Paradoxes at Organizational Level
Diverse and (In)compatible Goals
In the face of multiple stakeholder expectations, organizations are pressured to assume diverse and not necessarily compatible goals. These may include profits, social impacts, innovations, philanthropy and customer value which, while they may not be mutually exclusive, are certainly not mutually compatible. Innovation costs time and money that must come from the surplus value that produces profits. Social impact is worthy but from the shareholders’ point of view may dilute the value they expect to receive for investing their capital. Customer value is essential as a long-term goal because without customers there will be no other value to disburse but its achievement can be complex. Customer value may demand the delivery not just of a product or service but also social impact, philanthropy and innovation. Once upon a time, leading a business firm was relatively easy: manage the bottom line and keep the customers satisfied with products on the one hand, profits on the other. Times have changed. In the most recent period in which we write, the climate change crisis and the corona virus crisis have severely disrupted the fragile assumptions of both economy and civil society on which past normalcy was based.
Many businesses will fail because of the radically changing context of recession, possibly depression, flowing from the effects and reactions to the Covid-19 crisis. When the shutters come down, focus becomes concentrated and no doubt it will be on whatever it takes to maintain profitability and survival. Seemingly emergent developments, such as the creation of new forms that assume a dual goal of profit and impact, including В-Corps, may be sustained. The ecological crisis that the Anthropocene faces may recede even further in significance in the face of more immediate issues (Heikkurinen et al., 2019). Retreat from “green” issues will, in terms of strategic priorities, be a strongly negative move for Millennials, especially (Heo & Muralidharan, 2019). Nonetheless, most organizations will still have to deal, one way or another, with competing goals. For instance, how sensible and sustainable will it be to continue leading businesses into further supply chain entanglements or even maintaining those that they have beyond the short term in a post-virus economy and society?
To put things in perspective, the authors of this book all work in universities, some of which are extremely exposed in their supply chains, because they rely heavily on the fees that their Business Schools can raise from international full- fee students, something that seemed an unending supply chain of value. No more. When borders are closed, airlines grounded, face-to-face interaction minimized, not only does this value fail to materialize in many cases but, where it does, it occurs through a series of online interactions that are hardly going to satisfy the more serious customers.
Such scenarios were largely unforeseen by most universities (that in many countries today are hybrid public/private organizations in terms of their funding).Those institutions that in the past might have seemed global losers by servicing only a local and domestic market, such as Swedish universities, in which full-fee international students are unknown, may well be reappraised as winners in terms of value shrinkage. Universities, much as any businesses, have to do opposite things, such as innovating and cultivating efficiency in the present and the foreseeable future, investing in the possibility of futures seemingly unimaginable in business as usual scenarios while competing in the present, offering customers good value at an adequate price and remaining solvent.
Managing can be portrayed as an exercise in paradox: managers have to integrate a plurality of interests; they need to make decisions which are sometimes characterized by “worse-before-better” types of trade-offs (Rahmandad & Ton, 2020), meaning that the positive effects of some decisions are visible only in the long run. As Keynes once remarked, in the long run we are all dead, hence the temptation to focus on the short run. The way multiple interests and objectives become articulated is critical as it is these that define leadership in the long run of specific histories.
Even processes that tend to be described as exhilarating, such as creativity and innovation, are difficult and often frustrating (Van de Ven, Poole, Garud & Venkataraman, 1999; see Boxes 5.1 and 5.6). In some organizations the pervasiveness of paradox is more explicit than others. One reason international students were so attractive to university leaders was that they fuelled massive expenditures on real estate that was emblematic of the finest modern architecture, creating contexts designed to attract more students, especially international ones, to keep the cycle of growth spiralling upwards and onwards. After the lockdown of Corona virus Covid- 19, where almost all classes everywhere shifted online, in many cases with little preparation, the beautiful real estate of seminar rooms, collaborative spaces, lecture theatres became deserted. Will the future remain much more online than the past in the wake of the crisis? If so, what value attaches to the real estate of yesterday?
Universities undoubtedly face paradoxes in present times. They are hardly the only institution to do so. In family firms, for instance, tensions between individual freedom and family loyalty, tradition and change, are especially visible, hence their qualification by Ingram, Lewis, Barton and Gartner (2016, p. 163) as “exceptionally paradoxical”. In a crisis these family firms may cohere more strongly than those not bound by blood and emotional ties despite having less capacity as non-publicly listed organizations to ride out the crisis. The exceptionality of family business is a matter of degree more than one of substance as other organizations are equally rich in tensions between opposites.
Companies strive to obtain a profit but they are pressed to care for stakeholders (Ramus,Vaccaro & Berrone, 2020). Music companies are torn between artistic and commercial demands (Cunha et al., 2019). Prisons are expected to exclude deviant members from civil society but to re-educate them for future inclusion (Rubin, 2019). All organizations, whether universities, family businesses, public or private sector are hybrid, more complex than they are often represented as being (Smith & Cunha, 2020). In very few cases can we define them as systems with unitary goal orientations; in fact, they contain multiple goals.
Frequently, multiple goals are publicly eschewed while privately spurned. The commitments of the oil majors to sustainability or of motor manufacturers, such as Volkswagen, to going green must be questionable (Gaim et al., 2019). In other cases, goal multiplicity is affirmed as desirable; for instance, some investors worry about whether they can make a substantial social impact while also obtaining strong financial returns (McGlashan, 2018). Business schools contain business aspects, as well as scholarship, given the hybridity that many experience (Monies, 2020).
Often, organizations fail to articulate and to manage paradox, such as when universities become too business oriented at the expense of their educational mission (Starkey &Tiratsoo, 2007). When organizations focus too much on one pole at the expense of the other, they risk creating fatal imbalances. Boeing, for example, was accused of focusing on the financials at the expense of engineering, a partial explanation for the 737 Max tragedy (Hollinger, 2020). Boeing, studied by Pradies and her colleagues, was seen to be geared towards short termism, instigated by a “KPI culture” (Pradies et al., 2020).
BOX 5.1 KEY THINKERS: CAMERON, CLEGG, POOLE, QUINN AND VAN DE VEN
Andrew Van de Ven and Marshall Scott Poole have treated paradox as a core feature of organization in several of their works. In a conceptual paper published in the Academy of Management Review (1995), they presented contradiction as a source of organizational change. In their words, dialectics constitute one of four organizational change engines. Organizations change, in this view, because of the contradictions that characterize them and their relations with the environment.
Robert Quinn and Kim Cameron edited an important book, Paradox and Transformation (1988), and were among the pioneers of paradox theory, a topic also present in their competing values model, that highlighted the tensions between four organizational culture archetypes whose coexistence is not necessarily easy. They also introduced the notion of organizational effectiveness as paradox (Cameron, 1986). The paradoxical dimension of positive organizational scholarship was also elaborated (Cameron, 2008).
The paradoxes of positive organizing were also explored by Stewart Clegg in Positive Organizational Behavior: A Reflective Approach, which explores positivity from a mainly paradoxical perspective (Cunha, Rego, Simpson & Clegg, 2020). Before the topic was fashionable, Clegg edited a volume (2002) in which some possible threads for a research agenda on paradox and organization were laid out.