Companies with a Founder’s Mentality℠ don’t just accept conflict, they revel in it.
One key goal of good organizational design is to create conflict. At its simplest, customers benefit when companies are ruthlessly focused on delivering to them two kinds of benefits:
- Benefits of the similar. Customers see massive benefits when companies constantly strive to make their offerings to customers similar. That’s because similar means savings. It matters to me if a company makes all its back-office processes between markets the same, because that efficiency creates cost savings that they ideally will pass along to me. When I’m shopping for a car, for example, I want some aspects of the car tailored for me, but I certainly hope the automakers are trying to harmonize their components as much as possible so I get the cost savings as well.
- Benefits of the different. Customers also benefit hugely when companies are constantly trying to create unique products to fit customers’ unique tastes. Consumers in, say, Malaysia, expect the choice of soups to match their cultural palate, so even a seemingly standard tomato soup should be spiced appropriately. Tennis rackets should not be one-size-fits-all; a racket must fit your hand grip and playing style. As a consumer, you want choice.
Unless you’re a big technology company with lots of fancy algorithms, bringing consumers the right balance of the similar and the different is a hard slog. Many companies have embraced the matrix organizational structure, in part to ensure that portions of the organization are looking for the benefits of the similar and portions are searching for the benefits of the different. Not surprising, that creates conflict.
To illustrate a typical debate in big companies, let’s revisit the tomato soup example:
- “Our consumers like their tomato soup fantastically spicy and hate our standard packaging—it looks far too much like the leading brand of oil lubricants. Same colors, same picture of a poodle.” (Why tomato soup or lubricants might have labels with a picture of a poodle is left to the reader to ponder.) —Head of Malaysia, acting on behalf of the different
- “Yes, and that is why you have the choice of the spicy soups we’re using for Thailand or for southern India. But we simply can’t afford to add the complexity of a ‘Malaysian’ variant.” —Head of Supply Chain, acting on behalf of the similar
- “Okay, but the poodle stays. We’ve just invested £10 million in a global campaign that stars the poodle, and this will be central to our marketing efforts for the next three years.” —Head of Global Marketing for Soups
The winner? The Malaysian consumers. They will either get perfectly spicy soup tailored for them or something close enough, but a bit cheaper. They will either get the poodle off the label, so they don’t think of lubricants when they eat soup, or they will enjoy the benefits of a multinational poodle telling them something about the less expensive soup.
Conflict in an organization is a good thing. Done right, it creates the debates necessary to ensure that customers benefit from the optimal blend of the different and the similar. Companies with a Founder’s Mentality understand this. Their bias for action and their obsession with the front line ensure that the conflict doesn’t bog down the organization.
Incumbents and struggling bureaucracies, however, learn to hate conflict. And that is ironic, given their organizations are often paralyzed by it.
This is how conflict goes wrong:
- Conflict becomes personal. It is not a discussion about the different and the similar aimed at serving the customer; it is a fight between Bob and Mary. One must win and one must lose, and the outcome produces shock waves that reverberate far beyond the specific decision being debated.
- Conflict is seen as “unprofessional.” Big organizations often are governed by the God of Chronos, who cares more about time management than customer issues. It becomes unseemly to energetically represent different or similar—effectively, to start a conflict—because it takes the meetings “off track.” Actual conversation between dissenting adults is frowned upon because the agenda rules.
- The energy vampires take over. The problem isn’t just that Bob and Mary aren’t raising the right issues, it’s that Bob’s team and Mary’s team are fighting the fight at every layer, every day. It would be a great thing if the soup debate mentioned earlier was actually debated in the way I wrote it. But things are far worse. The poodle issue will fester for months at lower levels, with packaging design battles going back and forth. The spice issue—be it for Malaysia or Thailand or southern India—will involve hundreds of people across three regional supply chain organizations, two brand organizations and a couple of consumer insight groups. These battles, fought under the surface, suck the life out of all involved.
In short, the surface of the water appears calm at these big organizations, but schools of piranhas are warring at the deepest levels. To make conflict productive, it must be encouraged at the right times and places—and then resolved, before it goes any further.
One CEO of a Turkish firm told his story: “We love conflict. We understand its role. We have a Monday meeting each week with our full leadership team, and I expect major fights.”
Recently, the firm discovered that some of its products had been poorly packaged in colors that did not match its specifications. “We were stuck in a situation where we either pulled the stock because it didn’t fit our brand standards or let it pass to avoid stock-outs,” the CEO said. “This was a big issue. We were either going to disappoint our consumers or disappoint our channel partners.”
As the discussion progressed, though, one thing made the CEO angrier than the packaging: an overly acquiescent executive. “Our head of marketing was being way too reasonable. He understood the consequences of stock-outs and was quickly trying to explain that the color issue wasn’t that bad,” the CEO recounted. “I was furious. During a break, I told him that he was not doing his job. If he wasn’t going to stand for the consumer in that meeting, then I didn’t understand why he came.”
In this CEO’s view, a Monday morning meeting without heated debate—and resolution—is a failed effort. “Ultimately we execute our decisions as an integrated team,” he said. “But when we’re taking these decisions, I demand conflict. Otherwise, we’re letting our customers down.”
Conflict is not the problem. If there is a problem, it always lies in the speed and spirit in which conflicts are resolved.