THE FOUNDATION FORUM
WEDNESDAY 24TH APRIL 2013
The following article is a summary of an event we held in April 2013. Held at One Alfred Place on the 24th of April, the evening's subject was 'Power and its unspoken side-effects: The human ingredient central to growth but left out of the textbooks – how should we deal with it in the real world?' The three speakers were Baroness Morgan of Huyton, Former Minister of State and Director of Government at 10 Downing Street, headhunter and career coach, Douglas Board, and business writer and former Management Editor for the Observer, Simon Caulkin. Handily, Simon has also summarised the discussion below.
Power is the slipperiest of business concepts. It’s invisible and ubiquitous, like a force field. It’s a fact of life – unofficial ranking occurs everywhere in nature, even among fish – and like other facts of life it’s messy, unavoidable and subject to its own laws. Essential to getting things done, it doesn’t come when it’s called. It doesn’t necessarily have much to do with fairness, likability or even technical competence (except in its own application). Used constructively, it’s an electrical charge, generating pace, energy and momentum – ‘an organisation where power is used effectively is the most exciting place to be,’ as Baroness Sally Morgan, a one-time adviser to Tony Blair at 10 Downing Street and a minister in her own right, eloquently described her own experience to a packed Foundation forum audience on 24 April. Conversely, power used badly – and power that is unchecked and unchallenged – is a danger to people, organisations and governments. That too has become abundantly clear in the continuing backwash from the financial crisis in 2008.
Unchecked power famously corrupts – and, as management writer Rosabeth Moss Kanter has pointed out, its opposite, the powerlessness that results from abusive power, corrupts in its own way too.
Clearly, the ability to exercise power constructively is a necessary part of the CV of any effective leader, whether in politics or in business. Yet power, like sex, with which it has much in common, comes in high voltages, and like anything with a high voltage, it needs to be understood and handled with care. This is mostly poorly understood, on both sides of the power divide. Those who opt out of power and politics as incomprehensible or distasteful make the mistake of surrendering the field. As Simon Caulkin pointed out, those attracted by these qualities will thrust themselves forward to take up the space left vacant, whatever the suitability of their other qualifications. On the other hand, the more power the powerful accumulate, the more likely they are eventually to be undone by arrogance and overconfidence. People forget that despite the self-reinforcing and protective qualities of power, often effective for considerable periods, at some unpredictable point it bites back. Murdoch, Berlusconi, Goodwin, Gaddafi are potent examples of the bitten. Even Margaret Thatcher, perhaps the most effective legitimate user of political power in modern times, was finally brought down when her intolerance of rival opinions or sources of power left her without challenge to her own distorting sense of reality.
As Thatcher’s fall demonstrated, in politics there is a self-correcting mechanism that eventually kicks in: colleagues with an eye to the electorate and their own political survival will however reluctantly eventually unsheath the knives. But the checks and balances are much less developed in business, where most companies are the opposite of democracies, the last surviving centrally-planned dictatorships with all the formal power concentrated at the top. Perhaps this dirty secret is why it is so little explored, as both Caulkin and former headhunter and Treasury official, now academic Douglas Board noted. In management literature and discourse (although not in politics) power is an undiscussed and seemingly undiscussable topic, even though it is the currency of everyday business life.
Yet we are now paying a huge price for the governance failure that this silence (or coverup) has permitted in the shape of the never-ending global financial crisis. ‘Market-reliant capitalism allied with contemporary management technique is like a neutron bomb that has wiped out all capacity to make judgements about “enough” in organisations and society,’ charges Board. The combination of reliance on impersonal market forces and insistence that important decisions are taken by a small group of people in remote corporate boardrooms means that ‘there is no skills-building in modern managerial capitalism to make decisions about enough’.
‘Market-reliant capitalism allied with contemporary management technique is like a neutron bomb that has wiped out all capacity to make judgements about “enough” in organisations and society,’
Increasing the dangers of the concentration of power, the capture of corporate decision-making by small groups of executives has been accompanied in recent years by an equally massive increase in firm size. One of the reasons that power protects is that when it is great enough it gives the powerful the ability to write or at least influence the rules that they are playing by. In 2008 the problem was financial institutions that were too big to fail; now even bigger, they may be too big (i.e. powerful) to regulate and reform except on their own terms. Accumulating power, it needs hardly be said, is also a factor in the seemingly unstoppable rise in top executive pay, which then helps reinforce it.
So power matters, for both good and ill. What are the rules for using it well, and heading off its darker side? Morgan is clear from her political experience that it is the aligning of power with purpose that generates momentum, energy and empowerment of others. This is power as a force for good. Thus, ‘Tony Blair was a pretty effective user of power, and when I look back and analyse why I think it was, I can see that he knew what he was trying to do. He used the power of his position to restructure the organisation of government, to carry out what he wanted to do’. People have to understand why decisions are being taken, ‘because it’s ghastly being in an organisation where people don’t take decisions or you’re not clear why decisions are being taken’.
