The Necessity and Risk of Taking Sides in Change
Issue 179, September 26, 2024
You believe you are an individual with principles. You consider yourself to be fair and an advocate of fair play. You follow your North Star, have a shared purpose with others, and show courage as a leader. At work, you are a proponent of the bigger picture and how each member of a team plays a role in contributing diversity of opinions and perspectives. In short, you are a modern leader dedicated to the greater good.
But the real truth is that we all operate driven by inherent bias. And that bias is often at the subconscious or unconscious level, so we’re not even aware of our motivations. Our self-righteousness may be a cover for what we don’t know we don’t know.
As we head to the final innings of a polarized election season, we thought it might be a good idea to use the political scene as a backdrop for any parallels that have seeped into our organizations. We aren’t here to provoke, choose a side or contribute to the ever-expanding political commentary. Your online feeds are already full of that. We are talking specifically about how to manage change in an organization where the leaders and the workforce are significantly opposed in opinion, decision-making, and direction.
Judgement Days
For guidance and direction, we turned to Ray Dalio, chief investment officer of Bridgewater Investments. He writes extensively about history through the lens of political and financial theory, and believes that globally, we have reached a tipping point of internal order and disorder “when you have to choose between picking a side and fighting for it, keeping your head down, or fleeing.” That may sound brutal, but it may also be a playbook for survival of the fittest writ large.
He sees our current history as part of a series of cycles. The cycles are the same for a country or an organization; as tensions and anxiety build, bad decisions are made out of expediency and the failure to look backward and see how and when things really started. Without that perspective, we tend to assume problems are only contemporary and driven by immediate factors and variables. But that shortsightedness and short-term view may only add further challenges to a problem that has existed for some time.
Organizations, institutions and politicians all focus more on the short term with biased decision-making as a default (or defense) to show immediate progress, please voters, navigate societal changes, placate stakeholders, or quell an uprising. Rarely is there a recognition of playing the long game and making decisions that are forward-thinking to achieve a long play that pays greater dividends. And of course, the benefits of solving the problem for the long term with the hope it doesn’t reoccur at a future time.
With that in mind, Dalio paints a picture of our current political crisis. As you read his description, substitute political parties for differences in thought and operations within an organization for insights on how, as poet William Butler Yeats said, “Things fall apart; the center cannot hold; mere anarchy is loosed upon the world.”
In Dalio’s words, “Domestically in the US there are two political sides which are also each divided in two: 1) the right side (i.e., the red Republican team), which is divided into the hard right and the moderate right, and 2) the left (the blue Democratic team), which is divided into the hard left and the moderate left. Throughout history, in the later stages of the cycle of internal order and disorder, both sides become increasingly “hard” (extreme) for logical reasons. This is the part of the cycle that we are in. Classically, at this stage, wealth and values gaps are large, people have lost faith that the system will get them what they want (and/or need), and the hard right and the hard left become increasingly committed to winning for their constituents at all costs, which eventually means abandoning the rules of the game. In the current case and classically, the sides become unwilling to compromise as compromising is perceived as being weak.”
Does that sound plausible if you put his observation in context of an organization’s disruption as it seeks to transform or change? At his most dire conclusion, Dalio believes that polarization can lead toward an existential battle of the two sides, and we will have to pick a side and fight for it, keep our heads down, or flee.
To give some additional perspective, reaching such an inflection point in organizational change is often precipitated by failure. Revenues are down. Customers are abandoning the brand. The workforce is demanding a shift in leadership values and workplace conditions. When things are going well, these sorts of concerns and mandates are usually subsumed into the daily routines of working for a successful, well-oiled organization. But when cracks begin to appear in the organization’s armor, the latent weaknesses begin to manifest. And they can cascade into a crisis if not managed.
Desperate Moves
There is one camp that lives by the axiom that necessity is the mother of invention. This is a positive way to face challenges by bringing out an organization’s best self to face the odds. But more often than not, another approach is to divide and conquer. Dalio believes that the biggest risk in dysfunctional situations is antagonistic decision-making that can be ineffective, which of course leads to bad results.
When the going gets tough, factions begin to emerge each with its own idea about how to solve the problem or articulate the problem as it is perceived. Perception, for better or worse, becomes reality. And that reality is a cumulation of the group’s knowledge and experience. In today’s digital universe filled with so much limited or misinformation, anyone struggles to determine whether what they are reading is fact or fiction. Even worse, we worry that we are being manipulated for the gain of others.
The factions are typically at odds with each other. Which faction will prevail? Is it the survival of the fittest or self-destruction? Who has more ammunition and the skills to win the perceived war? Who is going to become so desperate to ensure their faction and its beliefs prevail, at the risk of greater destruction? All too often desperate moves result in a more precarious situation for an organization as it shifts and pivots to be more competitive – or to simply survive.
Some desperate moves made recent headlines: Both Starbucks and Nike ousted their CEOs with the optimism (or desperation) that new leadership would stem a downward spiral. Causality plays a role in the unraveling of Starbucks. First of all, they added too many new products and customizations which then gave customers too many options that were confusing and then paralyzed by the paradox of choice, customers couldn’t decide and the workforce couldn’t deliver and maintain service levels.
