Limit Your Power, Limit Your Business

Less is more when it comes to new management strategies

Legacy corporate leadership is based on the ancient military idea that the few lead the many. The general makes the decisions, and the army marches off to war. On the business battlefield, draconian leadership styles still characterise many companies. Even in startups, where the constraints of legacy infrastructure are avoided, the CEO often retains the vast majority of power.

In corporations, power is synonymous with control. If you have power, you make the decisions. But when power stays in the hands of the few, decisions lack scope, diversity and dimension. How can organisations distribute power, and what are the benefits of doing so?

Learning to let go

According to business strategist Gary Hamel, the biggest hurdle to organisational performance is a legacy management model that empowers a few but disempowers the many. Lean strategies, he argues, don’t go far enough to address this problem. Instead of thinking about control, businesses should shift their focus to freedom.

In dynamic markets, hierarchical autocratic management is a bottleneck for innovation. Decisions cannot be made without the all clear from senior leaders, stifling development and missing time sensitive opportunities. Employees are made to compete with each other, causing friction between colleagues. Workers are treated as subordinates, and as a result their capabilities remain untapped.

However, when teams are given the freedom to act on their own initiatives, a much healthier culture emerges. Employees feel empowered and trusted, which creates respect rather than resentment. Productivity improves as employees at all levels work collaboratively to achieve common aims. And, as the great white male still dominates the corporate sea, distributed decisions are more likely to be made by diverse groups.

It’s time to cooperate

Limited power means limited decisions. However, when power is distributed across businesses, innovation thrives. In pursuit of this ideal, many businesses operate as cooperatives. In the cooperative model, the enterprise is owned by its stakeholders: its employees, its users, its investors, or a combination of all three. A cooperative can also be a group of other cooperatives, or operate on a cooperative platform. These organisations have a democratic structure whereby the majority of members must agree on a decision before it can be made. Another key characteristic of cooperatives is that they are actively concerned with the cultural, economic, and social well being of the community. It is telling that this style of business management is twice as likely to survive its first five years than any other.

So, other than becoming a cooperative, how can businesses distribute and decentralise power? Defining purpose is an important starting point, so that teams understand what problems they are trying to solve. Rethinking vocabulary can be particularly useful, too. Avoiding words like ‘superior’ and ‘subordinate’ reduces the hierarchical mentality that is hard to break away from, even in startups. In cooperative and truly distributed organisations, there is no need for these terms due to democratic values.

Perhaps the most difficult part of moving away from autocratic management is establishing trust. If management doesn’t trust its teams, it will fail to give them a tangible level of power. Creating a workforce that can be trusted starts at the recruitment level, to ensure that the right individuals are placed in the right roles.

The silent CEO?

Flexible, innovative businesses are no longer comprised of the bosses and the bossed. The reign of traditional, bullish, and target obsessed leaders is well and truly over… But the business leader of tomorrow is certainly not the silent CEO. Instead, successful leaders are listeners who encourage their teams to act independently. They are sensitive to the ideas and sentiment of their workforce and target audience. By distributing power, they show that they trust their employees, and build a culture that rewards innovation. Mistakes are learnings, not failures.

Cooperative businesses take distribution and decentralisation to the next level by completely abandoning hierarchies. Even for businesses that don’t fit the cooperative model, there are various tactics that can help to move towards collaborative, distributed power. The bottom line, though, is trust. If executives can trust their workforce, they can trust that their decisions will be in the best interests of the business.

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