I’ve been thinking lately about how to balance two opposing goals. One is keeping our economy open so that we avoid a deep recession. The second is containing the COVID-19 Pandemic.
Companies have these kinds of seemingly opposing conflicts. A decade ago, British Petroleum was balancing the need to increase oil production (through drilling at sea) with the need to protect water and workers. More recently, Boeing was balancing the need to get the 737Max to market at an attractive overall cost against the safety needs of travelers. In the early 2000s, the Boards of Directors of US banks wanted higher stock prices through growth in assets without depleting capital.
We all know these balancing acts went awry because leaders pushed one goal at the expense of another, leading to major crises. Further, the solutions to these imbalances were all costly. Pushing up production at the expense of protection often is foolish in retrospect.
Erroring on one side or the other happens across many industries daily, but the results usually do not appear in the media. Reduce inventories to increase working capital and watch customer satisfaction fall. Cut nursing staff and avoidable infection rates rise. Increase classroom size to manage budgets, and racial performance gaps grow.
How can you solve the problem of tradeoffs before you make an expensive error?
Let’s think more about these kinds of tradeoffs. Leadership coach Letizia Amadinilane frames the cases I mentioned not as problems to be solved but rather as organizational paradoxes to be managed. Others call them dilemmas.
The lesson is that when you have a paradox, you cannot “problem-solve” your way out of it. Instead, you must manage it. And this requires a continuous sense of where the organization sits on the tradeoff.
That sensing is hard to accomplish because leaders divide responsibilities, with no one person owning the paradox. Also, higher up the organizational chart, you are more managing numbers than “sensing” where the organization is today, making it difficult to judge whether there is too much production or too much protection. US Army General McChrystal commented the situation on the ground across Afghanistan was so varied he told the troops, “If you get on the ground and find that the order we gave you is wrong, execute the order we should have given you.”
What are some practices that can help you deal with paradoxes?
One practice is to create a safety culture where all employees are free to speak up to any level of power. Our Federal whistle-blower protections are an example of a tool to create a safety culture in our government, where abuse of power can be very financially rewarding.
Another is to understand the dimensions of the tradeoff. A Massachusetts Hospital Association study showed significantly lower sepsis rates with higher nurse staffing levels. But the data may pose a quandary: how much can the hospital afford to spend on nursing without harming their ability to fill other needs? Or more, simply, how much sepsis is acceptable, and how much is too much?
Another tool is to build norms – behaviors enforced through examples, roles, penalties, and incentives – to limit the tradeoff, much like making sure neither of the two magnetic poles overpowers the other. Boeing had that kind of rule. It promised its customers no singular measure of a vital data point; were there a measurement error, pilots would observe conflicting signals. They could then figure out which measure was correct. Boeing broke its promise, leading to the crashes.
A final solution is to redefine the business model, system, or process to eliminate the tradeoff. Stuck with expensive piles of unpurchased clothing, Zara redefined its business model to make out-of-stocks acceptable to customers by quickly stocking even newer looks. Speeding up the design-to-store stocking process also enabled Zara to avoid investing in styles that were no longer popular.
As a strategist, that final solution is, in my mind, the best answer to managing paradoxes. Hospital boards for example must accept that prevention of mistakes is the business of healthcare. When you accept that prevention is the business, you eliminate pushing production at the expense of protection. You build a company that thrives on its outstanding reputation and avoids costly avoidable mistakes.
As to the pandemic and our economy? If we do not get the pandemic under control, our recently worsening national economic statistics will continue. Our policies should recognize that “sensing” happens best at the local level, where for example, the Mayor of NYC has increased restrictions in zip codes where cases are rising. A national mask mandate makes a ton of sense, as it is costless and effective in not just dramatically lowering risks but mitigating any sense of trade-off between the economy and the pandemic.
Finally, we need our Federal government to remember that its ultimate role is protection. We need to rebuild the Federal pandemic research and preparation department that Trump eliminated, standardize best practices across states’ county health departments, and stop politically interfering with CDC and the FDA directives.
We also need to vote for candidates that ensure these steps happen.