Scatter Diagram: A Pathfinder for Your Power

With a simple click on “Search,” or by pressing “Enter,” we receive plenty of responses to our queries on our screens, anytime and anywhere. Information is so widely available that a query string generates abundantly—sometimes more than we require. More or less, most of us can avail similar resources, as technology is pretty affordable.

In a world with a diminishing advantage of information, what could be your differentiator?  How do leaders stand out among the crowd? We have read that leaders can leverage analogies from other disciplines to solve a problem. Let us see how to systematically manifest that treasure trove of problem-solving.

The Scatter Diagram Technique helps.[i] The technique is a synthesis of our perspectives about diverse domains. It is a systematic approach that helps in identifying and exploring various solutions to individual and business issues at a micro or a macro level. Moreover, it can help individuals nurture a quality life.[ii]

In this article, we shall dive deeper and experiment with our instrument to arrive at creative solutions to “power conflicts”—a primary aspect of any business. We will explore diverse business situations that are potentially vulnerable to confrontations over the distribution of power. Subsequently, we will apply the concept of Scatter Diagram to analyze those scenarios.

What is Power?

Power is an ability that helps an individual influence others’ decision. By definition, “Power is a capacity that ‘A’ has to influence the behaviour of ‘B’ to do things he or she would not otherwise do” (Obisi 2003)[iii]. In an organization, individuals own different power bases—formal or informal—and capitalize power accordingly. Conflicts of interest in power transactions often result in disputes. Let us analyze a set of conflict situations.

Understanding Power Conflicts through the Scatter Diagram

As mentioned above, we will apply the Scatter Diagram technique and find out potential solutions to our cases in the points.

Our three points in the Scatter Diagram are “football,” “history,” and “politics.”Power Sourcing: How Do Football Clubs Foster Their Talent?

In Football, power transactions occur between power bases, such as between the coach and the captain, the coach and the support staff, the management and the players, the management and the coach, the senior team staff and the junior team staff, and so on. Football clubs have their strategy to attract niche talent. One of those is the player transfer policy of few of the professional football clubs. Who can forget the expensive player recruiting process of Galácticos, Real Madrid, in the early 2000s?

Power Sourcing/Fostering Power: In-House and Outsourcing

Real Madrid diversified talent sourcing and brought renowned players in the team. This created a player-pool and, in turn, fueled the growth of the club. Their move opened avenues for strong off-pitch commercial presence leading to a financial transformation of the club. Real Madrid doubled their revenue from £93.2m per annum in 2001 to £186.4m at the end of the financial year in 2005.[iv]

This tactic proved to be a differentiator for Real Madrid because FC Barcelona, its arch-rival, heavily depended on nurturing players fresh from the Barça Academy. Barcelona’s philosophy of nurturing talents resembles organizations’ strategy of fostering in-house talents based on their value systems. This, in turn, protects tacit knowledge and thus promotes in-house brands like Barca’s famous “Tiki-Taka” style.

From an organizational perspective, we observe Microsoft, the technology conglomerate, handing over the executive leadership position to Satya Nadella, a Microsoft veteran, in 2014. Whereas during 2012, Siemens, Hershey’s, and 3M recruited CEOs from outside to steer diverse strategies. Another recent example is that of Infosys. Infosys appointed Vishal Sikka, a former member of the executive board at German software company SAP AG, as the CEO in 2014.

Power Distribution: What If the Team Has Only One Center of Control?

Now let us focus on the process of how an individual or an organization can influence associated individuals, that is, organizational control. Going by our sample football point, we will explore two famous figures of the English football division—Sir Alex Ferguson and Mr. Arsène Wenger. They are among the most successful and elite football managers. Both of them are also known for their penchant for silverware.

Surely, something that places them beyond the crowd is their management style. Their leadership style was far from traditional, while their underlying strategy was “control.”

Centralized Power Steers toward a Common Goal

Though questioned multiple times, Arsène Wenger spearheaded both managing and coaching responsibilities. Interestingly, absolute authority helped these defiant personalities thrive beyond the glorious period of their career. A centralized power enabled both to form a multicultural and diverse team and to steer the team toward a common goal—productivity improved, complacency reduced, and quality ensured.

