What do these questions have in common?
- Should we include or exclude married-ins in our family business?
- Should we stick with the governance documents we crafted 10 years ago, or change them given current circumstances?
- Should we invest or harvest profits from the family business?
In addition to highlighting thorny issues common in a family business, they are also either/or questions that oversimplify dilemmas requiring a more nuanced approach. The Patel family (a pseudonym) recently faced a situation that found them considering these three questions. But they learned that focusing on the problems of Include or Exclude, Invest or Harvest, and Structure or Flexibility will not resolve the Patels’ issues.
A Portrayal of Polarity
Interesting, thought Anita, the non-family COO of the Patels’ medical supplies business. She watched Rajesh, patriarch and CEO, sit on one side of the boardroom table, while his wife, Purvi, sat on the other. Soon their daughter, Jasmin, entered and joined her father, followed by Nirav, their son, who sat by his mother. This is gearing up to be quite the battle, thought Anita.
Having called this ownership meeting, Anita sat at the head of the table. “Thank you all for being here to discuss the CFO situation,” she opened. Their long-serving CFO, Fred, had recently given notice that he would retire in 18 months. “We all have strong opinions on this topic, and now that we are together, let’s talk through our strategy. Rajesh and Jasmin, you are in favor of hiring Jasmin’s fiancé, Jay, and…”
“He’s exactly who we need,” said Jasmin, cutting Anita off. “Just because he has a CPA and not an MBA is not a good enough reason to disqualify him for this role. I don’t care what the family employment policy says.” The Patel family had written the policy ten years earlier. “As chief marketing officer, I am desperate for monthly, product-level P&Ls, and cost accounting is Jay’s specialty. I’ve been begging for this for two years because I can’t assess product-level profitability without it.”
Nirav spoke next. “We put a lot of thought into the family employment policy. Why would we ignore it just because you want to hire your future husband? If we are going to hire Jay, why don’t we hire my wife, too? She can run HR. She’s great at planning social events.”
“Social events?” asked Jasmin. “As a professional musician, you may not be familiar with human resources, but planning parties is not HR’s primary function.” As much as Jasmin admired Nirav’s musical talent, she thought much less of his business acumen. “Why must we adhere to our family employment policy? We wrote it, so we can change it.”
Nirav turned to Anita. “What do you think, Anita? Should we follow structure or allow for flexibility?”
This story exemplifies the tension of a polarity — a set of seemingly opposed but actually interdependent values — that a traditional problem-solving mindset cannot answer. Managing a polarity — also known as a paradox, dilemma, dichotomy, duality or conundrum — requires an approach that supports a bit more complexity because polarities don’t have right answers. They are tensions to manage.
Polarity thinking, introduced by consultant Barry Johnson in the 1970s, helps transcend indecision and move toward action.
A Polarity Example: Inhale::Exhale
The “Inhale::Exhale” polarity is one that humans manage throughout their lives. As depicted in the map below, inhaling and exhaling both have benefits, but problems result if they are overused.
Inhaling and exhaling are an interdependent pair of opposing values that define each other. An inhale doesn’t exist without an exhale and vice versa. When you identify mutually supportive and opposing values, you face a polarity. Let’s examine how this approach helped the Patels.
The Patels’ Polarity Maps
Anita turned to face Nirav. “I have good news and bad news,” she said. “The bad news is that there’s no right answer to your question. The good news is that we don’t have a problem. We are facing a polarity, and we can use a different approach — polarity thinking — to address this dilemma.”
“I don’t get it,” said Jasmin. “Can you explain more?”
Anita continued. “A problem has a right answer, but a polarity does not, because both poles in a polarity are necessary, over time. Neither alone is sufficient to create and sustain high performance. Let me show you what I mean.”
She pulled out a blank sheet of paper and drew a large plus sign. On the left of the horizontal line, she wrote “structure” and on the right, “flexibility.” Then she asked the Patels a series of questions:
- What are your shared goals for your family business? Your aspiration?
- What are you trying to avoid?
- What are the upsides of having a clear family employment policy?
- What problems do you foresee if you are overly attached to this structure?
