Unlocking the Hidden Value of Conflict

To grow, transform, and succeed, companies need to change in ways that make them better and more successful; and in many cases, they must do so with limited time, energy, talent, and countless other resources. These constraints require leadership and management teams to make substantive choices about objectives, methods, roles, rewards, and other material issues. A natural result of making these choices is conflict. In fact, choices and conflict go hand in hand: While conflict of any kind often gets a bad rap–both in our everyday lives and in the business world–what I refer to as “first-order” conflict is essential. This particular kind of constructive conflict is created by issues of substance that involve choices where the tradeoffs between those choices are meaningful. In these instances, conflict is the forcing mechanism that makes us think through options, potential consequences, and ultimately, the choices we must make.

Groups, like individuals, must regularly make critical choices, processing and mentally calculating the pros and cons of those choices. The resulting conflict has the possibility of generating creative tension that can lead to exciting new innovations. It can also drive groups to think more deeply and ultimately make better decisions. For high-performing teams, it can force them to explore the boundaries of what is possible and what is not possible in order to maximize progress. All in all, first-order conflict is highly valuable–but only when managed effectively.

When First Order Conflict Goes Wrong

A couple of years ago, I worked with the CEO of a large industrial company. The CEO was the kind of corporate leader you want to work with: He was a good communicator, smart, ambitious, and driven, while also being a caring and considerate businessperson. His goal was to have his company be an early yet savvy adopter of digital technology. I worked with the CEO and his Executive Team to build a digital vision for the company. Like the CEO, the resulting vision was smart and ambitious, and his team communicated their full support for the vision.

After the vision work was completed, a small strategy team developed a proposal for managing the transformation. This team proposed forming a new cross-functional organization–a Digital Transformation Office–to plan and execute the transformation. They made the recommendation to the Executive Team, and with lots of good discussion and head-nodding, the meeting seemed to go well. As it was ending, however, the CEO got very quiet and seemed to be mentally surveying his team. He thanked everyone and said he wanted to spend some time thinking about it.

The meeting adjourned peacefully, and everyone went back to their offices. That is when conflict erupted: Back-channel phone calls were made, concerns raised, and coalitions formed. The Executive Team moved from vocal support to covert conflict, and the proposal for a Digital Transformation Office was in trouble.

The proposal surfaced the first material choice on the path to the digital vision: The Executive Team could have had a healthy discussion about the proposal and dealt with this constructive, first-order conflict quickly and effectively. Instead, they generated a whole new layer of second-order conflict that would take two months to unravel and resolve, creating plenty of collateral damage along the way.

All Conflict Is Not Created Equal

“Second-order” conflict is something altogether different than first-order conflict. It is a layer of destructive conflict generated by the poor management of first-order conflict. This kind of negative conflict results from a failure to communicate, misinterpretation of what is communicated, misaligned incentives, and poor behaviors like bullying and passive-aggressiveness. Second-order conflict is in no way constructive and is often riddled with anger, disappointment, blame-shifting, and hurt feelings. One way to view it is as a break down in conflict process management: When there is a failure to process first-order conflict constructively, the result is a defective or toxic conflict that needs to be addressed and corrected as soon as possible. If poorly managed or avoided for long periods, second-order conflict can grow exponentially into a massive conflict debt that makes constructive management of first-order conflict almost impossible. Paying down this conflict debt can be very difficult due to the amount of time required to deal with emotional issues, lost trust, and other collateral dysfunction.

Does Your Company Suffer From Second Order Conflict

Conflict management is an inevitable challenge for every company. The question is, is your company constructively managing first-order conflict, or are you letting it devolve into second-order conflict.

Not sure? Ask yourself the following questions about your organization:

• Are conflicts resolved through compromises that later unravel and drive more conflict?
• Do people agree during meetings, then go back to their offices and start lobbying to undermine a decision.
• Do team members complain behind closed doors about other team members being unreasonable?
• Do colleagues get frustrated with ongoing dialogue and become reluctant to discuss the issues?

If you witness these types of behaviors (see a full list of self-diagnostic questions) in your company, then it is official, you have a conflict management problem that is preventing your company from realizing its true potential.

But all is not lost. Read on to understand the origins of second order conflict and how to fix conflict problems.