The LIFT Blog

By Ryan Quinn

Recently, I read an article about Dr. Ralph Schrader’s transformation of Booz Allen Hamilton. For sixty years, Booz Allen did consulting for government and business. After September 11, 2001, however, government business exploded, growing to account for nearly 75 percent of the firm’s revenue. This meant Booz Allen had to hire more employees to do contracts with different lengths and different margins than those doing business sector consulting, and conflicts between employees in the two different sectors erupted throughout the organization. Shrader tried to bring the two factions together, but it did not work, so he and his colleagues decided to break the firm into Booz Allen Hamilton and Booz & Company–two separate firms.

Contrast this story with an experience I had last year. I was working with Tony-Golsby Smith and his colleagues in the strategic consulting firm Tony founded called Second Road. Tony and his people were working with an international multi-billion-dollar firm that I will call “Foundry.” Foundry had grown through acquisitions for many years. It was organized into a handful of business units that operated independently with little trust, no coorperation, and the strategy for the firm in the head of the CEO alone.

The fact that the strategy was only in the head of the CEO became particularly problematic when the CEO was found to have made some ethically questionable decisions and was fired by the board. A new CEO was hired. The financial analysts told the new CEO that he should spin off Foundry’s consulting business because, in their minds, it made no strategic sense in the firm’s portfolio. Instead of complying, the new CEO asked for 100 days to work through Foundry’s strategy. Then he hired Second Road to help him with the process. After many days of intense and facilitated discussion, the CEO of Foundry and his management team–including the CEOs of the consulting business and the other businesses–learned to trust each other, work together, came up with a strategy that used the consulting business to generate value for all of the other businesses in the company, and thrilled their investors when it was presented.

Both of these stories are stories of positive outcomes. Each of the companies are operating profitably and creating value for many of their constituents. The second story, however, is likely to be more interesting to someone who studies or practices Positive Organizational Scholarship.

Types of Conflict

For many years, organizational scholars who studied conflict treated conflict as negative, and studied the question of how to resolve conflict. The focus was on getting from a negative state (conflict) to a neutral state (the end of conflict). Another way to view  conflict, though, is to see conflict as an opportunity: an opportunity to innovate.

To understand how conflict can be an opportunity to innovate, consider the five general approaches to dealing with conflict that researchers have identified.* When faced with conflict, people can:

1. Avoid the conflict
2. Force others to comply with their perspective
3. Accommodate others’ wishes (instead of one’s own)
4. Compromise (each party gives something up to come to agreement)
5. Collaborate (each party works through the problem until they can come up with a solution that meets everyone’s interests)

The story of the separation of Booz Allen Hamilton from Booz & Company is a story of avoiding conflict. The story of Foundry is a story of collaboration. And collaboration at Foundry would have been impossible without innovation. In order to come up with a solution that incorporated the interests of the five business unit CEOs, the CEO of Foundry, the investors, the customers, and other Foundry stakeholders, the executives at Foundry had to innovate new business models, new methods for working together, new approaches to serving their customers, and a new strategy altogether. The more complex a conflict is, the more that conflict will need innovation for the people who are in conflict to be able to collaborate. And if you can innovate a solution to a sset of issues that more than one party cares about, then you will have created value for each party involved, not just for a single party. Conflict is an opportunty to create value that did not exist before.

Capitalizing on the Opportunity

Countless books and articles have been written on how to manage conflict in a way that leads to collaborative solutions. For example, integrative negotiation is one excellent way to work toward collaboration. Scholars from the Harvard Program on Negotiation, for example, help people to prepare for negotiations by getting them to

1. Identify the relevant parties
2. Clarify parties’ interests
3. Probe for underlying interests
4. Create options to meet interests
5. Find ways to maximize joint gains
6. Consider each party’s best alternative to a negotiated agreeement
7. Establish legitmacy
8. Develop skills for listening, reframing, and questioning assumptions
9. Separate people and relationships from the issue at hand
10. Identify issues to be included in the agreement
11. Plan the steps to agreement**

