Applying The Stockdale Paradox To Business

"Applying The Stockdale Paradox To Business" by CEO turned business consultant, Denyse Whillier

Earlier in the week, I write an article about where it all went wrong for the 178-year old global travel group, Thomas Cook, which went into administration on 23rd September. Thomas Cook had a perfect business model for the twentieth century when two world wars, rationing and financial austerity imposed frugality upon Britain. By the affluent latter part of the twentieth century, Brits had changed. They wanted tailor-made trips, more adventurous choices, offbeat travel and sustainable tourism.

Times had changed and there was a revolution in travel and consumer behaviour. The internet and the rise of budget airlines made holidays cheaper and more accessible than ever before. But other factors combined to bring Thomas Cook down. The board hoped that the business could continue without making any significant changes, despite an outdated business model, high overheads, low revenues, slender profits and crippling debt. It failed to confront reality head-on and stuck its head firmly in the sand, despite a number of red flags.

All business leaders face significant challenges and adversity along the way, whether we’re running a global travel company like Thomas Cook, or trading from our kitchen table. But if we’re to prevail, we have to have unwavering faith that our circumstances can be changed, while confronting the brutal facts of our current reality.

You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they may be.
— Admiral James Stockdale

When I’m working with struggling businesses, I keep the story of Admiral James Stockdale in the forefront of my mind. It offers an invaluable lesson in how to stay positive during a challenging situation without falling prey to either magical thinking or feelings of hopelessness.

I first came across Admiral James Stockdale when reading the book, Good to Great, by the management guru, Jim Collins. Collins and his research team set out to understand the common traits of those they classified as “great” companies, and why they’d outperformed their “good” competitors over a 15-year period or more.  One factor common to all the truly great companies Collins deduced was called The Stockdale Paradox.

The Stockdale Paradox is named after Admiral James Stockdale , the highest ranked US officer to be held prisoner during the Vietnam War. Stockdale was tortured and beaten during this 8-year ordeal. He lived out the war without any prisoner rights, no release date and no certainty as to whether he would ever see his family again. Nevertheless he shouldered the burden of his command, doing everything he could to increase the number of prisoners who would survive unbroken, while fighting an internal war with his captors and their efforts to use the prisoners for propaganda. Tortured over twenty times, at one point Stockdale beat himself with a stool and cut himself with a razor, deliberately disfiguring himself so that he could not be put on a videotape as an example of a well-treated prisoner.

Asked in an interview by Jim Collins how he kept himself going, Stockdale explained that he never lost faith in the end of the story. He never doubted that he would make it out of Hanoi and turn the experience into a life defining event. Those that didn’t get out were the optimists!

Stockdale noticed that that it was always the most optimistic of his fellow POW’s who failed to make it out alive.  “They were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go.  Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart.”

What were the optimists missing?  According to Stockdale, these POWS struggled to confront the brutal reality of their situation. In wrestling with life’s challenges, what important is how we deal with the inevitable challenges. Stockdale approached his internment with a very different mind-set to ‘the optimists.’.  He accepted the reality of his situation and focused his efforts on doing everything he could to lift the morale and prolong the lives of other prisoners.  For example, he created a tapping code the prisoners could use to communicate with each other and developed a milestone system to help prisoners cope with the torture they had to endure.

Through the course of the research for Good to Great, Collins and his team observed a similar attitude in the leaders of what they termed good-to-great companies which they named the Stockdale Paradox. They came back from difficulties stronger because they maintained unwavering faith that their circumstances would change and they would prevail, while confronting the brutal reality of the challenges they faced.

The Stockdale Paradox is the signature of all those who have achieved greatness. When all is said and done, the great leaders are able to strip away the noise and clutter, and focus on the things that have the greatest impact; to operate from both sides of the Stockdale Paradox, never allowing one side to overshadow the other.

OVER TO YOU

Had you heard of The Stockdale Paradox before? How could you apply it to the way you run your business?  I love reading your feedback so please do take a moment to tell me in the comments box below.

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OVER TO YOU

Have you been like an ostrich in your business and stuck your head in the sand instead of confronting What Jim Collins calls the brutal reality?  I love reading your feedback so please do take a moment to tell me in the comments box below.

EXPLORE THESE ADDITIONAL RESOURCES

If you enjoyed this article, you may also like:

If it's your first time here, you may also want to check out the resources I've curated to help you grow your business. These include some of my most popular content.

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WEEKLY LETTERS

Every Friday morning, I connect with my community through Weekly Letters. For me, there’s nothing better than time to sit down, reflect and just write. Especially when accompanied by a favourite Spotify playlist, the first coffee of the morning, and the promise of a new day ahead…

Weekly Letters are a way to keep in touch and share insights, words of encouragement and business inspiration; things that I find helpful and think that you will too.