Power Structures in Business
The first concept in working with others is an idea called power and power quite simply is your ability to get things done through other people, but ah lot of people have kind of icky connotations around the word power, right? But it's important to understand that power really is a very neutral thing. Is this your ability to get things done by working with other people? And there are two very basic forms of power and all it doesn't look the same all the time. The first type of power is influence making a suggestion, making a recommendation, providing some sort of information to another person in a way that actually changes their behavior, causes them to do something different. So if people know you they like you, they respect you, they value your opinion and perspective and you give them some information or suggestion. The more powerful you are, the more likely it is that that person is actually going to do what you want them to do or what you think they should do right that's power th...
e second type of power and where power gets it's icky connotations from his compulsion force telling somebody to do something or do something in a specific way and you have some ability to force them to do that whether or not they really want to write. So imagine, um, remember the old movie office space right yeah, I'm gonna really need toe have you stay here on saturday and work through the weekend, right? That was a compulsion type of thing, right? You don't want to work on the weekend but he had to because there was hidden threat in there if you don't work on saturday you are not going to be employed here anymore right? That's a form of power as well right? Compelling other people to do something so when you are in a position when you're working with other people you have options right? You can and choose to make recommendations in an influencing type of way or you can choose to compel people if you have the power you have the ability to do that which one do you think works the best influence? Why? Because they want to do it it's they're being told you have to do something yeah so people generally like to do that do things that they believe are valuable for them right? What happens if you try to compel people too much? You get done but he won't have the fertile mind shit yes they put in their heart into yeah so they may comply but they may resist in the process of complying right? So the on ly do the minimum required t do that which is not optimal think back to what we talked about yesterday in terms of motivation wanting to move towards something versus moving away from something what happens when you compel people they want to move away from you, right? Ah and and in dramatic cases if you are motivating people through compulsion, remember what we were talking about yesterday in terms of threat locked down you become the threat that they're locking down against and you don't end up getting as much done as you could have because you're trying to push because you're trying to force ok, so in the exercise of power, if you're in a position of responsibility where you're dealing with other people, you're going to use both at certain times when you have a choice. The more effective approach in the more sustainable approach is to prioritize influence making recommendations, making suggestions asking people nicely doing all of those things because it's going to get you a better result and it's going to be more sustainable in the long term. All right? You make people feel important and you make people feel valued and they're going to want to move towards you instead of away from you, right? If you force if you compel if you order it can work in the short term sometimes it's necessary for things like speed, but you're undermining your power in the long term because people want to move away from you it's that make sense so very first concept we just defined the difference between a really good employees and a manager and a really bad employees in manager right it's the exercise of power how you influence of the people looking for this yeah, absolutely doing issue that I have every time I hear this and I understand instinctively they were absolutely correct except that when you run a business and I've been in business thirty employees it's very used to understand this but only nature day there's a great quote if you don't mind from jeff katzenberg, he should say to his employees, if you don't show up, if you don't come to work on saturday, don't bother showing up on sunday and it is when you know data that you have so much trash, you have things you need to do it's very easy to just begin telling people and you should know this this in that on an issue because because you're worried is the stuff you need to get it done, right? So every time I hear people talking about this, I always says, yes, you're right, but his steering breakfast doesn't work, you know, it's it's it's funny as an employer, the most effective tool that you have in the moment is not necessarily the ordering or influencing it's, the structure that you've created in your business by the employees that you've hired right? So if you need to have people coming on sun on saturday and sunday toe work the very best thing that you can do is hire people who want to who are motivated to and then you can use influence to make sure everything gets done where you're not having people who you have to do you feel like you have to order to get that particular result right? So a lot of it is the structure that you create in your business and around your stuff with the people that you're working with and ideally if you have some control over that and you have control over the people that you hire you can hire in such a way that compulsions not necessary so if you find yourself having to compel on a consistent basis there's probably something in the business structure itself that you could change you could fix is the major problem that you did was hired the wrong people to begin with yes, that makes sense okay, now working with people is often challenging right? Because sometimes as you say, sometimes people don't do that you don't take your suggestions they don't do what you want them to and so and the more people that were trying to work with and coordinate sometimes the more challenging it is to get the particular results that you're looking for so before we go into all of those ways that we communicate with each other is helpful to understand why bother right if it's hard working with other people, why do we deal with it in the first place and there's a very specific answer for this very old answer called comparative advantage um extremely old economists in the same kind of general eras adam smith the famous economists uh ricardo call this the law of comparative advantage which is it's better to capitalize on your strengths than to shore up your weaknesses and the way ricardo talked about this he actually did thought experiment of let's say you have two countries, you have england and you have spain now both countries are perfectly capable of producing both wine and well by raising sheep right england's really good at producing wool and spain is really good at producing wine and so the question is are england and spain better off off if they both tried to produce both things or if they each specialize in one and then they agreed to trade with each other and what ricardo proved and called this love comparative advantage is if you do the math both countries are objectively better off if they specialize at what they good at or what they're good at and they agreed to trade with each other to get the thing that they don't have so much of right both countries get mohr of the things they want by agreeing to collaborate by agreeing to trade or work with each other so comparative advantage explains why it is often a very good decision not to try to do everything yourself right it's good to find an employee who is good at doing something that you don't know how to do it's great to find a contractor who could produce a specific result quickly instead of having to train somebody internally to do it it's great toward with another company who specializes in doing something that you need to have done by not trying to do it all ourselves and by actively searching out seeking out people who can do it for us we're all better off right? The other person gets an employer or a a new line of business and we get a result way faster way better way cheaper in a more sustainable way compared to the advantage is why working with other people is worth it we