Moving Beyond Either-Or Decision-Making

Welcome to HBR on leadership case studies and conversations with the world's top business and management experts hand selected to help you unlock the best in those around you. I'm HBR senior editor and producer Amanda Kersey. In this 2017 HBR IdeaCast conversation, you'll hear how leaders move beyond either or decisions and to make stronger choices. The same approach can help you address trade offs in your own organization. You know, I remember host Kurt Nickish and I having a great time producing this episode. The beginning still makes me smile.

Everything is awesome. Oh my gosh, I love this song.

If you don't know that music, it's the theme song from the LEGO Movie. The animated film grossed nearly a half billion dollars in 2014. And it also breathed new life into the brand. People loved seeing the little plastic pieces of their childhood in action. The hero, Emmett falls down a hole one day into the LEGO underground.

The prophecy states that you're the most important person in the universe. That's you, right?

Uh, yes, that's me. Behind the scenes, the LEGO group went through through its own adventure. Turns out there's a strategic decision making story behind the blockbuster. And it's a case that Jennifer Riel and her co author Roger Martin study in their new book, Creating Great A Leader's Guide to Integrative Thinking. Riel teaches at the University of Toronto's Rotman School of Management. She also loves movies. So today she's here to talk about integrative thinking through the lens of the film industry. Jeff, Jennifer, thanks for coming in and talking with the HBR Ideacast.

It's my pleasure. Happy to be here.

So the LEGO Movie, amazing success. But it could have turned out much differently, right?

Absolutely. And interestingly enough, I didn't know until I had the chance to talk to Jorgen Vic Nudstrup, who was the CEO of LEGO at the time, that there had actually been a previous iteration of a Lego Movie. They'd actually made a Lego Movie before the LEGO Movie.

I didn't know about this either.

I was fascinated. It's called the Adventures of Clutch Powers. And it had come out of the fact that Lego for a long time, I mean, they make the little plastic bricks that we all grew up with. It's been a successful brand for decades, which is kind of amazing for a little company in Europe. And they had started getting into branded co branded entertainment. So like Harry Potter, Lego Games or Star Wars, Lego Games would be the most popular example. And so it was inevitable someone was eventually gonna come and say, let's do A movie about Lego and maybe, let's have it be original, not tied to another entertainment brand. And so they did. They created this adventures of clutch powers. And they partnered in a way that most companies would, which was they prioritized the protection of the brand. So they had final sign off on the script and on all of the filmmakers. And they made sure that it was true to the brand and that it protected the company. And as Jorgen will say with a laugh, it was really boring and not very successful, not a very successful film, not very successful for the company. So they were approached again from a Hollywood studio saying, let's really do this, let's really make the Lego movie. And they were confronted with what do we do? The last time it didn't work right. And we prioritized that we should have creative control. That was a huge bone of contention because they recognized that part of the challenge is getting really great talent who would be willing to work on a project for which the company had creative control. They wanted talent that would create a really great movie. To do that, the hypothesis would be you've got to give total creative control to that talent. You will not get great directors, great filmmakers, if they feel they're going to beholden to a corporate interest. Like they're uncomfortable enough being beholden to the studio, let alone to a company. So this question of how do we tackle the seeming trade off, the either or choice between maintaining absolute strict creative control but probably giving up the ultimate quality creativity of the film versus give someone else total creative control. You'll probably get a great film out of it, but that's a huge risk to take for the reputation of the company because who knows what they're gonna do?

Meet in the middle, the happy medium.

Absolutely. You can imagine all kinds of compromises in between where you really aren't thrilled with the answer, but you can live with it. And very often leaders frame the problem of trade offs in that way. Michael Porter, the father of all strategy, tells us, strategy is making trade offs. You can't be everything to everyone. And that's true. You absolutely have to make trade offs as a leader. What we found, Lego is a great example of this, Jorgen is a great example of this, is that there are some problems for which making the trade off is unacceptable. If I make the trade off, I lose. If I make the trade off, it's not going to solve the problem. And it is in that situation where you ask yourself, could there be a better way? Could I imagine doing something either than choosing the either or finding the barely acceptable compromise, and actually seek to create a better choice, something new that doesn't exist today that might actually solve the problem, be great for the organization. And in Jorgen's case, he was really clear. I want a really amazing movie, an awesome movie, if you will, but I also want it to be awesome for lego, right? I want LEGO to be better off from having engaged in this process. He looked at the challenge and realized that on creative control, ultimately, he did have to make the choice that, look, if I want great talent, really great talent, not good enough talent, they're gonna have to have control of the script, of everything that they do, of the casting of the film itself. And, yeah, they may give us the right to review it, but actually we need to trust them and they need to see that we trust them. But if I'm gonna do that, I can ask for something that I believe is gonna make a better answer. And the thing he asked for was their time before they started working on the movie. And he said, what I would like you to do is spend time not with me, but with LEGO's most committed, fanatical customers. Going to the fan conventions. I want you to spend time with kids as they play with lego. I want you to spend time talking to these super fans and understanding what LEGO means to them. Essentially, he was finding a way to help these filmmakers fall in love with the brand the way that a kid does. And if he could do that, if he could get them to fall in love with Lego, then they would protect the brand. They would be the ones who were dedicated to its preservation, and they would create an amazing movie that held LEGO at its heart. What's kind of cool about the engagement that they had with the adult fans in particular? I didn't know this, but apparently the one thing that is absolutely forbidden, even amongst the adult LEGO fans, is you're never allowed to use glue. Because the spirit of LEGO is building, taking it apart and building it again. And so that insight about fans and how they feel about LEGO becomes a plot point in the movie. They now build a huge part of the narrative around how evil it is to use glue. And this better answer produces the LEGO Movie.

