August 2017

Power and influence are often described as one and the same, but they are actually very different. My life in business has shown me that if you want to achieve lasting change, you must appreciate that difference.  

When people talk about power, they usually think of it as the power of coercion: the ability to make others do what you want them to do. People are “subordinates,” and they aren’t asked for their thoughts or their consent. They are just told what to do. In this paradigm, power depends on coercion and punishment to ensure that instructions are followed.  

Early in my career, looking at the people around me, I thought that leadership success was obtained through this sort of coercive power. I relied on my position in a hierarchy to get people to do what I wanted, knowing they understood that I had the power to withhold approval and to impose penalties. People followed instructions because they were afraid of what would happen if they didn’t.

But I saw that when the fear of coercive power lessened, so did the ability to get people to follow instructions without their voluntary cooperation. I saw projects managed through coercive power crumble and fade away as soon as that power to penalize became ineffective.

Once I realized that concrete tasks and achievements created by coercion dissolved when coercion stopped, I wondered how I could ever create lasting organizational change, cultural and otherwise. What I had thought was lasting power was in fact very ephemeral. True power was not “getting” people to do what I wanted. True power was giving them a reason to choose to follow my lead. I needed to share a vision and make it compelling enough that people would want to bring it to fruition. I learned that influence-based power is much more effective than coercive power.  

Influence-based leadership is also much subtler than leadership through coercion. When influence is most effective, people act in concert because they share a vision of an outcome and have a sense of being invested in achieving that outcome. Who had the idea or gets the credit is less important than getting buy-in from the group. 

As I looked around, I saw that the most influential leaders were often not at the head of a parade telling people what to do. Instead, they were spectators along the parade route, happily eating popcorn and enjoying the parade they helped start. They knew that power is not something asserted over others. It is something that people assert for themselves in support of a common vision. When each person is vested in an idea or a mission, each person will defend it and work to realize it, not because of fear, but because of the satisfaction that will come with achieving the goal. 

I believe that this lesson of business leadership should be applied more often to policy making and governance. By focusing on power through coercion rather than influence or consent, many of our political leaders legislate on partisan lines without the support of those holding contrary views.

Perhaps we should respect our history more. Our nation is based on the concept of consensus and getting buy-in from the governed. That is what made it different from the autocracies and monarchies our ancestors came here to escape. Our system works best when we honor its founding principles.  

Business leaders know that lasting change in business only occurs when we effect that change through consent and agreement. It’s a lesson that our current political leaders would be wise to remember as they consider the path ahead.  

Change obtained without consensus is unlikely to last.

 

 

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Our region’s economy is rapidly reaching a crossroads. Many of the problems we face cannot be addressed through blanket policy prescriptions. So how about putting aside our partisan bickering and looking at the tasks at hand?

As a business person, I’d like our politicians to acknowledge that there are no absolutes when it comes to creating conditions for successful economic growth. Every successful business person knows that growing a business is never clear cut. We must listen to new ideas and try new solutions when the old ones aren’t working. Inflexible business owners rarely succeed in the long run because they can’t respond to changing circumstances.

If a dogmatic and inflexible approach doesn’t work for business, what makes us think it will work for the economy? I’ll admit that it’s somewhat comforting to believe that a rosy economic future can be assured if we follow simple policy prescriptions. All would be well if we had a higher minimum wage. Tax cuts are what is needed to grow our small businesses. All regulations are bad. And so it goes. 

Instead of focusing on absolutes, we should acknowledge that our economy is an imperfect amalgam of businesses that historically has grown best when we rely on data to create policies and approaches that maximize economic opportunities. It’s never been effective for us to merely take a set of prescriptions on faith. When we admit that we live in that gray area where outcome matters more than ideology and when we are willing to acknowledge that well-run government coexists with well run businesses, that’s when our economy grows the fastest.

The greater Washington region faces real growth challenges. Our highways and roads are crowded and getting worse. Public transportation is failing, even as we build town centers in reliance upon it. Our local employers need tens of thousands of skilled workers for our most promising new industries but can’t find them. Housing is unaffordable, and young promising workers are moving elsewhere to seek their futures. New technologies are being created in our region and never commercialized. Export opportunities go unmet because our business people don’t know how to seize them.

These are issues that can’t be solved through an invisible hand acting on its own or through blanket tax cuts or cutting red tape. If the only rule that matters is individual profit maximization, then any problem that requires collective investment or burden sharing goes unsolved. Conversely, if the only rule is that government can do everything, then we may lose the dynamic influence of the individual profit motive in creating new solutions to these large challenges. We need a blend of the best of everything, and we need to be willing to accept that growing an economy is messy. None of us will get everything we want and no good solution will be ideologically pure.

As we look at our politicians, we should ask them to demonstrate that they are willing and able to provide specific solutions to the problems at hand. We should demand that their thinking be clear and that proposed solutions be thoughtful and reflect real-world data and facts, rather than talking points tied to ideological purity or warmed up proposals prepared by well financed political action committees.

We don’t run our businesses that way. Why should we ever tolerate such inflexibility and incuriosity in how our economy is grown?

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Military leaders are shaped by the nature of the conflicts they face. When they become business leaders, as they often do, their leadership styles reflect the times in which they served. I was reminded of this when I spoke recently with Chris Fussell, the managing director of a consultancy called the McChrystal Leadership Institute.

