Insights For Success

Strategy, Innovation, Leadership and Security

Leveraging the paradox

StrategyEdward Kiledjian

Since 2008, companies have had to face unprecedented economic challenges in one of the worst recessions we've seen since the Great Depression. While some companies are barely surviving, others are experiencing unprecedented growth.

There is no magic formula to instantly transform from one to the other but my research has identified a key difference between these two types of companies: the management paradigm held by the company's executives. The companies that are performing best, are those that have accepted that management is a paradox.

As an example, companies have to cut payroll costs. Most companies have taken the straightforward approach of freezing new hires, and eliminating their most expensive headcount. They see this as low hanging fruit. An easy means to get to the desired end.

Strategic managers that accept business as a paradox, have taken a completely different approach. These executives understand that they can reduce labor costs by hiring top performers. Sure, top performers cost more but they also perform at a much higher rate, think outside the box and provide an overall strategic advantage to your business. 

Another advantage of hiring top performers is the fact that they require less management. Corporate value is never created through the act of management. It is created through the act of transformation: either physical or logical. 

If your staff requires less management, it allows your managers to think more strategically (rather than tactically). Strategic management means that they can find new ways to innovate and reduce costs. Because your employees are being managed less, they feel more confident and empowered, which further fuels the desire to perform to a higher standard. 

This is but one example of a possible business paradox. Similar logic can be used for other business decisions from deciding which factories to close, where to do capital expenditures or whether to expand your product line. How you manage your business in these tough economic times will decide how you perform as the economy improves. If you have made educated and well thought out decisions, then you will be richly rewarded. If you have adhered to conventional wisdom, then you will be sorely disappointed for having missed such a remarkable opportunity. 

There has never been a more important time to "think outside the box". Every decision you make is an important one with long lasting repercussions. Before rushing to any decision, make sure you turn the situation on its head and ask yourself if you are facing a paradox.