- What are the benefits of allowing flexibility in your family employment policy?
- What problems do you envision if you are overly flexible?
Five minutes later, Anita lifted the page and showed the Patels the polarity map she fashioned from their answers.
“It seems to me that Jasmin and Nirav simply have opposite preferences in a Structure::Flexibility polarity,” Anita said. “This is normal — we all have pole preferences, and they are usually based on an aversion to the overuses of the opposite pole.
“Jasmin, you are advocating for flexibility in the family employment policy because you don’t want to be constrained by a document written 10 years ago that doesn’t consider the opportunities in front of you. Nirav, you are advocating for structure because you all put effort into crafting this policy, and you wonder why you’d throw that work away now.”
Both Nirav and Jasmin nodded. That seemed right.
For the first time, Purvi spoke. “I’d like to raise a different issue related to Jay,” she said. “If he becomes CFO, he’s going to see our entire financial situation. Given the current rates of divorce, I have concerns about him knowing so much about our family’s financials.”
Rajesh faced his wife. “Well, he knows Jasmin’s financial situation anyway, as they’ve been preparing their prenup,” Rajesh said. “He knows that the business is held in trust and passes by bloodline only, so he’ll never own shares. Plus, assuming Jasmin and Jay have children, he’ll always be their father, whether he and Jasmin divorce or not. I’d like my grandchildren’s father to be knowledgeable and informed about the business so that he can help them understand it even if he and Jasmin divorced.”
Nirav leaned forward. “Look, we have a hard time agreeing to things between the four of us. If Jay joins as CFO, we’ll have one more family opinion to consider. Oof. It’s just easier if he doesn’t join the business at all.”
Rajesh replied, “Interesting that you are concerned about one more opinion to consider. I see that as an upside. We have another smart person at the table helping us make good decisions.”
“And if we exclude Jay,” said Jasmin, “he’s going to feel like a second-class citizen in our family — as if he doesn’t belong. Feeling like an out-law, not an in-law, is a crummy way for us to start out our marriage.”
Arguing the Diagonals
Sensing the familiar tension rise on both sides of the table, Anita said, “It appears we have stumbled on our second polarity of the day. Purvi and Nirav favor excluding Jay, whereas Rajesh and Jasmin favor including him. As a result, you are arguing the diagonals of an Include::Exclude polarity,” she said, referencing a concept from Brian Emerson and Kelly Lewis’s 2019 book, Navigating Polarities: Using Both/And Thinking to Lead Transformation.
“Sorry, arguing the what?” asked Purvi.
“The diagonals,” Anita continued. “Purvi and Nirav, you’ve beautifully described the upsides of exclusion and the downside risks of inclusion. Rajesh and Jasmin, you’ve done a great job describing the upsides of inclusion and the downside risks of exclusion. Let’s map it out.”
Anita flipped the paper over and drew the following polarity map.
“You are entrenched in this battle because you are both right,” said Anita. “There are upsides to excluding Jay from employment, and there are upsides to including Jay in employment.”
“Ok, I see that,” said Purvi. “But how do we resolve our dilemma?”
“Well, to transcend any polarity,” Anita replied, “you replace either/or thinking with both/and thinking. Instead of either including or excluding Jay from employment, brainstorm new ways to integrate both the benefits of inclusion and the benefits of exclusion. Let’s get creative and give it a try. How could you both limit risks in the event of divorce, and get the benefits of Jay’s experience?”
“What if we brought Jay in as a consultant for a cost accounting project?” said Jasmin. “He’s been thinking about launching a part-time CFO consulting practice, and this could be a good starting gig.”
“In the spirit of brainstorming, here’s another idea,” said Nirav. “He could start in a special projects role, reporting to Fred and focusing on cost accounting first. That way, the non-family CFO can evaluate Jay’s skills. If Fred sees potential in Jay, Fred could mentor him to grow into the CFO role over the next 18 months.”
Rajesh spoke next. “Another idea is to bring him in on the family office side instead of the family business. He could be very helpful with the tax strategy…”
“…And he’s really interested in spreading his wings into private equity investing,” added Jasmin.
