Compromise and the Pareto Principle

I am right and you are too! What the Pareto Principle teaches us about compromise.

I want to touch on the subject of conflict resolution with an emphasis on team alignment.  Throughout the years, I have witnessed and participated in meetings in which there are two points of views that are each presented with the same power of conviction.  In other words, “I know I am right, so why should I compromise?” 

Many of us were taught about winning and losing, right and wrong, at an early age with the expectation that: “if I’m right, the other person must be wrong.”  Yet, experience and observation have taught me that in most cases, when we are in conflict with other people, groups, or even our bosses, it is because we tend to focus on our differences and spend little time looking at our commonalities.  

I was once facilitating a meeting in which the conversation became very heated. We were trying to make a decision on the elimination of a product line and the sales and marketing team was presenting a very compelling argument about the need of keeping line “x”. Conversely, the operations team - supported by the finance team - had data to support the elimination of line “x” due to low volume sales and the need to reduce inventory to increase turns and cash flow.  Ultimately, we were not able to reach a decision in the meeting and I met individually with each team representing the two arguments.  After listening to them, I realized that both teams were actually focused on improving EBITDA - but none of them brought that to the table.  The operations team thought that the intention of the sales and marketing team was to increase revenue just to support their own goals, and the sales and marketing team thought that the operations team was succumbing to the pressure of the finance team and aligning with them simply to reduce inventory.  

This is where things become tricky from a management perspective. As I mentioned before, both groups had strong data and compelling arguments - so how can we decide which argument is best?  What line of thinking - and data - is pointing to the correct answer?   

My analysis? If you’re asking those questions, you’re missing the underlying issue: their ideas and focus were based solely on the differences between their solutions, instead of their commonalities.

Fortunately, I did my individual interviews! The first thing we did was come back to the table as one team.  We needed to approach the issue with a unified goal (which in many cases already exists but is not apparent on the surface). In this case, we were approaching the same goal from different angles.  When we came together with the intent of finding common ground, we were able to see that there was agreement on almost 80-percent of the plans - we were just focusing on the other 20-percent. 

Once that was established, we were able to evaluate those differences with a new perspective. After all, 20-percent is a much easier compromise to accept than “caving in” on your entire proposal.  In the end, we decided to reduce inventory, keeping product line “x” just for a group of customers with predictable sales and utilize the free capacity to increase production on product “y” - which was a blockbuster and needed capacity.  

This was a simple use of a “Pareto approach” in a non mathematical situation.  I’ve found this type of situation happens a lot and, most of the time, the “conflicting” ideas are not mutually exclusive - but instead, work well together.  

When you face a situation that you know you are correct and don’t see merit in a compromise - keep in mind that that the “other side” (also a part of the same organization with the same overarching goals) is also correct. You may just be looking at the same problem from a different angle.  

Combat this type of ideological road block by listening, defining a common goal, and identifying all the things you can do together.  You will find it’s a lot easier to compromise on just 20-percent of the issues than the entirety of your argument.

Mastering CHANGE Management

A tip for you, give me some change!

Are we afraid of change or afraid of the unknown? I'm not asking this question from a psychological perspective – I’ll leave this field to my wife Zaida, an HR executive, and daughter Gabriela, a PhD candidate in psychology – instead, it comes from my experience watching successful people embrace change and wondering what sets them apart.

It’s not difficult to pinpoint that those people were made part of the change either purposely, by using good change management techniques, or by incorporating their ideas due to the needs of the business. I have also seen many people reject change and get in the way of different ideas brought to them - most of the time by the management team - but why?

Many things have been written about this by experts in the field and my point of view is not new, but I have seen it work.  I simply believe that good change management could be summarized in the following acronym; Coordinated, Heterogeneous Approach to New Goals and Expectations.

COORDINATED; all change needs planning.  Be sure you know what you want to do, why, by who and when.  Be very clear about the purpose and what you are trying to accomplish. Then, set up enough time to schedule the activities needed to get the information and complete the execution and feedback sessions.

HETEROGENEOUS APPROACH; in this age of diversity this sounds like an obvious thing, but for some reason this hasn't translated in the same way to change.  In multiple occasions we only have one thing in mind and offer an extremely homogeneous look at a situation. Try to incorporate participation from multiple areas affected by the change and incorporate their ideas as much as possible. You can deliver the same communication in different ways.  Know your audience and make sure you tailor the message to them. Trying to save time by doing it the one size fits all way can jeopardize the intended outcome.

NEW GOALS; remember that new does not necessarily means recent.  Sometimes we think something is obvious because what you are bringing into the table is an old idea.  This does not mean everybody has been exposed to it.  Present this new goal in a clear way and please make sure it is measurable.  Always establish a baseline to be able to monitor progress.

EXPECTATIONS; just because you set a goal doesn't mean expectations were always clear.  You have to make sure you've defined your expectations well - in a way that translates to other units as well.  For example, you could establish the expectation to be 50% of your goal by midyear and 80% at year end if we are dealing with a multi-year goal.  When you establish expectations make sure to recognize the achievements of each one of those milestones.

The first time I saw this approach work I was still working in Puerto Rico.  Our boss at the time was a big proponent of Quality Circles and wanted to change the organization to a culture of Quality. At the beginning he was very directive in his ways and we all resisted the new ideas but he quickly adapted and became very inclusive.  He took his management team through the journey of quality first, incorporated our ideas, set common goals, clarified expectations and then encouraged us to do the same with our teams.  We established all-inclusive teams across the site to evaluate the different processes and then those teams worked with our management group to establish the priorities and start addressing the issue one by one.  Even though his approach was not supported by the corporate office and he had to explain what he was doing all the time, I witnessed day by day how our organization started to embraced the change to a “Quality First” enterprise and in less than three years we were an absolutely high performance organization where everybody, at all levels, was working toward the same goal and had the same expectations.

This way of looking at change is especially helpful when you are trying to change the “culture” of a workplace.  I have seen teams formed to address “culture change” just to see them drift into a memory.  Our processes change culture, most of the time multiple processes.  Focus your energy in those processes that are more relevant to the behavior you want to modify and address them one by one and you will see your team embracing change in a whole new way!