Do Tough Decisions Require Making Trade-Offs?
Now that the debt ceiling crisis is long over, everyone is having the morning-after blues. In truth, nobody is 
happy with how the negotiations were handled or with the outcome. American democracy, and the economy, were shown to be hobbled by intransigence and an embarrassing lack of innovation. Lots of trade-offs were made--all of them unappealing.
It's received wisdom in business, as in government, that compromises are always necessary and that realists have an advantage in accepting this. But like much received wisdom, this idea can be dangerously wrong. That's part of Roger Martin's central premise when he writes about integrated thinking. Great leaders, he argues, simply refuse to accept bad trade-offs. He gives a couple of great examples in his landmark book, The Opposable Mind.
P&G: Bridging Polarized Factions
When A.G. Lafley took over as CEO of P&G, the company's track record in bringing new products to market was poor and the company had twice missed profit targets. One faction within the company argued that success lay in spending more on R&D; the other maintained that costs needed to be slashed. These two polarized mindsets implied that Lafley could do one or the other; there had to be a trade off.
Instead, Lafley encouraged a different kind of innovation within the company, reaching out and working with a far broader network of inventors and designers than they'd ever connected with before. This made innovation faster, more successful - and cheaper. This was the beginning of a turnaround and it derived, Martin argues, from Lafley's refusal to accept a bad trade-off.
Institute for One World Health: Rejected Compromises that Sacrifice Your Values
Traditionally, there are two ways for pharmaceuticals to innovate: either spend a fortune developing new drugs and then recouping your money by selling them to people who can afford them, or get lots of grants from governments and charities to underwrite the costs of medicines for poor people.
Both of these models were unacceptable to Victoria Hale, founder of the Institute for One World Health. What she did was to focus on a disease afflicting poor people that would could be treated with cheaper pharmaceuticals. She discovered that paromomycin - a cheap antibiotic - successfully treated visceral leishmaniasis, which kills some 500,000 people a year. Neither expensive R&D nor big government funding was needed to make a huge impact.
Patience and Pride
In both instances, decision-makers were determined to find solutions they could be proud of and not to accept bad trade offs. That required a high degree of patience and intellectual rigor on their part. But it also required that they reject the simplistic narrative that polarizes extremes and urges a cynical or lazy acceptance of simple answers. Just because Washington can't do it doesn't mean you can't do it in your business. Strategy, after all, isn't an election. It is supposed to be a thought process.
Further Reading:
Don't Cut the Training Budget
4 Myths About Innovation
Profit from Principles
