Chief executives most often work in a pressure-cooker atmosphere where two kinds of tension are present. The first kind is the natural tension that exists among top teams, in which talented, driven people who have to work together are also competing with one another for results, power, and stature. The other kind is performance tension: the stress caused by three pairs of important objectives that, in many companies, come into conflict on a daily basis. These are profitability versus growth, the short term versus the long term, and the success of the organization as a whole versus that of its individual parts. Over many years, we have worked with hundreds of CEOs as they confronted difficult situations, and we have observed that the most successful chief executives are the ones who get these tensions right. They have an uncanny ability to turn conflict, dissent, and disagreement into progress. Their mind-set is that having the “right fights” — embracing the right tensions and making them work for you — is the most effective way for companies and teams to move forward. As Brian Pitman, the former chief executive of Lloyds TSB, liked to put it: “You need real disagreement first to get true agreement later.”
The dynamics that exist within boardrooms and top teams vary widely, but most fall somewhere on what we call the relationship spectrum. At one end of this spectrum are the boards and teams that could be characterized as dysfunctional in a friendly way. The inclination to avoid conflict and to be in agreement is so strong that important issues never really get resolved. Consensus in these groups really means the absence of apparent disagreement rather than the presence of a shared commitment to decisions and actions. The lack of tension in the atmosphere fools everyone into thinking that the team members are aligned and collegial when in fact they are neither.
At the other end of the spectrum are the teams that are dysfunctional in an unfriendly way. This is where personal agendas, excessive pride, and turf battles over lesser issues get in the way of the real work that could improve a company’s performance and potential. The tension in the air is so thick you could cut it with a knife. But people are fighting against one another rather than for the company’s good.
The place to be is in between, as a productively tense team. Here there is enough like-mindedness on foundational matters (mission, goals, the facts, and so on) to allow the group to have the right fights in the right way over what matters most to the company’s current and future performance. The tension is real, but it creates a positive energy that moves the company forward. It is good tension — productive and healthy for the company.
Too little tension puts a company to sleep; too much bad tension diverts precious energy into the friction it creates. In our experience, creating a productively tense dynamic is essential to having a high-performance company. Therefore, instead of trying to eradicate tensions, leaders must choose to cultivate them productively.
Embracing the Right Tensions
Every business faces the opposing forces of the pull for more growth against the pull for more profitability; the demand to show profit today against the need to invest in the company’s future; and the call for optimizing the whole against the tendency of individual parts to maximize their own performance. The three performance tensions — growth versus profitability, short term versus long term, and whole versus parts — provide fundamental energy that can be harnessed to deliver superior, sustainable results. The ability of the board, CEO, and executive team to navigate these tensions largely determines their company’s ability to both create wealth and serve society.