Politics, or why nothing really changes

by Ivar Slavenburg

A lot is written about the impact the culture of an organization has on its ability to change. The common idea is that culture is something that is hard to change; therefore when the culture doesn’t support rapid change, it will often also be difficult to adapt to new ways of driving innovation. Less information is found on how a culture in an organization is formed. Why do some organizations have a open, non hierarchical culture, why others are very dogmatic and have a strict book of processes that need to be followed from beginning till end if you ever want to have a chance to fit in.

Open companies and the start up mentality

A company that is often mentioned when talking about open companies is IDEO, but still Lydia Howland in her presentation at SDN2013 was not so sure that its culture was ready to support the changes that especially startups are bringing about, both in terms of speed and operational agility. Her call to that companies should adapt themselves to the startup mentality and thus go from product design to experience design is a proof of that.

About the way startups work is written a lot more, especially because of the exceptional success of some of them, either in concerning their product or the incredible value paid for buying them by more established companies after only a couple of years in business. A classic book, though only a couple of years old, is "The Lean Startup" (Eric Ries, 2011) by Eric Ries. Also in that book, company culture is established as something very important. A critical role is played by the founding members of the company. So, is there a direct link between the culture of an organization and those who are founding or running it?

That seems likely. It is well known that after a couple of years, only a few members that originally founded a company are managing the company or are even still there. Mostly, they are replaced, either voluntarily or under shareholder pressure, by more experienced managers coming from outside of the company. These managers made their career in an other, often much larger or established company. In other words, the more entrepreneurial founders are gone and replaced by people with a different attitude. The bigger the organization gets, the more managers come in, ultimately changing the way things are done.

Entrepreneurs and managers

Entrepreneurs deal different with politics than managers

So what is the difference then in attitude between an entrepreneur and a manager? Obviously, this depends heavily on the person, but what you hear a lot is the way they control their position in the organization. An entrepreneur has a certain drive, he or she wants to go somewhere, wants to reach a certain goal, has the big ideas. Especially in the early days, they attract people that share that drive, that idea. Managers often don’t have such a big idea at all, they are hired to manage a group of people or a certain process and see to it that everything works as efficiently and effectively as possible. There is no higher purpose, no specific drive. While for an entrepreneur people are a mean to reach a certain goal, for a manager people are a cost centre, a mean to his or her career at best. For an entrepreneur, making his or her people better means reaching a goal faster, for a manager it means the risk of getting in the shadow of somebody else, potentially delaying a next promotion.
That difference between the type of people that lead an organization is eventually resulting in a different culture. As managers need to secure themselves of their position, wheeling and dealing between them becomes the norm. In other words, politics are becoming the norm. In Some remarks on Politics and Innovation I already made some remarks about the consequences. Here I want to talk about another phenomenon.

Median Voter Theory

That phenomenon is known in economics as the theory of spatial models. First published in 1929 via an article in Economic Journal about Hotelling, it describes the reason why on certain situations companies preferred to be located as close to each other as possible. A good explanation of this theory can be found in the video below.

In his book An Economic Theory of Democracy (Downs, 1957) Anthony Downs extended this theory to politics, called the Median Voter Theory. A great explanation of how this works can be found in this video

These videos only scratch the surface of both theories, but in all their simplicity they do make clear how politics tend to represent the majority of opinions on a certain subject. If not, a political entity might loose to many voters and thus, potentially, an election. There is no reason to think that such forces are not at play within every group of people where decisions need to be made and therefore some kind of leadership needs to be established and maintained.

Median Voter Theory
Median Voter Theory

As long as everybody is served

Assuming these kind of forces within an organization, what will be the difference between the way an entrepreneur deals with this and a manager? As an entrepreneur is much more idealistic about what needs to be achieved than an average manager, he or she will much less be willing to adapt to the medium opinion than a manager, who is much more dependent on the powers that be. Consequently, an organization managed by managers will have a lot less extreme opinions about subjects than one by an entrepreneur. Everything gets pushed back to a certain medium opinion and everybody that is not agreeing with that is marginalized or being pushed to the end of the political spectrum. Thus, the diminished ability to innovate is not the consequence of some kind of difficult to define absence of the right culture, but the outcome of a political process to ensure the widest support for the way the organization is ran.

Following the Median Voter Theory, that support will be found where most opinions are more or less satisfied, not at the more extremes of the ranges of opinions where the (disruptive) innovative ideas are found. As long as the median is guiding the company it will be going where it went before, even if that didn’t work last time.

Further Reading

  1. Eric Ries (2011), The Lean Startup.