The Hidden Opportunity in Paradoxes

Such apparent paradoxes can arise at the level of an individual, team, organization, and even the larger context in which an organization operates, like an industry, a state, or an entire society. But if a paradox is something that is fundamentally unresolvable, does that mean these business challenges are insurmountable?

A Paradoxical Industry

The energy industry seems to be in a particularly acute moment of paradox. A report from Royal Dutch Shell called sectors like commercial transport, power, manufacturing, and energy “paradox industries” with “huge pressures to increase their output and reduce their impact on our planet. To grow in size and shrink their footprint. To automate and create jobs.”4 The stakes are high. Activist investors have suggested that these tensions are so intractable that Shell ought to split into three companies. In June 2023, Shell’s newly appointed CEO announced plans to be “ruthless” in capital allocation, cutting some investments in renewable technologies and increasing investment in fossil fuels. “Ultimately what we need to do is to be able to generate long-term value for our shareholders,” said CEO Wael Sawan. “The answer cannot be, ‘I am going to invest [in clean energy projects] and have poor returns and that’s going to vindicate my conscience.’ That’s wrong.”5

What options do Shell and other energy companies have in the face of a seeming unreconcilable paradox? Consider the contrasting approaches taken by two other major energy companies.

In the late 1990s, oil and gas giant BP attempted (and failed) to rebrand itself as “Beyond Petroleum” and invested billions in wind and solar projects, many of which were later shut down or spun off. In February 2020, BP attempted another push toward clean energy, as CEO Bernard Looney announced plans to slash the company’s oil output by 40%, sell $25 billion in fossil-fuel assets, and boost its capacity to generate electricity from renewable sources twentyfold. It acknowledged that its clean energy business was losing money and would continue to lose money until at least 2025. But when energy prices surged three years later, Looney announced plans to slow the planned cuts and scale back spending on renewables. While BP’s leaders stressed that the company was reviewing, not ending, its commitment to shifting its portfolio, the story seemed eerily reminiscent of its first foray into clean energy.6

BP’s recent history may be said to typify an either/or mindset in action. That is, when you see the apparent tension between two parts of a paradox, you choose one or the other. BP approached renewable energy as fundamentally opposed to fossil fuels, aggressively ramping up (or marketing) the former at the expense of the latter — an approach that was doomed to snap back when circumstances changed.

In contrast, Danish energy company Ørsted has taken a both/and approach, wading right into the contradictions of a paradox to find a solution that unites parts that seem to be in tension. In 2009, management announced that the company (then known as DONG Energy) would seek to generate 85% of heat and power from renewable sources by 2040. It explored investment in offshore wind and began to wean itself off coal. By 2019, it had become the world’s largest offshore wind-energy producer, achieving its aggressive target 21 years ahead of plan. In 2019, it sold off its coal business and its liquified natural gas unit. While it no longer produces gas, it continues to play in the space as an infrastructure provider and trader, with a spokesperson noting in 2019, “There’ll be a long transition period leading up to a 100% green energy system, during which society can’t do without gas. Gas is the least harmful fossil fuel available to support the transition to green energy, and we’ll continue to trade gas for years to come.”7

Companies should, of course, dynamically adjust their strategies based on market conditions. But, more broadly, they ought to rethink the limiting perception that there is a tension between pursuing short-term returns and longer-term strategic reorientation. A stream of academic research has repeatedly shown that the perceived trade-off between pursuing planet-friendly policies and maximizing financial returns is a false one. In his book Purpose + Profit, Harvard Business School professor George Serafeim describes a study that showed purpose-driven companies that took an integrated view of sustainability issues received a risk-adjusted boost of 6% in their share returns.8

A proven path to beating the market. And one that also does good for the planet. Simple, right? Unfortunately, no.

The Polarizing Power of Paradox

Paradoxes are complex, adaptive, system-level issues with rampant uncertainty. That’s why the innovator’s dilemma has proved to be so stubborn despite two decades of work by practitioners and thought leaders.9 Humans suffer from a predictable range of biases and blind spots that make pursuing both/and solutions challenging. Confirmation bias causes leaders to ignore evidence that goes against their existing beliefs. Loss aversion and the status quo bias means people prefer avoiding risks over taking them. Hierarchy and groupthink make it hard for groups to see their way through complexity.

One recurrent finding from academic research conducted over the past two decades is that paradox produces polarizing reactions. My own research has corroborated this finding.10 I conducted a dozen in-depth interviews with business leaders who found themselves confronting paradoxes that scholars like Smith and Lewis have identified, such as the tension between pursuing profits and purpose, sustaining current operations and driving disruptive growth, and rewarding individual performance and encouraging equity. (See “The Research.”)

