A Managment Lesson From the Fiscal Cliff

Two mangers, faced with making a critical decision, sit across from each other in a conference room. Both have clear but very different objectives. Yet each one confidently tries to win the other over to his side.

Because each side is supported by equally confident constituents, there is little room for negotiation. As a result little progress is made, and the meeting is adjourned. Both leave frustrated and unsure that a compromise can ever be reached.

Such is the dilemma faced by President Obama and Speaker of the House Boehner; different positions, confident constituents and uncertain that a compromise can be reached. One demands higher revenues, the other spending cuts.

But the “value” of conflict cannot be underestimated; not in government nor industry. Indeed conflict and debate clarifies issues, challenges assumptions and can actually build relationships not destroy them.

Yet in many organizations, especially those characterized by a stable and uncontested decision culture, conflict and debate is often discouraged and even suppressed.

The irony, however, is that many of these same organizations maintain governance structures whose functions are designed to introduce challenge and debate. The board-of-directors, as one example, is responsible for challenging the strategies proposed by executive management, while the steering committee is responsible for challenging the progress of projects that deliver these strategies. And in Washington the two houses of congress as well as the president are responsible for challenging the ideas proposed by one branch of government.

The important word here is “challenge” not “obstruct.” Yet in industry the challenge is sometimes too little and too late.

Did, in fact, Hewlett Packard vigorously and impartially challenge its decision to buy Palm, Inc. for $1.8 billion in 2009, a decision that took HP in and the out of the tablet business by August 2011? And did Disney vigorously challenge the decision to produce the movie, John Carter which opened in 2012 and suffered a loss estimated to be between $90 to $200 million?

And today many, but certainly not all, companies in the consumer electronics industry are introducing products that lack the competitive and innovative edge necessary to compete with Samsung, Apple, Amazon and Google. It is not unreasonable to ask if their product development challenges were too little and too late. Indeed, it is not unreasonable to conclude that the greater the challenge the better will be the outcome.

Yet here is the problem. Raising challenges, initiating debate, contending with very uncomfortable situations, reaching compromise and convincing constituents and stakeholders to accept an outcome is not a pleasant exercise. But it is an exercise that no organization or government can afford to ignore.

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