A Review of Paradoxical Thinking

A Review of

Paradoxical Thinking

Jared B. Mason

National University

MGT 605 – August 2015

A Review of Paradoxical Thinking

Table of Contents

PART I    – Introduction/ Definition of Cause and Effect and Paradoxical Thinking

PART II   – Paradoxical Thinking at Starbucks Coffee

PART III  – Are we Able to Learn Paradoxical Thinking?

PART IV  – Why is Paradoxical Thinking the Least Used Skill of the Eight Signs of Intelligence?

PART V   – How Managers and Leaders can Use Paradoxical Thinking

PART I – Introduction/ Definition of Cause and Effect and Paradoxical Thinking

Managers and Leaders up until the late 20th century utilized a rigid set of principles when executing their duties at an organization.  That is to say, when there was conflict in a given situation, whether it was figuring out how to use organizational resources, or which markets to target, there was always something that had to be forsaken in order to facilitate the organization’s objectives. If there were a way to obtain everything the company wanted, a paradox was said to exist. Modern companies have realized that by transcending these paradoxes they can achieve success and often thrive when adversity presents itself.  There are two basic types of thinking that apply to the organization: cause and effect and paradoxical.

Cause and effect thinking centers on the premise that one particular action will lead to a particular result. As children, we are taught the dangers associated with making a bad choice. For example, parents teach their children that if they touch a hot stove, they will get burned.  If the child touches the stove, they will most certainly learn not to touch it again.  Cause and effect thinking still has its place in our society, however in certain competitive environments may hinder creative thinking.

In a given scenario, if certain actions lead to results that defy the logic of the cause and effect way of thinking they are said to be contradicting outcomes. Paradoxical thinking means “thinking in a way that transcends these contradictions and recognizes that two seemingly opposite conditions can simultaneously be true” (Quinn et al, 2015).  For instance, organizations can be both innovative while adhering to strict administrative controls. This situation could exist for a tire manufacturing company that has to produce tires meeting standards set by policy, yet must continually experiment and develop new technologies in order to compete in the market. The idea that managers need to adapt to these opposing ideals is a central theme to the competing values framework.

[pic 1]

Figure 1: Competing Values Framework

There are many benefits of thinking paradoxically using the competing values framework. All too often organizations become sidetracked by the status quo.  They fail to realize when changes are brewing in society.  When there are external forces pulling an organization in a certain direction, the organization must understand that the efficient way of operating may no longer be efficient. Organizational leaders who fail to realize the relevancy of paradoxes in society may often be the ones who find their tenures to be short.

PART II – Paradoxical Thinking at Starbucks Coffee

There exist many cases of companies that have been successful at leveraging the use of paradoxical thinking within organizations.  Perhaps many can relate to Apple Computer’s revolutionary approach to engineering products that continually exceed consumer expectations. It was Steve Jobs who once said, “A lot of times, people don't know what they want until you show it to them” (Reinhardt, 1998).  This manifesto drives Apple to continuously excel and outperform the market to this day. These principles closely resemble the open systems model of the competing values framework.  In an open systems model, units within organizations are free to innovate and adapt to change in an uncertain environment.  When companies fail to change, there is always concern that its products or services will grow outdated.

A review of paradoxical thinking at Starbucks Coffee, further illustrates the point. Between 2007 and 2013 during the economic collapse followed by slow recovery, there was much concern that Starbucks wasn’t going to make it out of the recession in tact.  Many considered its boutique offerings of high quality coffee to be an unnecessary expense that many consumers would cut out of their budget altogether. Although Wall Street had maintained that the company’s best days were behind it, a series of quick, paradoxical decisions helped Starbucks pull through (Ramirez, 2015).

Howard Shultz, CEO of Starbucks was faced with difficult decisions to downsize the company as well as cut employee benefits. Rather than caving under pressure, he instead chose to invest in new ideas.  One of the key paradoxical decisions was “to introduce a new blend of coffee that catered to 40% of Americans who preferred lighter coffee, while also satisfying the needs of the most staunchest of Starbucks Coffee drinkers” (Ramirez, 2015). This new coffee roast, dubbed “Blonde” hit stores in 2011, and helped boost revenues as 2013 financial data illustrates.

[pic 2]

Figure 2: Pulled from Starbucks FY 13 Company Data

Other examples of paradoxical thinking include Starbucks’ approach to store design. While most chain stores attempt to build in various locations while adhering to notions of uniformity where a visit in one location will mirror a visit in another (Cracker Barrel restaurant and retail stores come to mind), Starbucks designs its vast number of shops to complement the neighborhoods in which they reside – trying to be global and local at the same time”(Gertner, 2012).

Starbucks executives, by thinking in a way that didn’t limit themselves by paradoxes were able to transcend those limitations, and successfully avert economic disaster.  We see these cases time and again; cases of organizations that possess the intellect to use weaknesses as strengths, while discovering hidden paths that are often obscured by existing prejudices and worldviews.

PART III – Are we Able to Learn Paradoxical Thinking?

Paradoxical thinking can be difficult to grasp by many organizations because it often conflicts with the way businesses rationalize their actions.  That is to say, many organizations adopt cause and effect thinking because they believe that one decision will logically have the same effect every time.  A common statement heard is “If we reduce costs of Widget A, then we will take in more profit”. This may not entirely be true. Consumers could take a price drop as a drop in quality and thereby decrease their demand for Widget A. In this case, organizations must be able to use different points of view to approach the problem, and understand that outside-the-box thinking is necessary for achieving optimal results.