In 2015, Old Power Triumphed Over New Power, Again and Again

December 23, 2015, 4:36 PM UTC
Bomb downed plane in Egypt, says Russian security chief
MOSCOW, RUSSIA - NOVEMBER 17: Russian President Vladimir Putin is seen during a meeting on the Russian plane that crashed in Egypt on Oct. 31, in Moscow, Russia on November 17, 2015. Alexander Bortnikov, head of Russias Security Service FSB, Russian Defense Minister Sergey Shoygu, Russian Foreign Minister Sergey Lavrov, Chief of the General Staff of the Armed Forces of Russia, Valery Gerasimov and head of Russia's Foreign Intelligence Service Mikhail Fradkov attended the meeting. (Photo by Kremlin Press Office/Anadolu Agency/Getty Images)
Photograph by Anadolu Agency/Getty Images

In 2015, “old power” people and tactics triumphed in politics and business around the world. Sometimes, good people behaving nicely did well and received deserved plaudits, but not often enough.

This year, there was lots of talk about transparency, holacracy, the power of social networks to constrain selfish or dishonest behavior, and so forth. Meanwhile, the facts of leadership and power remained anchored in a social dynamic that Machiavelli would easily recognize.

The concept of new power was named by CNN as one of the top ideas for 2015. Unlike old power, which is concentrated, hoarded, and leader-driven, “new power is open, participatory, and more transparent.” It’s a nice narrative that presumably reflects the new, purpose-centered ethos of the millennial generation, the reality of more rapid communication, and the ubiquity of social networks and the rapid transmission of information. But I don’t see much evidence of new power in the world.

At the national level, the Arab spring has been replaced by Abdel Fattah el-Sisi in Egypt, while Bashar al-Assad perilously hangs on in Syria. Eastern Europe seems to be embracing authoritarian leaders. In Hungary, there is Viktor Orban, who has significantly increased the government’s power in society, while in Poland, Andrzej Duda and his political party are trying to eliminate any judicial checks on their authority. In Turkey, fundamentalist strongman Recep Tayyip Erdogan won reelection. Marine Le Pen of France, president of the right-wing National Party, with its anti-immigrant platform (not much openness there), garners substantial support in public opinion polls and in the voting booth. And then there is Vladimir Putin of Russia, who, notwithstanding the falling energy prices that have devastated Russia’s economy and weakened its currency, nonetheless expanded his sphere of influence in Ukraine and annexed Crimea by force, an old power tactic if there ever was one, even as he exerts power in the Middle East and confronts a Europe divided on maintaining economic sanctions.

Well, this is politics, so what can we expect?

How about transparency, another new power principle? The most transparent companies are those that are publicly traded, because they face numerous mandatory disclosures of financial and governance information and growing pressure to publicly report on their social and environmental impacts.

But as Michigan business professor Gerald F. Davis points out in his forthcoming book, The Vanishing American Corporation, the number of public U.S. corporations decreased by 55% between 1997 and 2012. There were fewer initial public offerings in total over the six years between 2009 and 2014 than there were in the single year of 1996. Moreover, many companies including Zynga (ZNGA), Facebook (FB), Groupon (GRPN), and Google (GOOGL), when they did go public, provided their CEOs with disproportionate voting rights, guaranteeing their control of the companies. Not much shareholder democracy there. And as widely noted, some valuable companies such as Uber, Lyft, Zenefits, controversy-plagued Theranos, and Airbnb are not public and are therefore not required to—and do not—disclose much if anything about sales, profits, margins, or anything else. So much for transparency.

As for the devolution of power from the C-suite to front-line employees, there have been more articles written about holacracy than there are companies that actually adhere to the management principle, which promotes the decentralization of authority. The late Stanford business school professor Harold Leavitt perceptively noted that although almost no one has anything good to say about hierarchy, and its demise has been predicted for decades, hierarchical structures nonetheless survive and indeed may be both desirable and necessary for organizing large, complex organizations.

So when you read or hear about the demise of old power arrangements, you should ask to see the evidence. After all, Time’s 2015 person of the year was the always strategic, frequently underestimated, but undeniably tough German Chancellor Angela Merkel, with its No. 2 being none other than the leader of ISIS and No. 3 Donald Trump.

