Are you exerting the right type of power as an entrepreneur? Is this a question worth asking? In traditional organizations, where institutional structures are defined, the mechanisms by which power is exerted differ in some ways from those you would expect to be used in a startup environment. I have seen this firsthand.

Traditional research on this subject that goes back decades, by French and Raven, summarize the sources of individual power as five: legitimate, reward, coercive, expert and referent. Legitimate power derives from the position of the power holder, which gives him or her legitimacy. Reward power comes from access to rewards that you can offer for compliance on your requests. Coercive power is derived from your ability to punish. Fear of punishment keeps people you manage in check. Expert power comes from your expertise, your competencies, and the knowledge you have. Others comply with you because you know the most and are the most competent. Referent power is the last one, and is commonly recognized as the power that “rubs off” you because of your friendships with others and attractiveness to others that people perceive in you. If you exude friendliness or attractiveness, you have referent power. Others comply because they respect and like you. By the way, this is, in no way, an expert dissertation on the topic of power, and there are other models and people conducting all kinds of research on this. I, as an observer of human behavior, like to read about these topics and I think others should as well because doing so helps you grow and give order to the world around you.

I would expect, in a startup environment, that leaders with high degrees of referent power would tend to attract the best talent. As you’ve heard, people like to do business with people they like – people trained in sales know this well. We may infer that for the same reason, people like to work for and follow an entrepreneur leader the more likable he or she is. If you don’t have this quality at the minimum, you will face a steep incline building a team. The second most important in my view, and that of some scholars, is power derived from expertise. In this age we live in, where digital technology drives the bulk of innovations – leading to this new term of “tech-enabled”, which can basically apply to anything old made new again – expertise power is key. Expertise and likeability, in my opinion, are the traits that successful entrepreneurs can use to build talent teams around themselves and derive commitment from co-workers. In the new constantly expanding frontier of the entrepreneurship ecosystem, we are slowly but surely moving away from the days of power deriving from your title, coercion, or ability to reward. More and more, I believe, the positive traits of likeability and expertise are pushing millennials to not just be compliant with authority, but become true followers committed to innovative leaders and organizations that promote causes, products and services where value is created.

In view of this, what should you do? I would suggest you become the best expert you can be technically in your market, in your craft. Make it a daily routine to learn more and more about your line of business, making sure nobody can top you on that. If you find someone that does, bring him or her into your circle to learn even more, if friendly, or work harder to learn more so you can out-compete them. Build your expertise power, surround yourself with committed followers.

At an even higher level of priority, make it a routine to weekly connect with friends, go out for a drink or coffee, or visit them with no agenda in mind. While doing that, focus on the other person, put your knowledge and expertise in the back burner, and engage in the required attention give-and-take that builds your score in the likability scale. Build your circle of committed friends, and everything else will have improving chances of taking care of itself.


Our View from the Top (August 28, 2018)