One defining trait of exemplary leaders, according to Roger Martin, is the ability to tolerate complexity and ambiguity, and hold two opposing ideas in mind at once. This internal tension helps avoid simplistic either/or choices and promotes creativity that can transform business models – and entire organizations. Here are a few thoughts on cultivating this skill in your organization’s management team, based on our experience using business simulations to help leaders develop integrative thinking.
If your organization is struggling to innovate, it might need to embrace a little more tension and conflict.
Tensions are contradictory challenges that pull in opposite directions: building global supply chains while serving local communities, creating disruptive new business models while squeezing profits from old ones, investing in future technology while cutting costs. Tensions are critical to creativity because they force us to think differently.
Tensions are critical to creativity because they force us to think differently.
Too often, however, there’s tremendous pressure on managers to eliminate tensions rather than work with them – they’re told to act decisively, eliminate uncertainty, and quickly resolve dilemmas. That’s OK as far as it goes, but it risks framing strategic decisions as contradictory, either/or choices: efficiency or growth, sustainability or profitability, technology or customer service. These are often false choices that short-circuit the creative process, over-emphasize expedience, and produce inferior business results.
Distinguished author and management professor Roger Martin calls the ability to deal with tensions Integrative Thinking. Integrative Thinking, he says, is leaders’ “predisposition and…capacity to hold in their heads two opposing ideas at once.” This ability is critical in today’s turbulent, uncertain, and ambiguous business environment because it enables us to adapt and change.
That’s why my collaborators and I build realistic tensions into our leadership simulations: learning to deal productively with paradoxes is essential to becoming an effective change leader.
The Nike Example: ROI and Athletic Performance
A great example is a program we developed with Organization Systems International (OSI) for Nike in 1999. The iconic sports company, which had become accustomed to uninterrupted success, was soul-searching as it worked to rebound from an 8 percent revenue decline.
Nike’s proud culture of singular passion for athletic performance had helped it grow to nearly $10 billion in revenue, but was no longer adequate to ensure profitable growth on such a scale. Emotional decision-making had led to some poor capital investments, and senior leaders wanted a more-mature approach that valued ROI as much as technical performance.
We suggested, instead of a series of lectures on finance, a simulation-based leadership program. This fit well with Nike’s active culture, and broad understanding of the important role that practice fields play in building great athletic performance. Like point guards or goalkeepers, business managers who practice under realistic conditions and learn from their mistakes are more likely to apply new skills successfully in “game” situations.
Our simulation featured Edge, Inc., a fictional snowboarding company closely modeled on Nike: focused on the serious athlete, with snowboard sales augmented by on-mountain apparel designed for skilled riders. After an introductory day-long workshop on the essentials of shareholder value creation and fact-based decision making, participants broke into teams of 9 - 10, assumed management roles, and made multiple rounds of decisions in pursuit of ambitious financial growth targets.
Assessing Two Product-Line Expansions
To build integrative thinking “muscles,” we using fictional documents, memos, and data to recreate a central tension Nike managers were experiencing at the time: Was the company more committed to the athlete or to Wall Street?
To build integrative thinking "muscles," we recreated a tension Nike managers were experiencing in 1999: Was the company more committed to the athlete or to Wall Street?
To achieve our educational goal of encouraging more financial thinking in the management process, we had to help Nike participants move past that dualistic view and understand that business and sport are not incompatible. But simply giving them that answer wasn’t enough – they needed firsthand experience working through an apparent contradiction.
We accomplished this by presenting teams with two options for boosting revenue via new product lines: 1) less-technical versions of current snowboard products that would appeal to beginner-level snowboarders (Mainstream Equipment), and, 2) off-mountain apparel targeting a fashion-conscious segment (Casual Apparel).
We intentionally made Casual Apparel a tempting choice - a market so large that even a small share would add significant revenue. And Edge, Inc.’s strong brand reputation made getting that small market share relatively easy. This situation echoed channel expansion options that Nike was considering at the time.
But Casual Apparel also carried significant risks. It moved Edge, Inc. away from its core focus on serious athletes and into a new market segment that required substantial investments in stores, sales force, and product marketing. Getting more than a few percent market share would cost money and take time. Margins would be lower. It wasn’t clear that significant shareholder value could be created.
Beyond Dualism: An Expanded Set of Options
The Edge, Inc. management teams typically lined up on opposite sides of the Casual Apparel decision, with one group taking an optimistic emotional position based on brand strength and the appeal of the big market, and the other seeing low expected financial returns and espousing a more rational and pessimistic position. (To simulate real-world conditions, we distributed slightly different information to people in different roles.)
As the discussions deepened, however, participants realized that the either/or choice was an artificial framing of the market opportunity. With a little coaching, teams began exploring alternatives in product design, merchandising, and marketing in the Casual Apparel sector. Sometimes these new ideas changed their assumptions about market penetration; sometimes they didn’t. The point is, they moved beyond a simple dualistic view to expand their possible decision options.