get a better result that makes sense now comparative advantages the upside of working with people communication overhead is the downside any time you introduce a new person into your business system whatever it is ah new employee or a new contractor a new partner or a new prospect or a new employee what we find is that the amount the the amount of time you spend communicating with the people in your business goes up and it doesn't go up a little bit it goes up a lot and it goes up quickly so when you're working with yourself you don't have anybody to communicate with right it's all appear it's all up in your head you can spend all of your time doing this thing that you do when you introduce another person into your business system the percentages of of time that you spend communicating goes up to probably fifty percent of your total time from zero right instantly you're spending a lot of time communicating to keep the other person on the same page with you right if they're not on the same page with you they start doing things that aren't necessarily moving towards that that desired end state I spent a lot more time communicating if you had another person so now you're working with two people team of three right? You're going to spend about seventy percent of your time communicating with people right? And it goes up extremely quickly the graph ifyou'd graphic goes up like this and so what you need to really think about is introducing another person into your business system that's capacity right? You have more people who can all work together to get things done that's good thing but it's only good to a certain point because if you're spending ninety nine point nine percent of your time talking with other people and nobody is spending time getting things done that's not very effective right and so there needs to be a happy balance between adding people to your team to improve capacity but not so much that you're spending all of your time just keeping everybody on the same page. And so the question is, what is the effective size? What is the best size of a team? So you're adding as much capacity is possible without taking it away in terms of communication overhead? Any idea what that fresh shil is? Any guesses that they're done by this number one fifty no that's actually really big we'll talk about dunbar's number here in a little bit that's the number of people you can kind of keep in your head and hold the same time no maximum effective team's eyes is there's actually really? Yep seven, seventy eight and to a maximum of about twelve and so if you go out into the world and you look at all of the most effective high performing teams, so go into look att folks in the military and look at the navy seals look at high performing police and firefighters look at teams of surgeons and hospitals doing really complex stuff. What you'll find is those teams have a minimum of three to five and a maximum of eight to twelve members, and when the team becomes goes past that eight to twelve threshold, they tend to split off into smaller teams to do separate things and there's a coordinating element between them but the team itself is isolated they focus on communicating with each other, okay, once you get beyond that, team effectiveness really decreases, so the lesson of communication overhead is keep your team's small. A small is possible to get the job done because that minimizes your communication overhead and keep them independent. So a committee of forty people is not going to be anywhere is effective as a couple of very small elite teams working on a single task. Sure, you do have a question relationship that is that a person? Is that a percentage? Because I think isn't big business one hundred fifty, the largest businesses that the threshold numbers becomes one fifty yeah, so let's let's talk about now there's there's a related concept. And remember when we were talking about the cognitive scope limitation yesterday, we don't have an unlimited ability to keep track of the world around us in our minds, there's there's a certain point where our ability to cope with outside information really diminishes, and so this general idea applies to people as well. We can't track thousands and thousands and thousands of people all at the same time with the same level of resolution. There are people who are close to us that we see all the time members of our family, close friends, people, we work with people who are in our surrounding environment. We can we can model as full people right? We can know their names we can know their dreams we can know everything about them for a certain amount of time so there was a similar research question of how how many people really can a person track before people stop becoming fully formed people in our minds and start becoming you know, people looking objects in our environment and so uh there are lots of different estimates about this the most common the most common researchers commonly cited research is what's called dunbar's number and this was an anthropologist last name of of dunbar on the hypothesis was around one hundred fifty people we can keep track in a very good level of detail with about one hundred fifty people now this is not necessarily you know, having one hundred fifty facebook friends right? Because it's a moat much lower threshold of resolution right? We could have hundreds of facebook friends but you probably can't keep track of the intimate details of more than about one hundred fifty people's lives same kind of thing arbor after that after a certain point our brain just kind of overloads and shuts down ok does that make sense that's why you see uh dunbar's number actually came out of anthropological studies of groups of people living together over the course of history and what you see is when a group becomes a slightly larger than about one hundred fifty there's a tendency for it to splinter into two subgroups and that process just continues, and we'll talk about a little bit more of how that works here in a little bit. So yeah, the idea of communication overhead is keep your teams as small as possible so you can all focus on getting things done and not sending e mails to each other all day. Jim accents from ryan braun, art and falcon kind of to the same thing ryan says could this max of seven twelve increase in a big business? If you break your business into teams of seven to twelve not exceeding that number of teams and you communicate with the heads of each team or the whole team is an entity that's exactly how you do it so and then nfl, khun says. But how are you sure that your message will reach toe all team members if there's so many different groups and you only brief the team leader? Yeah, so that is a really good argument for having a really good on top of a team leader, right? But if you try and you know there are certain things like if the purpose is just to disseminate information, then you have to have an all hands meeting for your company and get everybody together in a room and convey that information great. The trouble comes when you try to do work or make decisions with one hundred fifty people instead of seven to twelve, right? So that is exactly the solution right? You break your teams into as small a possible unit as possible and you give them as much independence as possible and we'll talk about when you're delegating work to a team there's a specific way that you do that that's very, very effective so you don't have to have that communication going back and forth sam cox from loveland, colorado says is it reasonable for an individual to be a member of more than one team? Yes, yes, as long as the coordination only has to happen within that individual team and not trying to coordinate between both teams has anybody ever worked in a company with an organizational structure called matrix management where you have lots of different managers and people can report to more than one manager at a time? Thanks nightmare it's an absolute nightmare but that was, you know, a lot of large companies experimented with that type of organizational structure for quite a while because lots of people were on lots of different teams and you know the manager's wanted to have thie reassurance that the person reports directly to you right but as it turns out, everybody starts reporting to everybody and you just have meetings all day and nothing gets done so it's it's tremendously ineffective and so yes uh, small teams as independent as possible. And if you have to do coordination with a larger group, have a single person responsible for figuring that out.