Why Power Is More Important Than Money

by John A. Byrne on

Stanford's Jeffrey Pfeffer's new book is must reading for MBAs.

Are MBAs more interested in power or money?

Some might consider this a silly question. After all, doesn’t one lead to the other? Yet, far too many aspiring MBAs and business school graduates focus on the compensation they will get—rather than the opportunities that can lead to a position of great power. They peruse the starting salary and bonus numbers at the top schools and often factor those rates of return into their decisions. It’s a mistake.

In any case, the question of power versus money immediately comes to mind when you open Jeffrey Pfeffer’s new and insightful book, “Power: Why Some People Have It—And Others Don’t.” Pfeffer is a maverick professor of organizational behavior at Stanford University’s Graduate School of Business. He’s been teaching MBA candidates there since 1979 and has authored or co-authored 13 books. Power, a subject that has intrigued him for quite some time, is among his best.

Right from the start, Pfeffer introduces us to a person he calls “Anne,” no doubt an MBA student of his, who smartly played what Pfeffer calls the power game. It’s an intriguing tale with lessons for strivers of all kinds, including those who feel power is a political game they want nothing to do with.

“Coming out of business school, Anne wanted to lead a high technology start-up,” writes Pfeffer. “But Anne had no technology background. She was an accountant and had neither studied nor worked in the high-tech sector. Not only that, prior to her business education she had practiced public-sector accounting—she had been a senior accountant working in an important agency in a small foreign country and she was now focusing her aspirations on Silicon Valley in California. Nevertheless, Anne was able to accomplish her goal by making some very smart power plays.”

It’s a situation a lot of career-switching MBAs find themselves in. In Anne’s case, there was no prestige, consulting job in her background nor an elite investment bank or venture capital firm. Worse, she was an accountant. And yet she wanted to use the degree to make a leap into a field she knew little about. How?

MBAs AND GEEKS: A POWERFUL COMBINATION.

“Success began with preparation,” Pfeffer continues. “While most of her compatriots took the entrepreneurial classes offered in the business school. Anne took a class in the engineering school on starting new ventures. With that one move she altered the power dynamics and her bargaining leverage. In the business school class, there were about three MBAs for every engineer, while in the engineering school course, there was only about one MBA for every four engineers.

“She explained later that MBAs were unwilling to walk all the way over to the engineering building. Not only did she want to improve her bargaining position, Anne wanted to take a class closer to the laboratories, where technology was being developed and where she was more likely to run into interesting opportunities. Because of the pressure from the professor and the venture capitalists who judged the business plans that were a central part of the course to get MBA skills reflected in that work, Anne had bargaining leverage in her chosen environment.

“After interviewing a number of project teams, Anne joined a group that was working on a software product that improved existing software performance without requiring lots of capital investment in new hardware. She had not developed the technology, of course, and joined the team notwithstanding some disdain for her skills on the part of her engineering colleagues.

CREAMED BY VENTURE CAPITALISTS.

“Having found a spot, Anne was then very patient and let the others on her team come to recognize her value to them. The team—she was the only woman—initially wanted to target the product at a relatively small market that already had three dominant players. Anne showed them data indicating that this was not a good idea, but went along with the group’s wishes to focus on this first market in their class presentations. The presentation got creamed by venture capitalists. As a result, the engineers began to think that Anne might know something of actual value. When the course was over, the team continued to work on their idea and got a small seed grant from a venture capital firm to develop the business over the summer. Anne, the best writer on the team, took the lead in putting together the funding pitch.”

Of course, you can guess what happened. Pfeffer lets the tale unwind. “Anne was graduating with an offer from a major consulting firm,” he writes. “She told her team about the offer, thus letting them know she had much higher paid options so they would appreciate her and realize that she could make a credible threat to quit. She also intentionally let the engineers try to do things that she knew how to do proficiently—such as making presentations and doing financial projections—so they could see these tasks weren’t as easy as they thought. Anne used her accounting and business expertise to review the articles of incorporation for the new company and the funding documents for its financing. Meanwhile, she gathered lots of external information and, being more social than the engineers, built a strong external network in the industry they were set to target. Her outside contacts helped the team get funding after the summer was over and the initial seed grant had run out.