On the positive side, these kinds of paradoxes produced feelings of curiosity, excitement, and engagement. One of my research subjects, who confronted paradox daily in his role leading an innovation unit within a highly conservative company, described how even discussing paradox makes him feel “stimulated, like in the middle of a great chess game.” An executive who helped launch two billion-dollar businesses within a large consumer goods company described how finding a “point off the line” (data that didn’t conform to expectations) was exciting because it opened up the possibility of a new path to a solution. Another executive described how, as a university president, he confronted the seeming paradox between high-quality, campus-based education and accessible, affordable online programs. The executive formed and led several special-purpose teams. One ensured that both on-campus and online offerings met rigorous academic standards. Another helped on-campus professors learn from online educators and vice versa. Beyond transforming his institute, the executive noted how the effort sparked personal growth: “At an organizational level I’m more effective, and at a personal level I’m either a better person or I’m at least a more self-aware person.”

However, research also suggests that paradoxes can foster “anxiety, uncertainty, and ambiguity, leaving individuals feeling threatened and defensive.”11 A former CEO who drove strategic transformation at two organizations described how confronting paradox raised fundamental questions about the organization’s identity: Having to make choices that invalidate aspects of that identity could have a cascading impact on individuals who connect to the organization’s old identity.

One practitioner described the paradox of seeking to innovate within a law firm. “The work that I do is paradoxical in nature,” the lawyer said, “because we’re meant to be doing innovation, which by definition is new, but if it’s too new, nobody actually wants to do it because they want to see some proof, or they want some reassurance that it’s going to work.” While a lawyer breaking from the practice of making decisions based on past precedent may seem trivial, such a break would require the lawyer to question a fundamental piece of themselves and their organization. The lost-in-paradox lawyer was left demotivated and frustrated: “I’m stuck in the middle. I’m not in a position to say, ‘Let’s go and change these structures that are impeding our work’ … [or] to say, ‘Let’s be honest about what we’re doing and clearly state that … we’re not actually doing groundbreaking stuff,’ so it feels disempowering.”

Is It Really a Paradox?

While classic philosophical paradoxes are unsolvable within their logical constraints, paradoxical problems in business can yield to solutions when leaders think beyond apparent constraints — or “out of the para-box,” if you will. Christensen called his first book The Innovator’s Dilemma, not The Innovator’s Paradox. The challenges of disruptive change are vexing, but like the perceived paradoxes facing modern executives, they are solvable. There’s no law of nature that says law firms have to use past precedent when looking at innovation projects. Individuals can change a group and remain a part of it; individuals can change themselves without losing their sense of self.

Consider some of the other seemingly irreconcilable tensions that have been resolved:

• It was generally accepted that profitable manufacturing required making trade-offs between cost, quality, and speed — until Toyota showed that those trade-offs were false.
• It was common knowledge that manufacturing had inherent randomness that required extensive quality control — until the Six Sigma movement showed that a tightly designed and managed process could produce highly predictable outputs.
• Leaders believed they naturally had to adopt stricter control mechanisms as organizations grew in order to prevent employee malfeasance — until Netflix showed that “no rules rules.”12
• Environmental activists and business leaders knew that sustainability and profitability were incompatible goals — until Unilever’s Sustainable Living Plan delivered on its commitment to double revenue while halving the company’s environmental footprint.

Executives can, of course, choose to follow either/or approaches. Or they can use the following techniques to seek opportunities to find both/and solutions.

Shift perspectives. Consider the concept of work-life balance. In the exact minute that you read this sentence, you can’t be in balance, because you are doing one thing or another. Now, zoom out and imagine that you estimate that your life expectancy is 80 years. That’s about 700,000 living hours. Let’s say you are a really hard worker, averaging 50 hours a week, 50 weeks a year, for 50 years. That’s 125,000 hours. So you work only 18% of your living hours. Balance! Those extreme answers are not particularly useful, but consider the possibilities opened up by taking a quarterly perspective. That time frame allows rituals such as a weekend family retreat, decision rules such as having no more than 10 days of travel in a quarter, or more rigorous time-boxing, such as dedicating blocks of time for family activities.

Similarly, a shift in time horizon can reframe the renewable-energy tensions described previously. Consider one study contrasting five organizations operating in the oil sands of Alberta, Canada.13 All of the companies faced apparent paradoxical tensions in terms of their temporal (short- versus long-term) and philosophical (business versus society) orientations. Some companies viewed these issues as either/or poles that forced a choice. They prioritized practices that favored efficiency, such as quantitative planning, and minimized interactions with stakeholders, which led to what the researchers described as “temporal myopia” that resulted in the “narrowing of the solution space.”

Those that stepped back, shifted perspectives, and considered the interconnections between issues engaged multiple stakeholders and sought avenues for cross-collaboration. This approach allowed them to develop integrated solutions with greater potential for long-term benefits for all relevant stakeholders — including themselves.