What would most companies have done?

What most companies would have done is what LEGO did the first time. Treat it as an optimization problem, figure out, what is it we want. We want a movie that protects the brand, probably even prioritize that over the notion of it being a good movie. Make their own interests paramount over the interest of the viewer, and be surprised when the movie's not very good. And it actually makes people think less of the brand anyway. Sort of like catch 22. You end up producing the result that you were trying to avoid. And I think lots of organizations tend to either just make the trade off or lay out the possibilities, analyze those possibilities endlessly. We hear about these meetings that go on and on and you get progressively less excited about all of the answers as you analyze them. But as you do that, you then start to say, okay, we can't just choose one or the other. Let's build the Frankenstein option, the consensus option, where we, we can all live with this as a solution. It's not going to thrill anyone, it's not going to be great, but at least no one's going to get fired. When we talk about integrative thinking, it's this idea of leveraging the tension of opposing ideas, leveraging the disagreement. And it's not that you want to stay in disagreement forever. You ultimately want to create a great answer that we can achieve consensus around. But it's a fundamental belief that you have to go through the challenge or the tension of disagreement to get there.

I mean, I think of this almost as like the getting to yes book. Getting to yes and coming up with solutions in negotiations that end up making both sides happier than they ever imagined. Even like walking into the situation. And you're saying that that's kind of possible with. If you apply integrative thinking to business problems.

Yeah, I love the idea of getting to yes and it's delightful. Not every problem is going to be well suited to this way of thinking. There are lots of great thinking and decision making tools and if you have some that you love and that work really well for keep using them. We endorse all of these, think about it as being particularly useful. When you look at the problem in front of you, you look at the possibilities or the options that are laid out, you look at the trade off and you say, I'm just not willing to make that trade off. I just, I can't imagine making that choice. I need a better answer. It's one thing to say I need to do something other than choose here. And it's another to actually have a methodology coming up.

We're going to break down that methodology and talk through the stages of integrative thinking. But first I'm going to talk about another real world example from the movies. In the 1990s, the Toronto International Film Festival, TIFF for short screened a few hundred movies. It was basically for film lovers, for everyone. It sold a lot of tickets, but it wasn't really profitable. And that was the challenge facing Pierce Handling when He became Festival CEO in 1994. Handling thought about the Cannes Film Festival is another model. It's exclusive. It's got this juried prize, the Palm d'. Or. Kahn gets tons of news coverage, lots of star names, plenty of sponsorship money. Most executives would look at tiff's challenge as an optimization question, right? Where on the scale between community and exclusivity is the best place to be to balance ticket sales and sponsorship money? But the new CEO asked himself, why even make that trade off? Is there a way to get the benefits of both? To keep TIFF just as inclusive, but make it more buzz worthy too. That's where integrative thinking came to play. Here's handling in 2012.

We measure the success of our festival against many factors. It is the films we showcase, the audience reaction to those films, the talent that emerges, and the attention the films attract from the industry and the media.

What Handling really figured out is that Toronto's huge, diverse audience of filmgoers wasn't a liability. They were actually an asset. Take Slumdog Millionaire. It won the People's Choice Award and then went on to win eight Oscars.

Ladies and gentlemen, what a player.

Two years later, the King's Speech took the audience prize.

What was your earliest memory? I'm not here to discuss personal matters. Why are you here then? Because I bloody well stammer.

And four Academy Awards. Turns out tiff's audience is a powerful market predictor.

It's now the case that if you have a movie you think might win an Academy Award, you bring it to Toronto, you see how the audience responds. A film like Crouching Tiger, Hidden Dragon had come into Toronto with the studio. Not quite sure. I mean, if someone had said to you, in the year 2000, the big hit movie of the year is gonna be a Mandarin language film in which warriors dance on treetops, Right? Not many people are gonna say american audiences are gonna love that, But Toronto audiences did and adored the film. And so they were able to look back at what had been predictive about the audience in the past and say, if we really elevate this idea of an audience prize, make it really central, we believe, based on prior evidence, that it's more likely to be successful. But this is a case where they made a bit of a bigger bet. And it was in part because what they were doing wasn't working. And sometimes you just have to be pragmatic. How do we start doing this and see Whether it's going to be more successful. I think in Piers's case, he didn't have a ton to lose by trying an audience prize and seeing whether it was actually going to produce the outcome that he cared about.

