Paradox view on strategy

“I always lie”

(Megarian school of philosophy, 4^th century BC)

With no doubt, one of the most famous philosophical (logical) paradoxes is the Liar paradox presented by the ancient Greek philosophers. If the statement above is true, the speaker is always lying, and then the statement made is false, because the speaker told the truth.

The paradox view has started to challenge the more conventional contingency approach since the beginning of the new millennium. As contingency theory highlights either-or decisions, paradox theory appreciates the both-and approach in strategy work and decision making (Jay, 2013). While contingency theory suggests finding the most suitable fit for each situation, to choose among competing tensions, and to choose the option that matches strategy with structure

(Chandler, 1962), paradox theory aims to acknowledge the tensions and effort put into divergent demands simultaneously (Cameron, 1986; Lewis, 2000; Smith &

Lewis, 2011). Paradox theory attempts to provide an alternative approach to the sometimes-oversimplified contingency approach.

Poole and Van de Ven (1989) categorize paradoxes on three different levels; the general, rhetorical and logical. The general level refers to all sorts of contradictions, and the term paradox is used loosely to show an interesting inconsistency. In rhetorical studies “paradox designates a trope which presents an opposition between two accepted theses” (Poole & Van de Ven, 1989, p. 563).

The third level, the logical (or philosophical), has a meaning special to the paradox theory approach, which "consists of two contrary or even contradictory propositions to which we are led by apparently sound arguments" (Poole & Van de Ven, 1989, p. 563). The Liar paradox above is a classic example of logical paradox.

Smith and Lewis (Smith & Lewis, 2011, p. 382) define a paradox as comprising

“contradictory yet interrelated elements that exist simultaneously and persist over time”. Putnam and colleagues (2016, 72) expand the paradox definition of Smith and Lewis to be “contradictions that persist over time, impose and reÀect back on each other, and develop into seemingly irrational or absurd situations because their continuity creates situations in which options appear mutually exclusive, making choices among them dif¿cult”. Although these elements seem easy to handle while they remain in isolation, when appearing simultaneously, they are irrational and complicated (Lewis, 2000, Putnam, Fairhurst & Banghart, 2016). The paradox approach appreciates the complexity of organizational life and encourages organizations to work with and through those paradoxes. The contradictions may occur in the model of identities, practices, perspectives, or demands (Lewis, 2000). Paradoxes have interested scholars in different contexts, such as a) leader-member relationships (Lüscher and Lewis 2008; Denison, Hooijberg, and Quinn 1995; Smith and Tushman 2005), b) management teams (Amason, 1996; Smith, 2014) d) private contexts (Andriopoulos & Lewis, 2010;

Jarzabkowski, Le, & Van de Ven, 2013; Sitkin, See, Miller, Lawless, & Carton, 2011), e) hybrid contexts (Jay, 2013), f) public organizations (Beech, Burns, Caestecker, MacIntosh, & MacLean, 2004; Haveri, 2006; Jarzabkowski & Sillince, 2007; Roberts, 2002) and g) social enterprises (Smith, Gonin, and Besharov 2013).

2.3.1 Organizational paradoxes

In this study, organizational paradoxes are viewed using the Smith and Lewis (2011) categorization, in that they are dividing into learning, organizing,

belonging, and performing. A learning paradox refers to the knowledge base on an organization. This form of paradox arises especially in organizational change situations. In such change situations, actors often fail to capture the new knowledge and incorporate it into existing mental models, routines and structures (Lewis, 2000). Exploration and exploitation (O’Reilly & Tushman, 2008) can be seen as one of the core elements of the paradox of learning (Smith, 2014; Smith &

Tushman, 2005). The familiar old incremental development seems often a better, easier, and safer choice than the new and unknown. Explorative learning and radical innovation requires double loop learning (Agryris, 1991; March, 1991;

Raisch & Birkinshaw, 2008). The core question of the learning paradox would be how to simultaneously support radical renewal and innovations while exploiting existing knowledge and resources.

The paradox of organizing also occurs particularly in periods of change. It appears from the tensions between stability and flexibility, collaboration and competition, and empowerment and direction (Lüscher & Lewis, 2008; Smith & Lewis, 2011, p.

383). The paradox of organizing deepens understanding of contradictory organizational processes. For example, organizational routines are important to managing the everyday life of organizations, while simultaneously routines often inhibit required changes. To balance between routines and change is paradoxical, yet central to success (Feldman & Pentland, 2003). The organizing paradox also occurs when thinking of organizational structures, as illustrated in this dissertation’s second article. The tension between separation and integration when re-structuring a manufacturing company toward servitization was one of the most challenging among the companies studied. The core question of the organizing paradox would be how can we maintain efficiency and simultaneously achieve agility.

The paradox of performing arises from tensions between multiple goals and competing strategies. Often short-term performance, and the desire for financial excellence determine strategic choices in organizations, although it might be, that long-term sustainability requires balancing multiple dimensions and goals simultaneously (Cameron, 1986; Smith & Lewis, 2011). The core question of the performing paradox would be how to be successful in both the short- and long-term.

The paradox of belonging has its roots in collective and individual identity. The commonly used phrase “think globally, act locally” offers a good example of a belonging paradox. As organizations become ever more global, simultaneously their local identities foster tensions between different units and organizational levels (Lewis, 2000; Smith & Lewis, 2011). Employees are concurrently taking part

in different groups and tasks with different types of mental models and identities, as noticed also in this dissertations article around servitization paradoxes. These tensions between identities requires an organization to acknowledge and appreciate different identities inside the organization to be able to balance and to work with them. Thus, the latest research around identity suggest identity is a process instead of being some kind of stable position (Gioia & Patvardhan, 2012;

Gioia, Patvardhan, Hamilton, & Corley, 2013). Even though identity might be more changeable than stable, competition between different identities inside of an organization seems to be inevitable. The main question of the belonging paradox would revolve around who we are as an organization, when we are continually changing.

This study connects the paradox view in strategy work by building a framework for paradoxes of servitization, and later on, integrating the paradox view with cognitive and sociomaterial view. Strategic change companies face during servitization fosters paradoxes, that organizations cannot solve by choosing either/or solutions as suggested in previous strategy studies. Paradoxes force organizations to balance between at first sight illogical aspects, such as having simultaneously product engineering mindset and building customer-centric solutions mindset, and exploiting the product business while simultaneously exploring the solution business. By doing so, companies enable both logics to grow, and aim to balance between the logics to appreciate and nurture both sides of the paradoxes.