“OK, OK, wait a minute,” said Purvi. “This is getting out of hand.”
Nirav turned to his mom. “It sounds scary to me too, Mom, but I’ve heard him talk about alternative investments. He knows a lot and has great industry connections. This could be good for our whole family.”
“It could,” said Purvi, “but I’d like us to make sure we mitigate the downside risks as best we can.”
“Good point, Mom,” said Jasmin. “How about…”
Anita smiled as the Patels continued to talk through how Jay could support the family in some way. This feels different, she thought. Rarely does this family engage in this kind of collaborative brainstorming. Polarity thinking is helping them creatively support each other instead of bicker.
The Clarity of Polarity
When leaders learn about polarity thinking, a lightbulb often turns on. The familiar battles, when framed as a polarity, look and feel different. Polarity thinking acknowledges the truth in both sides of a polarity and reorients attention away from “Who is right?” Instead, it invites a shift from either/or thinking to both/and thinking. When both perspectives are affirmed, entrenched resistance dissipates.
Something Jasmin said jerked Anita’s attention back to the family conversation.
“These Structure::Flexibility and Include::Exclude tensions feel really familiar, and I can’t put my finger on it,” said Jasmin.
Nirav agreed. “Yes, it’s feeling like our annual battle about allocating profits at the end of the year. I wonder if that is another polarity.”
Purvi suddenly perked up. “Yes! Every year, we argue about how much of the profits we should invest back into the business and how much we should harvest in dividends for the family. Maybe it’s an Invest::Harvest polarity.”
Rajesh looked down. He dreaded this annual battle — it was always heated. He and Jasmin vehemently argued for reinvesting back into the business, while Nirav argued for issuing dividends, and Purvi supported her son. Nevertheless, every year, Jasmin and Rajesh won. All the profits went back into the business.
“Well, let’s map it the way Anita showed us,” said Rajesh.
Five minutes later, they had mapped the Invest::Harvest polarity:
“Looks like we found our third polarity of the day,” said Rajesh.
“No wonder this conversation is such a battle,” added Jasmin. “Now that it’s framed in this way, I understand Nirav’s perspective much better. And I can see some of the risks of only reinvesting back into the business. Maybe we can use this both/and approach when we have the profits allocation discussion at the end of this year.”
“I’d appreciate that,” said Nirav. “I have a business idea that could use some seed money. Touring with the band is losing its appeal, and I’d like to open a venue that attracts musicians, comedians and corporate events. I’ve spoken with Jay about it, and he has some great ideas. If we issue dividends this year, I could use the funds to attract other investors. I’m envisioning a national brand in several years.”
“You know,” said Rajesh, “I’ve been thinking it’s about time for us to slow the reinvestments in the business and refine our production process before another big capex project. We have been investment focused, but our people aren’t using all this new technology efficiently yet. Perhaps we use this year to issue dividends before ramping investment back up in a few years.”
“I fully support that idea,” said Anita. “As your COO, I know that we have some operational kinks to work out and getting more equipment at this point would be premature.”
Purvi concluded the meeting by saying, “This is the best conversation we’ve had in years. Thank you, Anita, for teaching us about polarity thinking. My blood pressure feels normal for the first time in ages!”
Practicing Polarity Thinking
When polarities are framed as either/or problems, families get stuck in conflict or indecision because polarities have no right answers. Or, better said, there’s “right” in both answers.
Once you recognize that you face polarity, keep these principles in mind:
- Both poles in a polarity are necessary over time. Neither alone is sufficient to create and sustain high performance. When you focus exclusively on one pole, you are guaranteed to experience its overuses.
- We all have pole preferences. Our preferences are born from an aversion to the overuses of the opposite pole. When people with opposite pole preferences argue about who’s right, they tend to spin in place by “arguing the diagonals” because they are both right.
- To transcend any polarity, replace either/or thinking with both/and thinking.
Polarity thinking may not feel intuitive at first. It asks us to hold two opposing truths together at the same time, which isn’t how our brains are trained to think. Yet as F. Scott Fitzgerald famously wrote, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”