AMANDA KERSEY: 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 to make stronger choices. The same approach can help you address trade-offs in your own organization. You know, I remember host Curt Nickisch and I having a great time producing this episode. The beginning still makes me smile.
LEGO MOVIE THEME SONG
CURT NICKISCH: 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
LEGO MOVIE :
LUCY: Prophecy states that you are the most important person in the universe. That’s you, right?
EMMETT: Uhhhhh. Yes, that’s me.
CURT NICKISCH: Behind the scenes, the Lego group went 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 Choices, 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. Jennifer, thanks for coming in and talking with the HBR Ideacast.
JENNIFER RIEL: It’s my pleasure. Happy to be here.
CURT NICKISCH: So the Lego movie, amazing success, but it could have turned out much differently, right?
JENNIFER RIEL: Absolutely. And interestingly enough, I didn’t know until I had the chance to talk to Jørgen Vig Knudstorp, 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.
CURT NICKISCH: I didn’t know about this either.
JENNIFER RIEL: 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 going to 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 prioritize 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 Jørgen 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 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. 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 going to do,
CURT NICKISCH: Meet in the middle, the happy medium.
JENNIFER RIEL: 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 tradeoffs. You can’t be everything to everyone. And that’s true. You absolutely have to make tradeoffs as a leader. What we found, Lego is a great example of this. Jørgen is a great example of this, is that there are some problems for which making the tradeoff 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 Jørgen’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 going to 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 going to do that, I can ask for something that I believe is going to 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, 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.
CURT NICKISCH: What would most companies have done?
JENNIFER RIEL: What most companies would’ve 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. It’s sort of the catch-22, you end up producing the result that you were trying to avoid. 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 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 is 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 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.
CURT NICKISCH: 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 walking into the situation. And you’re saying that that’s kind of possible if you apply integrative thinking to business problems.
JENNIFER RIEL: 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 you, 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 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.
CURT NICKISCH: 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 Piers Handling when he became festival CEO in 1994. Handling thought about the Cannes Film Festival as another model. It’s exclusive. It’s got this juried prize, the Palme d’Or. Cannes 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 buzzworthy too? That’s where integrative thinking came to play. Here’s Handling in 2012.
PIERS HANDLING: 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.
CURT NICKISCH: What handling really figured out is that Toronto’s huge diverse audience of film goers wasn’t a liability. They were actually an asset
SLUMDOG MILLIONAIRE: Giving chai for the foreign
CURT NICKISCH: Take “Slumdog Millionaire”. It won the People’s Choice Award and then went on to win eight Oscars.
SLUMDOG MILLIONAIRE: Ladies and gentlemen, What a player.
CURT NICKISCH: Two years later, The King’s Speech took the audience prize.
THE KING’S SPEECH: What was your earliest memory? I’m not here to discuss personal matters. Why are you here then?
Because I bloody well stammer.
CURT NICKISCH: And Four Academy Awards. Turns out TIFF’s audience is a powerful market predictor.
JENNIFER RIEL: 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, someone had said to you in the year 2000, the big hit movie of the year is going to be a Mandarin language film in which warriors dance on treetops, right? Not many people are going to say American audiences are going to 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? And I think in Pier’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.
CURT NICKISCH: So let’s break this down.
JENNIFER RIEL: Yes.
CURT NICKISCH: How do you do it?
JENNIFER RIEL: It’s a four stage process. Stage one, get clear about what 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, alright, 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, 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. 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, alright, 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. That’s where the most tension is. We can’t be totally centralized and totally decentralized at the same time.
CURT NICKISCH: Right? Force yourself not to find the balance.
JENNIFER RIEL: Exactly.
CURT NICKISCH: 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.
JENNIFER RIEL: 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 intention. 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’ve 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?
CURT NICKISCH: At which step do most companies stumble?
JENNIFER RIEL: 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 times you’ve had some time to think,
CURT NICKISCH: 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 got to start over?
JENNIFER RIEL: 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 believed as 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.
CURT NICKISCH: Jennifer Riel, thanks so much for taking us through this process.
JENNIFER RIEL: It’s my pleasure.
AMANDA KERSEY: We’ll be back next Wednesday with another handpicked 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 at hbr.org. This episode was produced by Curt Nickisch and me, Amanda Kersey The “On Leadership” team includes Maureen Hoch, Rob Eckhardt, Erica Truxler, Tina, Tobey Mack, Ramsey Khabbaz, Nicole Smith, and Anne Bartholomew. Music by Coma Media. Thanks for listening.