The Dark Side of Industry Leadership

by | Feb 22, 2021

I have written a lot about the benefit of industry organisations innovating faster so they can create more value for more businesses. If innovation is not happening when it should, do you know the underlying problem?

Look carefully, and it might reveal the problem is the dark side of industry leadership: people are acting to retain power. 

In The Dictator’s Handbook, political scientists Bueno de Mesquita and Alistair Smith start from a single assertion: Leaders do whatever keeps them in power. They don’t care about the “national interest” – or even their subjects – unless they have to. 

Their findings basically say that political leaders can attain and stay in power longer by having a small number of essential supporters, as it makes for fewer people to satisfy to keep control. When these winners have control of revenue flows, they will act to redistribute money to reward friends and replace dissenters. 

It’s a cynical view, but resonates just a little too well with what we see happening in contemporary and historical political regimes of all types.

The problem is that industry bodies can become like regimes and represent the interests of a few, rather than industry businesses as a whole.  When that happens, industry leaders start to behave like political leaders and parties seeking to gain or retain power. 

The insight is that if the innovation problem for industry institutions is about power seeking by vested interests, then the solutions are about governance. It is about making sure that the industry body is designed to empower a large coalition of businesses and not a select few.

Business leaders need to watch for the red flags that say the governance arrangements for their industry institutions must change. 

Can you have a direct say and influence in your industry organisation? Or do select groups have control of policy decisions and the money?

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