There are other helpful techniques as well. One important technique is simply labeling conflict as an opportunity. Using a label like this is what Tony Golsby-Smith and I call a “heuristic of agency” in a working paper we have written about managing strategic conversations for innovation. A heuristic is a rule of thumb. The practice of labeling a conflict as an opportunity is a rule of thumb that increases our agency because it helps us to see that there are other alternatives besides just “solving” the problem that our conflict presents. In fact, when managing conflict, we suggest that people need to have three types of rules of thumb to help them move from conflict to innovation: heuristics of agency, heuristics of disorder, and heuristics of order. Disorder helps us to see that the world can be shaped many ways, unlike the way it is shaped now. Agency increases our capacity to shape the world in different ways. And order helps us to create the new world that we think will create value for each of the people involved.

When Collaboration is Not an Option

Collaboration is the approach to conflict that is likely to be of most interest to people who are interested in studying and applying principles of positive organization. And it is also the approach that is likely to create the most value. Collaboration is not, however, always possible or even desirable. Sometimes one of the other approaches to conflict is the best that can be done. Avoiding is a good thing to do when issues are trivial or when engaging in a conflict may do damage. Accommodating is a good thing to do if we discover that another party’s point of view is more accurate or productive than ours. Forcing may be appropriate when people’s safety, or other pressing, ethical issues are on the line. Compromise may be the best option when we want to include everyone’s perspectives but we face strict and unmoveable deadlines. In situations like these, these other options may be better than taking the time to innovate collaborative outcomes.

Each of the responses to conflict have circumstances in which they may be considered appropriate. Some of these circumstances occur more often than others, though. For example, in a recent study of conflict in the Research and Development departments of 727 electronics companies, Michael Song and his colleagues*** found that forcing and avoiding tended to increase the relationship-damaging nature of conflict, compromising decreased the relationship-damaging nature of conflict, and accommodation and collaboration increased the constructive nature of conflict. Constructive conflict increased innovation, while relationship-damaging conflict decrease innovation.

The conflict that Dr. Schrader faced may have been doing damage over trivial issues, or may have provided  other good reasons for choosing to avoid conflict and split the company. The article I read said almost nothing about his reasons or about how he attempted to handle the conflict before splitting the company, so there was not enough information to judge how well he handled the conflict. Booz Allen Hamiliton and Booz & Company are certainly profitable businesses, and it is impossible now to judge what value might have been created if they had worked through the conflict to the point of collaboration.

I cannot judge Schrader’s decision, but I have seen many conflicts in which managers chose to avoid, accommodate, force, or compromise, and I felt certain that an opportunity had been lost. Conflict is a powerful experience that can surface many fears and negative feelings for the people who experience it, and so avoiding, forcing, and accommodating responses are certainly understandable, even when they are not ideal. Hopefully, though, with the idea that we can label our conflict as opportunities, we will increase our ability to transform these opportunities into innovation, collaboration, and the creation of  new value.

* See Blake, R. R., & Mouton, J. S. (1964). The Managerial Grid. Houston, TX: Gulf; Thomas, K. W. (1976). Conflict and Conflict Management. In M. D. Dunnette (Ed.), Handbook of Industrial and Organizational Psychology (pp. 889-935). Chicago: Rand McNally; Rahim, M. A. (1983). Rahim Organizational Conflict Inventory II. Palo Alto, CA: Consulting Psychologists Press.

** This list is adapted from Roger Fisher and Danny Ertel’s (1995) book, Getting Ready to Negotiate (New York: Penguin).

*** Song, M., Dyer, B., & Thieme, J. (2006). Conflict Management and Innovation Performance: An Integrated Contingency Perspective. Journal of the Academy of Marketing Science, 34(3), 341-356.

This entry was posted on Tuesday, June 2nd, 2009 at 1:13 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.