Not long after he took the helm of General Electric in the early 1980’s, Jack Welch had his Eureka! moment. Just like Archimedes, Welch was bathing when he decided that GE would quit doing business in all industries in which they could not be the number-one or number-two players. It was that decision more than any other that is credited for positioning GE as the belle of the ball for the remainder of Welch’s corporate tenure.
But I think the secret to the success of Welch’s decision was less about his insight than his ability to implement that insight. Any manager who has ever cut a business line, killed a department, or halted a promising product’s development knows that the decision to quit pursuing one path in favor of another course is one of the most difficult decisions to make. Yet it is absolutely vital to success. Steve Jobs once told a group of Stanford students that “the secret to innovation is saying ‘no’ to a thousand things.” I think the same is true of our careers and our personal lives.
The Paul Principle states that progress in virtually every area of life and work depends directly on our ability to consistently and frequently rob from Peter to pay Paul. Every situation has both Peter factors and Paul factors. Both sets of factors are equally “good” when viewed independently of each other. However, when they find themselves in the same situation competing for attention, time, energy, money, or other resources, Peter factors and Paul factors cannot peacefully coexist.
Think about the experience of buying a car. Most car-buyers consider the important factors to be features like price, quality, safety, styling, gas mileage, and so on. The problem is that no single vehicle will beat all the others in every category. The car that wins on price loses on safety and styling. The car that wins on styling loses on safety and price. Despite the Smart Car’s amazing gas mileage it has no storage space for the camping equipment, and out on the freeway it feels about as safe as a souped-up Vespa. The only way to get back on the road and move on with your life is to determine which are the Peter factors — the things you would prefer but that you are nevertheless willing to rob from (maybe safety and styling) — in order to satisfy the Paul factor (maybe price).
The same is true for whether you spend your free time playing with your kids, getting ahead in your job, exercising, calling your loved ones, having a drink with some friends, volunteering at your church, or — heaven forbid — relaxing. As parents, you have to make a sober evaluation of soccer practice, piano lessons, homework, video games, family dinners, and at least 13 other perfectly healthy ways to fill a kid’s day to determine which are the Peter opportunities and which are Paul opportunities.
Mary Frances Luce of Duke’s Fuqua School of Business has discovered that robbing from Peter to pay Paul is in fact so emotionally jarring that people engage in all sorts of mental gymnastics to avoid it. Instead, the tendency is to run ourselves ragged and bite off way more than we can chew just so we don’t have to let go of Peter. That’s why those leaders — whether of corporations or households — who do regularly apply the simple logic of the Paul Principle wind up much happier and more successful.
Thankfully, psychologists have made an enormous amount of progress on this topic in recent years. We now know the three forces that enable us to consistently apply the Paul Principle. I'll cover those next week.