So let's break this down.

Yes.

How do you do it?

It's a four stage process. Stage one, get clear about where your problem is. You find a problem you think is worth solving. Where you believe the answers in front of you aren't good enough. Some of them fall into the category of eternal organizational tensions. Number of organizations I've worked with where structure, they're like, all right, we were a completely centralized structure and we were slow to move. So we decentralized. We moved decision making out into the organization, and that didn't work terribly well for us. We found that while there were moments of great interaction with consumers, we were doing things in one part of the organization very, very different than others. We'd lost efficiencies, we lost economies of scale. And very often in organizations, they'll say, well, centralization didn't really work very well. Decentralization definitely didn't work very well. And the pendulum just swings back to centralization again. And it's the definition of insanity at that point. Well, if it didn't work before 4, it's probably not going to work this time either. And so the idea of saying, if you've been solving the problem over and over in the organization, or if you feel an eternal tension like centralization and decentralization or standardization and customization or those eternal tensions are often problematic because the choices aren't good enough. Right. We know we need both. We just can't figure out the how. In step one, what we want to do is take that problem and explore two very opposing ways of solving it. So we would dive very deeply into, all right, if we were totally centralized, what would that look like? Let's describe that just so we all know what we're talking about. Totally decentralized and pushing them out to extremes, because that's where the most tension is. We can't be totally centralized and totally decentralized at the same time.

Right. Force yourself not to find the balance.

Exactly.

Engineers do this, right? When they test things. They're like, what would happen if labor costs go to zero? Like, how would you design a warehouse that way? Or whatever.

Absolutely. And it provokes new thinking. We then try to fall in love with each of those models. Opening your mind to understanding what is truly great about that choice. What does it get us that might be helpful in building the better answer, Step two, here's where we actually hold them in tension, right? Here's where we look at them together and we essentially push ourselves to see what we see, to notice what we notice. Where are they more similar in terms of outcomes than we might have expected? Where are their true distinctions or points of difference? A really great outcome from model A that just doesn't exist in model B. This is stage three, right? Generate possibilities. What could a better answer look like? And in some ways, you just ask that question, what do I really value? And could I imagine creating something out of the things that I truly value? And so ultimately, you'd want to generate a few answers so that you're not just focused on one. Step four, how could you try your new models, see how an audience or a customer base or a shareholder group reacts, and then continue to move forward with that as a possibility. So instead of just saying, we're done, let's launch. Can you actually test those prototypes as you roll them out?

At which step do most companies stumble?

So I think that there are a couple of places that are challenging. Sometimes there is an inclination not to do this at all. Right? Just make the trade off. Sometimes it's hard to fall in love with one of the models because you already really like one. And so it's important to bring people into the room who can help push your thinking. Sometimes they'll get stuck on examining the models by just treating it as a checklist. We've got 15 minutes. What's similar? What's different? What assumptions? And sort of be a little dogmatic and just push through those. Part of this is recognizing that pushing forward to new ideas doesn't happen on an immediate timeline, right? Giving yourself a bit of time and room to walk away from the problem and come back to it. Certainly, if you've got an afternoon and that's all you can spend on it, you can make progress. But best practice would be convening the group a couple of times to go through the different stages at different points in time so you've had some time to think.

How do you know when in the middle of this unfamiliar process, that you're on the right track? What are signs that you're succeeding? What are signs that would tell you, you gotta start over?

So I think they're largely emotional. In stage one, if you really are able to push yourself to have genuine affection for the two models, get to a place where you say, I understand why someone would choose these. There's something good in it that is a good sign that it's working. When you're examining the models, if you feel a little in the weeds of the complexity, you do need to dive into the complexity of this in order to push yourself forward. If you feel like you see something new that you didn't see before, it might not be earth shattering, it might not be world changing, but something that I didn't recognize before I started this process that might push me in a new direction. And then in terms of the possibilities, is it better than what I started with? Have I made progress? Have I produced something that I believe does a better job of solving the problem than where I began? And as you're testing, am I actually making this idea better? Am I learning as I go? Am I producing an answer that I'm excited about? Some of it's managerial judgment. If this were an algorithm, it wouldn't actually be all that valuable to you. It is a process or a methodology that you can follow that paired with your own understanding of your business, with your own leadership acumen, enables you to tackle problems in a different way.

Jennifer Riel, thanks so much for taking us through this process.

It's my pleasure.

We'll be back next next Wednesday with another hand picked conversation from Harvard Business Review. If this episode helped, you, share it with your friends and colleagues and follow the show on Apple Podcasts, Spotify or wherever you listen to podcasts. And while you're there, consider leaving us a review. And when you're ready for more podcasts, articles, case studies, books and videos with the world's top business and management experts, find it all@hbr.org this episode was produced by Kurt Nickish and me. Amanda Kersey, on Leadership's team includes Maureen Hoch, Rob Eckhart, Erica Trexler, Tina Tobey, Mack Ramsey Kabaz, Nicole Smith and Anne Bartholomew. Music by Coma Media. Thanks for listening.