in one position or another, choosing one side of an either/or choice. When you fail to recognize that a supposed puzzle is actually a paradox, you may lock into this either/or thinking. You won't allow yourself to consider other options or to later choose an opposing approach even when the situation demands it. You are like the more rigid novice accountants in the need-for-closure study at the big four accounting firms: You are someone who “truncate[s] the hypothesis-generation task sooner, producing fewer causal hypotheses and demonstrating lower hypothesis quality.”¹⁸ In other words, you are someone who comes to conclusions more quickly than others, but at the risk of sloppier thinking.

The leaders of Groupon demonstrated the perils of inflexibility when the company did little to change its business model when entering the Chinese market. Groupon's Western strategy was to lure executives and acquisition targets with large sums of money. In China, Groupon was surprised when one target company, Lashou, refused its offer, despite the rich terms. Groupon failed to understand the market-rate of vendor profit split, and it offered a much lower vendor split than was typical. It also imported employees instead of hiring locals, opening in China with only two local Chinese executives. The China unit suffered from inefficiency and high employee turnover. Groupon, caught in the classic global-local paradox, failed by not adapting its business model to the local market.¹⁹

In our consulting with one company, we learned that the biggest problem was both simple and hard: People's need to be right. After going through the strategic planning process, leaders became closed to challenge, closed to new data, unwilling to say they might have screwed up. They became stuck on the puzzle side of the line, shoes glued to the pavement. They were debilitated by inflexibility.

Getting Hit by Ignored Forces

When you don't factor all the opposing forces into your solution, those forces may come back to bite you in the backside. If as a leader you delay long-term investment, in time your decisions hobble firm performance. Once again, if you solve a paradox like a puzzle, too many factors get ignored in the interest of coming up with a clean solution.

Netflix seemed to ignore the forces of an installed customer base when it decided to solve the problem of an obsolete delivery technology. Its solution was to eliminate mail-in rented DVD movies. All at once it announced a changeover to a dependable revenue stream from digital subscriptions. This was a logical solution to an obvious problem—except the problem was not a simple one of technology. Customers rebelled, venting their rage on the Internet. Netflix stock nosedived. Netflix leaders swung too far, too fast, and they had to backtrack. They missed the implications of the paradox posed by forces of customer stability versus technological change. And in an age of transparency, Netflix paid the price for not choosing better options and involving customers.

Deciding Too Quickly

Freezing in one position or another is an error in the face of paradox, and the tendency to freeze in a hurry makes things worse. Leaders in search of closure may rush to judgment—often in a would-be heroic display of snap decision making. They say X is right and Y is wrong. We have seen countless leaders who would rather not work through the unease and confusion of two seemingly irreconcilable necessities. Instead, they act on their belief in a single solution. Doing something may provide relief, but the choices turn out to be ill-considered and the actions premature.

One of the authors (David) experienced this many years ago when he was promoted to supervisor at Honeywell and told to improve the performance of his new group. He was a manager for all of two days before he decided to fire a direct report he'd long felt wasn't performing up to expectations. As a newly minted manager, he hadn't considered the potential legal trouble his actions could create—and, more important, hadn't taken the time to fully assess the situation in his new role as leader. Fortunately, legal problems did not ensue, but more remarkably, the terminated employee went on to achieve remarkable success as an independent consultant. As a leader, David did not take into account the truth that people have strengths and weaknesses, or might change and grow with the right supervision and leadership. He just made up his mind and acted, as if a preconceived solution crafted from an earlier perspective would solve a complex performance problem.

Failing to Understand Trade-Offs

In one of the more insidious dysfunctions that stem from mistaking paradoxes for puzzles, people don't allow for the intricate dance that, in a group of collaborators, takes place between opposing factions. The opposites always remain powerfully linked. Actions suggested by one directly affect the other. But under the surface, we know we are interdependent. By not taking the time to examine the forces vying for primacy, people lose the chance to engage in frank discussions with trade-offs put on the table.

In one bank we have worked with, the head of the digital unit wanted to hire a new manager from a start-up firm in Silicon Valley. After learning the salary expectations of the new hire, the people in Human Resources said “No way.” The expectations were so far outside the salary guidelines for the level of the position that paying someone that much would create a unjustifiable precedent and even dissension if it became known.

The head of the digital unit complained to his boss about the HR bureaucrats who were preventing him from growing the online business. The head of HR dug in to maintain the well-established salary guidelines for the bank. The conflict escalated until the paradox was identified: HR's role was to maintain equity across the system. The head of digital's role was to drive business performance, which required hiring the best person at the price required.

Both were right. But identifying their personal conflict as an organizational paradox helped them to see one another's viewpoint and begin to decide how to proceed. In this case, they made much of the higher salary contingent on some performance expectations. The new manager joined and performed successfully, justifying the higher salary.

Failing to Be Transparent

Even when you know you're facing a paradox, you may not want to reveal your confusion over the opposing actions. Rather than share your uncertainty and invite others into the decision-making process, you may go it alone and lose the benefit of outside input. You risk not only closing yourself off to fresh insights but energizing opposition to your actions. To manage paradoxes today, consider transparency as a competitive requirement.

Tony Hsieh, CEO of Zappos, practices this approach by taking transparency to the next level. He shares detailed information about company performance with all employees. He encourages employees to share with others. He invites the public to the company's all-hands quarterly meetings (and now streams those meetings live). He offers free tours of the Zappos offices, where little is off limits for visitors.

And he allows vendors to access data on inventory, sales, and markdowns—data that would be considered proprietary information by any other company.²⁰ This is the emerging standard by which other leaders are judged, and it is this openness, rather than remaining guarded, that elicits the broader engagement of employees to solve paradoxical problems.

Failing to Learn

Leaders who frame their decisions as choosing between one alternative and its opposite limit learning. If you're sure that option A is right, you have little incentive to learn about option B. The less knowledge you have, the less risk you take. Moreover, if you believe planning is good and spontaneity bad, you hesitate to follow uncertain leads, play hunches, or trust your instincts. This limits the experience you gain from taking action—experience informed not by analysis but from the imperative to act in spite of ambiguity.

Paradox Leadership

Jumping over the line to managing paradoxes is not easy for most leaders. If you're like most of us, you are not a natural in making the jump, and you know that if you stay on the puzzle side you will enjoy the company of the familiar, friendly faces of control, consistency, and closure. On the other side, you see nothing so familiar. This unfamiliarity can provoke fear. Will you get to the other side, lose your bearings, and succumb to uncertainty, depression, and despair?

We believe not. You will recognize the right measure of control to exercise, the right situations for demanding consistency, and the right times to bring about closure. You will know that traditional problem-solving skills have their place, and that paradoxical problems require a place of their own. You will keep constant track of which side the line you're on, and in turn which kinds of skills to deploy. As a complete leader, head, heart, and guts fully engaged, you will gain new bearings and find liberation, not depression.

You simply have to make the jump—just as Barbara did as she gave up power in the hierarchy but demonstrated her power in collaboration. She showed that the way to arrive at smarter solutions to today's toughest problems—wicked, paradoxical problems—comes from giving control to others, committing to consistency of principles instead of action, and seeking closure only by bringing other managers across the line with you. It also comes from avoiding the dysfunctions of decision paralysis, inflexibility, hastiness, and on the rest.

That sets you on the right track as a paradox manager. But of course, that's not the end of our story. As it turns out, you cannot deal with problems full of contradictions solely by changing your own way of thinking and working. The change required is not just internal. You also have to deal with the people and institutions around you, which create other obstacles. We now turn to those obstacles, and show that in tackling them, the complete leader can defeat a range of organizational forces that stymie paradox management.