Until recently, the prevailing view of optimal business leadership has been a “top-down” approach. Top-down business leadership centralizes decision making and requires concerted actions by subordinates who are evaluated by how well they perform against strictly defined duties and goals.

The top-down approach has been strongly influenced by military experience. Militaries everywhere, including the U.S. military, have traditionally followed a top-down model. The types of wars they fought (or prepared to fight) required highly orchestrated activities of tens or hundreds of thousands of people on a battle front. It also required managing highly complex logistical chains, to support the movement of these large armies.

For this reason, 2oth century experience was that when military leaders entered the business arena, their skills were a good match for prevailing conditions. At that time, the world economy was dominated by large companies making and selling complex industrial products that required strict manufacturing conformity. Success meant achieving economies of scale that would keep costs down and sales high.

By the beginning of the 21st Century, however, the business world was rapidly and irreversibly changing. Companies like Google, Microsoft, Facebook, Amazon and others were disrupting existing business models. Companies based on new technologies in transportation, biotechnology and energy were challenging existing market leaders. Meanwhile, instantaneous communication was changing how people coordinated and interacted around the world. Success in business now required agility. Top-down leadership was often too slow to respond to rapidly changing market conditions.

While this was occurring in the private sector, people like Fussell were coming of age as military leaders. They realized that the trends that were changing business were also prevalent in warfare. Instantaneous communications and the broad availability of technology had created adversaries that used small coordinated groups to act quickly. It was no longer sufficient for the military to prepare to fight wars along a battle front. These adversaries would never fight that way

What was required were “servant leaders,” people who Fussell describes as having the skills to create an organization that combines strategic oversight with small group agility. Servant leaders provide transparency to subordinates. They don’t prescribe in granular detail the “how” to execute strategic vision, but fully express the “why.”

Subordinates are given autonomy to make rapid decisions in the moment, if necessary, to achieve the strategic goals of leadership. But it is not complete autonomy. Servant leaders require accountability against their expressed goals. This ensures that key values such as ethics and compliance with legal and other norms are honored and that the overall strategic objectives articulated by the leader are followed.

For Fussell, the key to servant leadership is that it is “not enough to talk about it. You have to create a process that drives communication with enough speed and transparency.” This allows groups to form and operate with autonomy, but within a structure of accountability. You get people to work together not by telling, but by showing.

Now an organizational expert helping businesses grow, Fussell regularly sees that the skills he and his peers gained through military service have broad application in today’s rapidly changing economy. He has helped many businesses use servant leadership to make a significant difference.

And in the process, he follows in the footsteps of so many prior military leaders who successfully applied their leadership lessons to business.

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Successful entrepreneurs learn from failure as well as success. I was reminded of this last week when I looked into Loci, a start up in the DC region that a growing number of people are talking about.

Loci is a very interesting mash-up of two big market opportunities: intellectual property creation and Blockchain database application. In talking with John Wise, Loci’s founder, I found his journey in creating the business as interesting as the business itself. His story of failure and reinvention is valuable for anyone who either is thinking about starting a business or is mired in the weeds of trying to succeed and wondering if it’s time to quit.

Wise’s vision was to create a marketplace of invention ideas – a place where inventors could see not only what had been patented, but also what had been invented and had not been patented. He believed that a comprehensive catalogue of inventions would dramatically change how inventions were created, protected and sold. The problem was that the technology didn’t exist to implement that vision.

Over time, after a number of failures, he and his team were able to develop a technology approach that supported the comprehensive information collection his marketplace needed. But commercial success did not follow.  There was an unexpected issue: solving the technology problem wasn’t enough.  As Wise learned, “inventors didn’t want to freely share their unprotected ideas.”

What had been a technology challenge became a business model challenge: how to allow inventors to use and benefit from his marketplace without giving up confidentiality. Wise solved this problem by selling his technology to lawyers, who could then remarket Loci’s technology to inventors. Selling the technology in this way, Wise and his team could utilize the confidential relationship that exists between attorney and client.

Now that Wise had solved the technology challenge and the customer adoption impediment, he had created something that all entrepreneurs dream of: a successful business model that matched his technology with paying customers.

Yet he was still not satisfied, and he asked himself how he could grow his business more quickly. Was there a way to make his marketplace large and complete his original business vision? How could he protect an invention’s confidentiality without using lawyers as intermediaries?  

The missing piece was Blockchain, a rapidly emerging data storage methodology. Blockchain is becoming widely known in startup circles as the backbone of Bitcoin and other cryptocurrencies, but it has broader application. Wise and his team were drawn to its permanence and to the inherent confidentiality of a Blockchain database, features that made it very attractive as the last piece of the puzzle.

Applying this last insight, Wise believes that after a number of failures, he and his team have learned and positioned his business for rapid commercial growth. He views the growing interest in his company and its approach to inventions as validation for his vision and is excited for Loci’s future. But he doesn’t ignore how far he has come, finding recent workdays “almost a lucid dream.”  

Moreover, Wise believes that his experience dealing with prior adversity makes him more confident and prepared. He says that “a year ago I would be freaking out. Instead, today I propose a deal” when he gets calls from much larger potential partners.

Having gone through his startup experience, what advice does Wise give to other entrepreneurs? For him, it is essential to embrace failure and learn from it. It’s an inevitable part of being an entrepreneur, and you “must accept and understand that you are never right, and there is always a better way to do it.”

His conclusion? “Everyone has the will to succeed, but few have the energy.”

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