'He used the power of his position to restructure the organisation of government, to carry out what he wanted to do’
But the alignment is delicate and needs constant readjustment. In Morgan’s view, where Blair went wrong was betraying this greater purpose by failing to use his power to move his challenger, Gordon Brown, when he could, thus surrendering control of his own and the government’s destiny. Less obviously, the effort of keeping the two in harness had a time dimension. ‘I also think that people run out of road and out of steam. Recognising this timescale, and planning for your work to carry on by being prepared to hand over at some stage is really tough and really necessary’.
The experience of Blair’s successor delivers a different but equally salutary lesson. Apart from the period of economic crisis when he did deliver strong and effective leadership – ‘I think it was the only time he really knew what he was there to do’ – Brown’s example demonstrates that wanting and using power for its own sake is not enough. For Morgan, ‘his spending patterns [as Chancellor] were very closely connected to his desire for power and the top job, and that’s when he began to lose control’. The loss was both economic and political, with accounts of erratic behaviour and bullying that echo those of Mrs Thatcher 25 years earlier.
Is it possible to forestall the destructive side-effects of power? Board argues that some kind of institutionalised challenge is needed – with particular urgency in business. ‘Conflict and challenge need to happen in a much broader way through the organisation,’ he says, ‘and not merely for a very tiny elite’. This is partly a matter of skills – learning to fight and challenge in non-destructive mode (in itself a challenge to the alpha-male behaviour that got most board members to the top in the first place) – but also of will. Board suggests taking a leaf from politics and the office of the leader of the opposition, giving say two non-executive directors in rotation every year an official remit to raise the quality of challenge in the boardroom, with access to the staff and information necessary to do it.
'We need just enough of us to feel that we want higher standards from our leaders, and in the end our leaders tend to give us what we want.'
But in the end the biggest, most important and most interesting lessons of power may be for the individual. There are good personal and political reasons why we should all pay a lot more attention to grammar and syntax of power than most of us do. In fact it’s a duty. As Stanford Business School’s Jeff Pfeffer, quoted by Caulkin, put it, the best chance of having the powerful do good is having more of the good get powerful. ‘In any organisation the worst thing you can do is just follow and be quiet and put up with it,’ says Morgan. ‘You try to shift the paradigm a bit but if it’s not going to work don’t sit there and moan and still be there five years later because in the end that’s terrible for the organisation and dreadful for you as an individual.’ For Board, to get to the revolution, ‘the capitalist spring that I hope to live long enough to see, we need people in the workforce in companies to realise they don’t have to just accept all the decisions. They just have to, like humans will when pushed, decide they’re not going to be talked down to and treated like idiots... We need just enough of us to feel that we want higher standards from our leaders, and in the end our leaders tend to give us what we want. Let’s just ask for better, in our workplaces and in life more widely. That’s what the students in Tahrir Square did, after all.’
The Foundation's view
Our interest is how to make the conscious management of power into something constructive for all involved inside and outside an organisation.
We took three useful lessons from the evening;
For power in someone else to be willingly embraced and accepted over time by a numbers of others, it needs to be in pursuit of a purpose that’s bigger than the individuals involved.
We knew this mattered, but the way it was expressed during the evening shone a new light on why – it gives direction and energy to all involved, with the leader in service to the idea not the other way round
For power to be sustained there needs to be space for others to challenge and question, and the more effective the better.
This seemed counterintuitive as it would most obviously slow things down and reduce clarity of direction. But the belief that a decision has been properly debated will help its acceptance, and the decisions themselves will be improved through scrutiny too. Hence the ‘official opposition’ at the top of a business may not be as daft an idea as it first sounds. Social media can increasingly play this role in another way, allowing a persuasive voice from outside an organisation to be amplified and influential in a way that used to only be possible through media channels or other vehicles that required power to access
The least obvious lesson of all was the need to hand on power before your time is up if the reason for holding it truly was to pursue a higher purpose.
The power of an idea that is carried on through others can grow over time and become a cause. The alternative is to overstay a welcome, and the replacement when it comes is likely to need a fresh new direction to win the mandate for their elevation.
About The Foundation
We are a management consultancy working with all kinds of organisations to achieve customer-led success. This means tackling big organic growth challenges; growing faster, growing into new markets or fending off threats to growth by starting with what matters to customers and then making it work for the business as well.
The aim is to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren't challenged.
We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value.
This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.
By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get around the natural and limiting inside-out beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.
We answer three sizes of question:
Small – a new proposition or an improved customer experience
Medium-size – growing value per customer or improving retention (a sub-set of the former)
Large – creating customer-led business success, often by uncovering a true outward-looking purpose and the genuine belief needed for it to be acted on
Our clients include HSBC, JLR, O2, M&S and Ebay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth.
Behind our work our most distinctive characteristic is our team and their outlook. Each individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well.
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