As the discussions deepened, participants realized that the either/or choice was an artificial framing of the market opportunity.
Teams that successfully launched Casual Apparel adopted an experimental approach. They didn’t assume that their initial choice to enter the market was the only important decision. Instead, they made modest initial investments, studied results, adjusted their strategy, and only scaled up after learning from experience. As importantly, they coordinated their decisions across roles, engaging the entire Edge, Inc. business system.
The takeaway from all this was not that either strategic choice was right or wrong (although Casual Apparel was certainly more difficult to execute than Mainstream Equipment). Rather, the experience showed participants how a deeper, more rational, exploration of the many facets of a complex decision (including financial returns) led to better results than relying on gut feel or emotions, and treating the decision as a binary either/or proposition.
Participants discovered for themselves that incorporating ROI into decision-making didn’t undermine their dedication to the athlete.
At the end of the day, participants discovered for themselves that incorporating ROI into decision-making didn’t undermine their dedication to the athlete. In fact, profitability enabled investments in R&D that generated better sports products. A bottom-line focus and passion for sports can be mutually reinforcing rather than in opposition.
Integrative Thinking Skills in Your Organization
So, what does this mean for you and your organization as you navigate our complex, changing, uncertain business environment? Roger Martin notes that integrative thinkers exhibit “uncommonly high tolerance for, even attraction to, change, openness, flexibility and disequilibrium.” By doing so, he says, they get out of apparently irresolvable binds created by competing organizational interests.
If that sounds like an appealing capability in today’s world, consider cultivating Martin’s four interconnected skills (which we emphasize in our simulations):
- Salience. When faced with complexity, it’s often tempting to simplify by ignoring some pieces of information. But that’s a ticket to trouble. As Martin explains, effective integrative thinkers seek out additional, less-obvious factors that are relevant to the puzzle, often outside their specialty area. “Of course, more salient features make for a messier problem, but integrative thinkers don’t mind the mess,” he notes. The most effective team leaders in the Nike simulation reached beyond their roles, sought information from teammates, helped set priorities, and pushed teammates to wrestle with implications, even though it muddied the waters within the role-play.
- Causality. Integrative thinking also requires seeing the interconnections between salient factors. As Martin points out, “less integrative thinkers tend to view the causal relationship between factors to be linear and one-directional,” rather than seeking a systemic understanding of the nonlinear, circular, and cumulative relationships between variables. The Nike participants uncovered causal connections between financial performance, ROI, and smart product decisions, and saw potential for a virtuous cycle – profits reinvested in R&D could enhance products and benefit athletes, while strengthening the overall business.
- Decision Architecture. Strategic options are rarely one-time yes/no decisions. Outcomes depend on execution, with many interrelated activities and external factors coming into play. If these activities are pursued in functional silos, the results will be suboptimal. Therefore, integrative thinkers avoid the temptation to isolate tasks and instead seek to coordinate them across the whole business system. Nike teams that pursued the Casual Apparel option learned that success required alignment and orchestration of product development, sales, forecasting, marketing, and other functions, and ongoing assessment of what worked and what didn’t.
- Resolution. There’s always pressure to revert to easy answers. The longer an organization faces a messy conflict, the greater the pressure to make it go away. Integrative thinkers resist simple trade-offs and embrace the tension long enough to force different thinking. In the Nike simulation, and in real life, CEOs play a critical role in maintaining this tension, especially during the difficult phase when strategies are being implemented but results have not yet improved. Rather than letting team members fall back on old patterns (“See, we should have just spent more on [my area]”), they push for better connections between role-based decisions.
We’ve seen thousands of managers use simulation “practice fields” to develop these hands-on skills, which are forged from messy experience, not from recipes in books. They are context-specific, and sensitive to culture, environment, and the problem under consideration, which is why carefully designed, realistic, immersive simulation experiences are so effective. Successful experiences build the confidence needed to embrace tensions and avoid reaching instinctively for unacceptable compromises, even in real corporate settings where there’s cultural pressure for immediate resolution.
Successful [simulation] experiences build the confidence needed to embrace tensions and avoid reaching instinctively for unacceptable compromises when there's cultural pressure for immediate resolution.
One point that I’ve often noticed: teams that spend substantial time talking together around the same table usually outperform those that focus on diving individually into the numbers. As important as it is to do your homework, successful managers know that transformation requires more than one person’s integrative thinking. The entire team must be mobilized to successfully work through contradiction and uncomfortable disequilibrium.
In Part II of this post, I’ll cover some of the higher order leadership skills needed to mobilize an organization in this kind of collective integrative thinking. We’ll look at Ronald Heifetz’s notion of adaptive leadership, and I’ll share some examples from our practice fields.
Until then, try embracing tension rather than relieving it. See what creative ideas emerge from the mess.
Note – in addition to Roger Martin’s work, excellent related writing includes Charles Handy’s 1994 book The Age of Paradox (Harvard Business School Press), and “Both/And Leadership,” a May 2016 HBR article by Smith, Lewis and Tushman.