Rhetoric v. Reality

2015 demonstrated yet again that many of the widely advocated leadership traits and behaviors aren’t always necessary or even useful for achieving individual career success.

For instance, in our socially networked world, an individual’s reputation and being generous and cooperative with peers presumably counts for a lot. Tell that to first-term Texas Senator Ted Cruz, who is currently in the top three among Republican presidential candidates. As voluminously reported, “Mr. Cruz stands out for his widely held reputation for putting Ted first” and is singularly unpopular among his Senate colleagues.

The Internet and modern media have supposedly made it impossible to get away with being untruthful. In 2007, the Tampa Bay Times founded PolitiFact to fact check candidates’ statements. But presidential frontrunner Donald Trump’s “record on truth is astonishingly poor,” and he is followed closely by Ben Carson, who up until recently was running neck-and-neck with Trump in the polls. Among the more truthful of the candidates in the Republican race are Jeb Bush and Chris Christie, who happen to currently be far down in public opinion polling. Although the sample is small, examining the chart in an article written by Angie Drobnic Holan, the current editor of PolitiFact, suggests there may be a negative relationship between truthfulness and political success, at least as measured by public opinion.

Modesty, while widely advocated, is mostly absent in the presidential race, with few negative consequences for the immodest. Trump puts his name on everything. Carly Fiorina touts her business record, despite her questionable success. The number of companies who claim they are the leaders in their particular business is enormous—how often do you read annual reports or see advertisements where the business says, “we are at (or below) the median in our industry?” Of course, by definition, there are companies (and leaders) that are below average. And the market for CEO-written books touting the executive’s wisdom and amazing achievements has never been bigger.

Even the Exceptions Proved the Rule

Old power ideas are so potent that kindness and generosity sometimes produce opprobrium rather than approbation. Take the case of Dan Price, whose credit-card transaction processing company, Gravity, decided to pay all of its employees at least $70,000 a year. Price agreed to reduce his own pay so the company could afford the approximately $1.8 million in extra expenses. The reaction? Fox News and commentator Rush Limbaugh called Price a socialist and some of Gravity’s employees and customers complained. Bloomberg published an article claiming that Price’s move came in response to a suit by his co-founder brother alleging Price had paid himself excessively.

Gravity seems to have profited from Price’s generosity, regardless of its cause, as the resulting publicity has been a marketing bonanza that helped produce rapidly expanding sales. And, not surprisingly, employee productivity has soared so that Gravity’s costs have not increased significantly. I say this isn’t a surprise because 30 years ago, Nobel prize-winning economist George Akerloff, in his description of efficiency-wage theory, noted that employers who paid above-market wages would obtain more effort from grateful employees as a result. Furthermore, higher wages also attract more talented people.

This year, Pope Francis continued to speak about environmental degradation and on behalf of the poor. Even after the Paris attacks, the Pope reiterated that “refugees are more than statistics: they are children of God.” He exhibited humility by traveling around Kenya’s capital, Nairobi, in a “little gray Honda” rather than a Mercedes or four-by-four. His message: “Remember the poor. Respect the youth.” These positions have earned Francis criticism from conservative religious leaders in both Catholic and Protestant churches, politicians such as Rick Santorum and Chris Christie, and from businesspeople such as Ken Langone, a founder of Home Depot.

It seems as if self-interest and selfishness still abound, and that no act or statement of compassion or caring is immune to politics and negativity.

Change Comes From Power

The narrative that millennial values and social media transparency will root out bad actors and promote generous behavior leads people to a very false sense of the world. If social forces will effortlessly produce better leaders and more benign behavior, people don’t have to do anything. Improvement arises automatically.

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But I am convinced that the best, maybe the only, way to create a better world populated with kinder, more generous, and selfless leaders is to both recognize the current realities and accumulate the power skills to get into a position to change things. Liberal democracy, human rights, freedom of the press, and a more equal distribution of economic and physical well-being don’t just emerge. Those with power or those who seek power for their own interests are not going to be swept away in some new-economy, new power paradise.

Everyone needs to build their understanding of and willingness to use power, even in its old, “hard” forms. Otherwise, as The Who once proclaimed, we will repeatedly “meet the new boss, same as the old boss.”

Jeffrey Pfeffer is Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. His latest book is Leadership BS: Fixing Workplaces and Careers One Truth at a Time.

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