With a shortsighted assessment of their customers, Starbucks misread the marketplace assuming they had reached a pinnacle of brand resonance and customers would pay higher prices because they were loyal and committed to the brand (as well as the elitism that they were better because they drank Starbucks). Pragmatically from a financial perspective, Starbucks made that play because inflation was high and, well, everyone else was raising prices whether supply costs were higher or not. They believed they could do the same, but were tone deaf to consumers saying enough is enough.
Less dramatic but more common, in a dysfunctional organization leaders may emerge from the workforce that are grasping at straws to solve a systemic problem. That can show up in cosmetic changes like changing the marketing pitches for a product or service. But what if customers don’t want that product or service? The shift misses the underlying problem. Or worse, crackerjack strategy teams devise a new path forward for an organization without checking in with the most loyal customers. This is about as successful an approach as getting blood out of a stone.
This becomes a case study of classic mismanagement because it (insert organization name here, perhaps even your own) didn’t focus first and foremost on the customer, informing the organization’s shared purpose, knowing its market orientation, understanding the marketplace, the organization’s own history — why it was successful — and knowing how to be really good at what it does best.
Underlying Causes
Dalio has an objective way of describing what causes things to fall apart. “Both (opposing) groups are more likely to have critical, stereotypical impressions of each other that make them more inclined to dislike each other than to view themselves empathetically as members of one community in which they should help each other. I see how difficult it can be to help each other because of these stereotypes.”
A societal blind spot in organizations is that we always seem to think (individually and collectively) that we are more different than we are the same. Conversely, if we take the time to critically assess humans and their systems, we are much more the same than different. However, we default for some reason to polarization more easily than we do to the part we play in the collective whole.
Our bias is typically driven by self-preservation and self-interest. A traditional CEO must be a high performer and bring forth solutions to problems. They are beholden to their stakeholders. Their motivation is to ensure that they keep their jobs and maintain their position of power and influence. This is not a collective viewpoint for forward progress; it is simple self-preservation (or hubris).
And then there’s the issue when leadership loses control as the chaos resulting from the wrong solutions seeking to solve the wrong problems takes root. As Dalio adds, “It is a much bigger deal to break a system/order and build a new one than it is to make revolutionary changes within an existing system/order. Deciding whether to keep and renovate something old that is not working well or to dispose of it and replace it with something new is never easy, especially when the something new is not clearly known and what is being replaced is as important as order.”
Successful change is more influenced by emotion than intellect. And in the end, averages don’t matter. We need to address each faction’s concerns with open minds and a holistic view of how diversity in thought can augment the end result, not tear it apart. We have often written that it takes courage to open oneself up to criticism. Honest and constructive criticism can help provide greater clarity of how to manage a problem, situation, and challenges. However, opening oneself up to the collective and what others think does not come easily. As Dalio says, “To have peace and prosperity, a society (organization) must have productivity that benefits most people. Consensus decision-making and compromise require a lot of people who have opposing views to work well with each other within the system. That ensures that parties that have significant constituencies can be represented, but like all big committees of people who have widely different views (and might even dislike each other), the decision-making system is not efficient.”
Leadership Styles
The evolution of leadership during turbulent times has been well documented. Dalio describes the phenomenon. Out of disorder and discontent come leaders who have strong personalities, are anti-elitist, and claim to fight for the common individual (man/worker/customer/citizen — fill in the blank with any audience segment). He says they are called populists. Populism is a phenomenon that appeals to ordinary people (workers, supervisors, managers) who feel that their concerns are not being addressed by the elites (an organization’s leadership; CEO, board members, owners, etc.). It typically develops when there are wealth and opportunity gaps (workers receive no salary increases while leadership receives huge bonuses or stock payouts), perceived cultural threats from those with different values both inside and outside (for example calling all staff back into the office full-time to right size perceived work culture challenges which shows an underlying lack of trust), and “establishment elites” in positions of power who are not working effectively for most people (the CEO seems completely out of touch with the day-to-day). Dalio adds, “Populists come into power when these conditions create anger among ordinary people who want those with power to be fighters for them. They are typically confrontational rather than collaborative and exclusive rather than inclusive.”
So, a populist leader may navigate an organization out of an immediate crisis, but we believe this is not a long-term strategy as an architect for sustainable change. It is a stopgap to stem a problem, not a plan for a resilient future. As we have written in The Truth About Transformation, an effective leader who manages five different generations with a range of life-stage issues and perspectives requires systems thinking and empathy. Each generation can be segmented into its own faction with its own motivations, beliefs and values.
End Notes
When we face opposition, polarized opinions, unhappy employees and an unclear path forward, it’s critical to have a long-term perspective. Fluidity and flow are not new age management strategies. Dalio adds, “There are cycles that are like tides that come in and go out and that are hard to change or fight against. To handle these changes well it is essential to know timeless and universal principles for dealing with them. It is a mistake to rigidly believe that any one system is always best. Constantly reforming systems that adapt are best. The test of any system is simply how well it works in delivering what most people want, and this can be objectively measured. The lesson from history that comes through most loudly and clearly is that skilled collaborations produce productive win-win relationships to both grow and divide the pie fairly, so that most people are happy and rewarded. This approach is much less painful than fighting civil wars over power plays that lead one side to subjugate the other.
At a tumultuous time externally, and with the necessity to grow and transform organizations internally, looking more deeply with more fundamental meaning, bodes well for our future, not just for society, but for all organizations and individuals.
Get “The Truth about Transformation”
The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.