|
Two Women
& A Paradox
By Michael Alan Hamlin
July 5, 1999
Two beautiful
women in slinky, sexy black evening gowns were talking at one of
those glitzy cocktail parties while enjoying the covetous glances
and quick smiles of the men in the room. Nodding in the direction
of two of the best-looking men, one woman told the other, “See
those two handsome men? One’s my husband, and the other’s
my lover.”
The other woman turned to the first,
and looking hard into her eyes smiled and said, “Funny, I was
about to tell you the same thing.”
That’s the danger of making assumptions says Chandru Rajam,
Sub-Dean of the Faculty of Business Administration of the National
University of Singapore and director of the University’s Asia-Pacific
Executive MBA program. And when it comes to management strategy
in a demand economy, most times it’s what you don’t know
that’s most important, and what you think you know that can
undermine your plans.
Speaking on the paradoxes of global
competition and CEO mindsets before a special forum organized by
the Trade & Industry Committee of the Management Association
of the Philippines, Mr. Rajam observed that the most vexing challenges
facing CEOs “involve tradeoffs among competing goals.”
Those tradeoffs represent strategic dilemmas that must be resolved
to focus resources for rapid growth.
Resolving strategic dilemmas successfully,
however, requires two things to happen. First, the CEO must recognize
and acknowledge the tradeoffs. Second, the CEO must choose the correct
tradeoff.
Mr. Rajam illustrates strategic tradeoffs
by presenting a set of 10 paradoxes he says are inherent in global
competition. The first of these is the Value Paradox, or “how
to offer superior quality, better service, and overall higher performance
while reducing the cost of doing so.” This is the paradox of
doing more for less, and requires that the CEO be equally obsessed
with reducing costs and maintaining or improving quality.
Next comes the Horizon Paradox: “how
to maintain a long-term investment perspective given the pressure
for profitability in the short-term.” During Asia’s miracle
years, alleged long-term investment perspectives were frequently
used by conglomerates to explain away low returns on capital, investment,
and economic value added. That’s going to be a lot harder to
do as minority shareholders become empowered and Asian corporations
increasingly look to equity markets to fund development and expansion.
Mr. Rajam says CEOs must think long, but act short to resolve the
tradeoffs.
Third is Competence Paradox, or “when
should the firm deepen its existing core competence and when should
it build new ones? When exactly does obsolescence set in, and innovation
begin?” Another way of saying this might be, “How do I
avoid big company disease?” Escaping infection Mr. Rajam says,
means CEOs should think lease but act own. In other words, avoid
emotional attachments to the way things are.
The fourth paradox is the Survival
Paradox, or “how to measure first-mover gains from a new product
against safe profits from a current product.” For Mr. Rajam,
the only real alternative is, “If you don’t eat your baby,
somebody else will.” That means think cannibalize, but act
capitalize: compress product cycles.
That brings us to the fifth paradox,
the Boundary Paradox. In this age of coopetition, it’s critical
to understand “how to cooperate with alliance members without
losing sight of the underlying rivalry.” That’s the paradox
we see players in the telecoms industry struggling with now as profitability
becomes increasingly elusive. To resolve the tradeoff, CEOs must
think compete, but act cooperate, according to Mr. Rajam.
Next comes the Spatial Paradox, or
“how to run a globally efficient operation while meeting the
needs of customers in every — often unique — national
market.” This tradeoff looms large in a demand economy, and
requires that organizations do the obvious: think globally, but
act locally. The Spatial Paradox requires that CEOs focus on getting
better at knowing and increasing share of profitable customers.
Similarly, the Culture Paradox involves
— for multinational firms particularly — getting a “multinational
workforce to act as one.” How does the CEO instill corporate
values across vastly contrasting cultures? Mr. Rajam argues that
resolving the tradeoffs requires that the CEO and the organization
think corporate, but act national.
As companies become increasingly
focused, they face the Size Paradox: “how to exploit economies
of scale, yet avoid bureaucratic malaise.” Mr. Rajam likes
to quote G.E.’s legendary CEO Jack Welch to illustrate this
paradox: retaining “a small-company soul in a big-company body.”
Doing that means the CEO must encourage the organization to think
big, but act small and intimate.
Strategy is all about innovation,
Mr. Rajam says, and that brings us to the Strategy Paradox, or “how
should CEOs juggle the competing claims on their time?” In
other words, “what deserves their attention, what doesn’t,
and how to tell the difference?” If CEOs aren’t focusing
on the future — and allowing themselves to become distracted
with operational issues — they’re not doing their jobs.
Focusing on the future requires that CEOs think precious, but act
pressing. That is, trust your people, and stick to your job.
The final paradox is the Icarus Paradox,
or “how to succeed, yet not allow success to get to your head.”
Resolving the tradeoffs inherent in this paradox is crucial to avoiding
complacency, according to Mr. Rajam. He encourages CEOs to run scared,
to think failure, but to act success. Microsoft chairman Bill Gates
always looks disheveled, Mr. Rajam suggests, because he’s paranoid
that someone in a garage somewhere will come up with an alternative
to Windows. Corporate paranoia keeps the organization and its leaders
on their toes.O
f course Mr. Rajam also warns that
individual paranoia — several thousand paranoids running around
the organization — isn’t too helpful. But everything in
life involves a tradeoff, and effectively dealing with the paradoxes
inherent in success must be a priority for every successful CEO,
and assuming that what he doesn’t know, will hurt him.
Copyright © 1999 The Events & Awards Managers of Asia and
Hamlin-Iturralde Corporation. All rights reserved.
|
