From the February 1996 issue of Entrepreneur

John wells is a manager and an entrepreneur, not a philosopher. Yet day in and day out the founder of 30-employee Executive Perspectives, a 13-year-old training firm in Brookline, Massachusetts, finds himself wrestling with logical contradictions that might have puzzled Plato.

"One example is the need to empower people to do what they think is best, but at the same time keep everyone moving in the same direction," says Wells. Another: giving customers good value while making enough profit to sustain and grow the company. "That's a tough one to manage." He also wonders, "How do you maintain profitability and yet keep investing for the future?"

Wells isn't the only one to notice that business is permeated with paradoxes, absurdities and contradictions. In fact, an intriguing new school of management thinking holds that managing those paradoxes is the key to business success.

"You have to take these competing forces head-on and understand them," explains Bill Dauphinais, a management consultant and partner at Price Waterhouse in New York City and co-author of The Paradox Principles (Irwin). "Understanding them and dealing with them explicitly will move you a great deal further down the road."

Thus far, paradox-based management has yet to achieve the popular appeal of approaches such as total quality management or teamwork. But advocates of looking at business as paradox say that its requirement for balanced consideration of alternatives has a value that many hot trends in management don't.

"It makes sense," says Scott Shane, director of the DuPree Center for Entrepreneurship at Georgia Institute of Technology in Atlanta, "because all of management is about managing paradoxes."


Mark Henricks is a New York City writer who specializes in small-business topics.

Paradoxical Origins

The word "paradox" comes from the Greek words para and doxos and means "beyond belief." Today, it is applied to nearly any concept that seems puzzling. Oxymorons such as "military intelligence" and "airline food" are humorous paradoxes. Absurdities, like "free money," could also be described as paradoxical.

Paradoxes go back a long way. Greek philosopher Zeno of Elea posed this paradox 2,500 years ago: If a runner striding at 1 yard per second covers half the length of a 1,000-yard course, then continues over exactly half the remaining distance, then runs another leg of half the remaining distance and continues to do this ad infinitum, will the runner ever finish?

It took over two millennia for mathematicians to apply a new understanding of infinity to answer that one. They decided it would take 1,000 seconds, an answer that didn't necessarily satisfy all students of paradox.

Similarly, no one has come up with globally satisfying solutions to the paradoxes entrepreneurs face in the real world. For every success story based on conservative planning and relentless cost-cutting, there is another tale of triumph by a reckless visionary to whom creativity was everything. That, says Dauphinais, is exactly the point.

"We would have loved to discover some magic formula to help managers," Dauphinais says. "But what we're saying is there's no right answer."

Paradox Pluses

Dauphinais and his co-authors identified a handful of basic paradoxes they say underlie virtually all management issues. In addition to the leadership vs. empowerment paradox that puzzles Wells, they hold that change requires stability, that to build an organization you have to focus on individuals, that focusing indirectly on corporate culture is more effective than a direct focus, and that to build, you must tear down.

Dauphinais uses a spinning gyroscope to illustrate the need for stability in a changing organization. The gyroscope can balance upright even though its base is being tilted and shaken. Similarly, he says, an entrepreneur who sets out to radically reshape a company should provide a firm foundation for employees to cling to when everything around them is changing.

"You have to have some anchors," says Dauphinais. For a company, those might be core competencies, key customers or irreplaceable employees. "Once we have a lock on what's really important, then we can figure out what can change."

Communication is often an important part of coping with paradox. At Executive Perspectives, Wells empowers and leads employees at the same time by indoctrinating them with a mission statement, which sets forth broad but specific aims for the company. Within that framework, they are free to manage themselves.

Once you begin to look, paradoxes pop up everywhere, from finance to human resources. Owners must compensate employees to retain and motivate them, but not pay them so much they lose the need to work. Entrepreneurs must raise capital without either indulging too heavily in expensive debt or giving away so much equity they lose control of their business.

The biggest issue for entrepreneurs involves managing the risk and opportunity inherent in starting a business, according to Shane. Safe ventures have lower payoffs, he notes, while risky ventures have higher failure rates. "The paradox is, How do you create a competitive advantage without taking risks that are likely to get you sunk?" he asks.

Paradox is at its best as a teaching aid, says David BenDaniel, professor of entrepreneurship at the Johnson School of Cornell University in Ithaca, New York. BenDaniel, a mathematician with a special interest in paradoxes, points out that Zeno was essentially a teacher who devised paradoxes to help his students understand new concepts.

Paradoxes are especially useful in teaching creativity. Mind-bending puzzles, almost by definition, force people to think outside narrow, accepted channels, BenDaniel says. "Managers who really want their people to be creative," he adds, "essentially have to develop a method of teaching by paradox."

Limits, Risks, Costs

What paradox proponents are really advocating is common management sense, a sound understanding of business goals and principles, and an awareness that one-sided solutions are likely to be wrong. It's quite possible, for instance, to take the development of teams so far that a company is left without any leader, Dauphinais warns.

"Think consciously about that," advises Dauphinais. "Don't just let it happen. Think about when you should be pushing the leadership or the involvement button harder."

The paradox model of management is likely to be welcomed by people who keep trying-unsuccessfully-the latest management fad, which promises them that by concentrating on one skill or function, such as quality, customer service, speed and so on, all will be well. "There's been too much emphasis on trying to come up with solutions that say 'This is the way to do things, and if you do this one thing, you will be successful,' " says Shane.

That's not to say the paradoxical approach is without risk. An entrepreneur looking for islands of stability in a changing environment may well settle on the wrong rock, warns Dauphinais.

Many entrepreneurs seem to intuitively grasp the paradoxes inherent in business, says Dauphinais. He theorizes this is because many entrepreneurs are one-person shows, single-handedly creating and even performing all the functions of a business.

But other entrepreneurs may show little or no grasp of paradox. Dauphinais observes that the business founder who is highly proficient at one part of running a company-sales, say, or product development-often has little grasp of the other elements of operating a business. Such entrepreneurs are often in greater need of an appreciation of paradox than a large company with diverse talents in its management.

"Entrepreneurship," says Dauphinais, "is pretty fertile ground for this kind of thinking."

Sharpening Skills

Although paradox may be old in terms of philosophy, it's new to business. Most of the logical and mathematical treatises that deal with paradox are not suitable to pragmatic management.

Similarly, in the last several years the interest in chaos and complexity has invoked paradox as a component of successful management without actually providing much in the way of useful techniques. However, management writers have produced a number of recent books that will help an entrepreneur who wants to learn more about paradox.

The British consultant and author Charles B. Handy explicitly brought paradox to the forefront of business thinking with his 1994 book The Age of Paradox (Harvard Business School Press). Handy deals with a number of paradoxes, such as the way higher productivity helps society by increasing output, while also hurting society by reducing the number of jobs.

Paradoxical management isn't, like some other fads of recent years, a costly exercise requiring a company to turn topsy-turvy. Nor is it all or nothing. A casual appreciation of paradox is just as likely to yield real benefits as a Zeno-up study.

The bottom line of paradox, however, is that it will remain paradoxical. In a paradoxical universe, there are no easy answers. "It's never-ending," says Wells. "The world is a bunch of paradoxes."