One way to shift perspectives and find those points off the line that point to novel solutions to a problem is to run a series of thought experiments that play with constraints. That can involve removing a constraint, such as asking how you would approach an apparent paradox differently if you had infinite time or infinite resources, or imposing a constraint, such as imagining what you would do if the government suddenly outlawed the use of a particular raw material. While it might feel like imposing constraints would limit creativity, research consistently shows that constraints can focus problem-solving energy and boost creativity. One technique that can help spur these thought experiments is what Hal Gregersen calls a “question burst,” where you brainstorm not for answers, but for provocative questions.14

Adopt a paradox mindset. Adopting a mindset that views apparent paradoxes as opportunities boosts creativity and organizational performance, according to research.15 People who demonstrate a paradox mindset agree with statements such as “Tension between ideas energizes me” and “I am comfortable working on tasks that contradict each other.” The paradox mindset can be approached in three ways. First, leaders can be screened to identify those predisposed to have a paradox mindset by having them complete a short diagnostic.16 Second, the items on the diagnostic can be used as prompts before a group discussion to help people consider multiple possibilities when discussing an apparent paradox. Research shows that simply starting a meeting by stating that tensions create possibilities helps a group adopt more of a paradox mindset.

Finally, there can be conscious efforts to help people develop a paradox mindset. Experience in dynamic circumstances or on challenging problems builds what is known as cognitive complexity (the ability to consider multiple possibilities with nuance), a key enabler of a paradox mindset.17 Development plans that give high-potential leaders experience launching new products, working in emerging markets, or building new organizational capabilities help to prepare them to confront future paradoxes. More broadly, individuals can consider going on a paradox quest, consciously doing something that would be unusual for them, such as the following:

• Taking an art class, learning a musical instrument, or learning a new language.
• Doing an extreme activity, such as skydiving.
• Volunteering or participating in a socially oriented activity.
• Enrolling in an online program to develop a new skill, like coding.

Hold a paradox sparring session. Boxers use sparring sessions to train. The goal isn’t to knock their opponent out but to practice form and response. A paradox sparring session is a purposeful place to bat around ideas and challenge assumptions. For example, in the early 2000s, a reorganization led to confusion within the iconic Danish toymaker Lego. Managers were being asked to do things that felt contradictory, such as simultaneously focusing on developing people and meeting stringent production targets. Lewis and fellow academic Lotte S. Lüscher led the group through a series of sparring sessions to discuss the apparent tensions.18

Sparring sessions should challenge participants with four types of questions:

• Linear questions, such as “What are your concerns?” encourage explanation and bring logic to the surface.
• Circular questions, such as “What do you think others think?” explore other perspectives and home in on polarities.
• Reflexive questions, such as “What does what you say imply?” seek opportunities to critique and connect existing options.
• Strategic questions, such as “Is what you say realistic?” motivate more expansive solutions.

This approach helps to tease a perceived paradox out of a seeming mess, creating opportunities to explore potential novel solutions to transcend it. For example, Lego challenged managers to drive performance and allow teams to be more self-managed. A sparring session devoted to the seemingly paradoxical question of how managers could both let go of and retain control led to specific solutions, such as alignment around goals and degrees of freedom for teams, more regular dialogue between managers and teams, and focused investment to teach teams how to solve problems. Lego ultimately created a list titled “11 Paradoxes of Leadership” to help future leaders develop practical solutions to vexing challenges on their own.

Organizational paradoxes are ultimately illusions. They are artificial constructs, sometimes of a system, many times of the mind. They fail to meet the definition of a paradox because they are not irreconcilable. Yet these illusionary obstacles persist as groups and individuals protect themselves from the perceived challenges of addressing them. They demand engagement because the process of engagement reveals the illusion, develops a deeper sense of self, and builds an organization’s capabilities. One of my research subjects, a former Silicon Valley executive researching the human side of transformational change, began our interview by saying, “Continual creativity comes from paradox. … All great meaning comes from grappling with paradox.”

Leaders who feel like they are facing a paradox should ask themselves four questions:

1. Is the perceived paradox truly a law of nature, or a difficult choice?
2. Am I imposing a constraint that is creating the perceived paradox?
3. Am I hesitating to act because the perceived paradox is the result of the system I helped to construct, perpetuate, and potentially benefit from?
4. Does a different frame reveal the paradox as an illusion?

There’s no doubt that tackling perceived paradoxes presents challenges and requires work. It may feel easier for leaders to collectively shrug their shoulders and say, “What can I do? It is just too hard.” They can do better. Perceived paradoxes can be dissected and transcended, turning helplessness into empowerment. Make the paradox choice to turn either/ors into both/ands.