“Anne had more than business skills—she was also politically savvy and tough. When classes were over and the team was setting up the company, there was one other competitor for the CEO position. Anne told her colleagues she wouldn’t join the company if he was named CEO. To show she was serious and to gain further leverage, she had her colleagues meet with other MBAs who might be possible replacements for her. Because she had spent lots of time working with the team, eating lots of pizza and bad Mexican food, the group felt much more comfortable with Anne. In the end she became co-CEO and found funding for the product at a hedge fund. Although there is no guarantee the business or product will be successful, Anne achieved her goal of becoming the leader of a promising high-tech start-up less than a year after graduating from business school, overcoming some significant initial resistance and deficits in her background along the way.”

THREE REASONS WHY YOU HAVE TO PLAY THE POWER GAME.

The moral of the story? As Pfeffer asks: “Why not just eschew power, keep your head down, and take what life throws at you?”

Because you can’t if you want to be truly successful. It’s a tough world out there, even when you earn an MBA degree from one of the world’s best schools. Building and using power is not only a useful organizational survival skill; it may be essential to becoming an effective executive and leader.

Pfeffer advances other fundamental reasons why you should play the power game. First off, he points out that having power is related to living a longer and healthier life. Studies have consistently shown that the degree of control you have over your job the less likely you are to suffer a mortality risk from coronary artery disease. Secondly, power and the visibility and stature that accompany it can produce wealth. Bill and Hilary Clinton are good examples of this. So is former New York Mayor Rudy Giuliani. No less crucial, power is part of leadership and is necessary to get things done.

Besides, ultimately power is about winning. And who wants to be on a losing team?

  • Mireille

    Duh? I work for a bank and have read up on the financial crisis quite extensively. One of the debates going on is whether MBA’s got it wrong. A main strand in these discussions is on ethics. And you plead for a switch of games? Gaming for power instead money? Thanks for reminding me that we have a long way to go, and that neither legislation nor the assumption of common decency will work.

  • Tim

    So like Ann, we should manipulate our way into a strategic position on our team and then use the leverage of our position to advance as high as possible – got it. I’ve seen this cynical leadership before.

    What about Servant Leadership – my company has been pushing this concept lately and once contentious employee-management relations have improved tremendously. This concept won’t serve the individuals’ career quite as well, but allows for a thriving organizational community.

    Full disclosure – I haven’t read Pfeffer’s book, but I found the above article sobering.

  • http://www.unitedworld.in Tamana

    The power equation is the most important part for survival in any forms of life, not only in corporate. In corporate, we might get 5 MBA from Ivy colleges, but who will get on the top position not depends on who is the best employer, but also who can manipulate his power strategically.

  • seamus

    While on the face of it it does appear to be a cynical Darwinist manipulation, I read this more hopefully as leveraging one’s talent to accomplish one’s goals and not necessarily the pursuit of power for its own sake. I do think that the problem most of us have is having an expansive and generous view of self and that the crimping of the spirit is more of an issue then the pursuit of power
    I too think a new organizational corporate model is forming. No Asshole Rule is defintely in the offing.

  • Ben

     Tim you clearly don’t get it. To be on the utmost top, you must do what it takes. I’d comfortably say that 85% of people will never get there because they just don’t have what it takes. So if you’d like to work your way up through the means of a standard channel, go for it. It’ll just take longer, much longer to reach your goals. I used to have an employer that continued to move the goal posts on me each year review time came around because he sense that my skills and experience were far more advanced that what he was tolerable to handle. To beat his BS maneuvers, I quit and went to work for one of the biggest organizations in my state and began hiring his employees thus removing any more competition in that arena and satisfying my own position. Problem solved.

  • http://www.valueeducation.co.in/ BBA in Ahmedabad

    Education is one of the most fundamental rights of every citizen in the country and it is the prerogative of every child to gain education in the field of his choice. In India, there are some of the finest educational institutions that are par excellence and these outstanding institutes compare well with the best institutions abroad.

  • Frank

    Tim you are a great man for this comment. Good men who believe in doing the right thing live meaningful lives as for the rest, well let them believe what they want.

Partner Sites: C-Change Media | Poets & Quants for Execs | Tipping the Scales | Poets & Quants for Undergrads