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.