In companies, power distribution between leadership and employees follows a similar pattern too. Brian Stowell, the CEO of Crown Point Cabinetry that supplied high-end custom kitchen cabinets to customers throughout the US, earned the trust of customers and motivated the workforce by implementing his strategy of organizational control.[v] Thus, understanding the absolute authority of a coach in a football team gives us an idea of organizational control and its importance.

Could there be a flip side of absolute authority? What could happen if most of the organizational power rests with an individual?

Absolute Authority Might Lead to Organizational Conflicts

Lionel Messi is touted as “the single most important entity” in his club, FC Barcelona. According to his teammates, “Barca can do anything to retain Messi.” Focusing on the corporate world, we see the influence of Warren Buffet on Berkshire Hathaway’s future or how Elon Musk’s tweets on Tesla negatively impacted Tesla’s share price by almost 20 percent. The aforementioned are among the many instances of impacts of a centralized corporate governance.

Stand-alone influences, such as Messi in Barcelona or Ronaldo in Juventus, can help their team align to a common goal. If channelized properly, this stand-alone influence can motivate the team immensely. However, when that individual fails to perform, it might destroy the value. From an organization’s perspective, the higher the power distance in an organization is, the more dependent are the subordinate employees on their leadership.

This, in turn, makes an organization more vulnerable to differences in opinion among its employees. And, “agency costs” increase if the stakeholders are not managed properly. The rise and fall of Theranos, the blood testing start-up in Silicon Valley, depicts the entire picture of stand-alone influence of the CEO, Elizabeth Holmes, who was the supreme influencer and decision-maker of the healthcare start-up.[vi]

So, from our knowledge of football, we can infer that absolute authority establishes a culture of power-distance in an organization, which can enhance corporate performance and impact adversely as well. However, a corporate governance that can strike a balance between a culture of power distance and a system of distributed accountability will steer the institution towards a common aspiration and enhance the institution’s performance.

Power of Collaboration: What can We Reflect from History to Strengthen Our Power Tenet?

We will shift to the next point of our Scatter Diagram, that is, History. Transactions of power occur between a king and his nobles, between a king and a church, between nobles and peasants, among colonies and empires, and across different strata of a society. Let us analyze these structures and try to understand the consequences of the division of power leveraging some “historically tested” solutions.

First, we will try to understand the meaning of “authority.” As per Max Weber, “Authority is power whose use is considered just and appropriate by those over whom the power is exercised.”[vii]The early Vedic history showcases an effective way of distribution of authority. The Varnas—Brahmins, Kshatriyas, Vaishyas, and Shudras—were divided based on profession and people were living in a cohesive society. They were interdependent and had mutual respect.

Mutual Respect and Collaboration Drive Holistic Development

Though later on, this mutual respect was lost and the society became divided. This not only established hierarchy among castes and repression of the lower castes but also made the society weaker and vulnerable to attacks from foreign powers. Research study emphasizes the same as finding says that 80% of employees treated uncivilly spend significant work time ruminating on the bad behavior, and 48% deliberately reduce their effort.[viii] Hence, we can acknowledge that “collaboration and respect” can develop stronger bonds among teams and help the system prosper as a whole.

Mergers and Acquisitions: What Does the Roman Empire Tell Us about Corporate Synergy?

Thus, collaborations manifest synergy. “Synergy” becomes more vital when different institutions share their resources either by merging together or acquiring the other institution.

“Mergers and acquisitions” are crucial in the corporate world and so is the power struggle among the involved parties. Often, after acquiring a small firm, larger firms tend to overarch their culture and policy. Or when two firms merge, a mix and common culture are imposed on both the organizations. Two companies fail to negotiate their cultures and they clash. Amazon and Whole Foods venture, which, in spite of being one of the promising mergers, failed to create impact because of a cultural misfit.[ix]

Tracing back to ancient Europe, we see that the Roman Empire, the ancient mega-organization, was founded on the principle of res publica and sustained for more than 200 years. A closer look unveils that the imperial administration exercised both decentralized power and principles of minimal intervention. It maintained a fine balance between provincial versus centralized authority ensuring peace, law, and order on the one hand, and revenues and resources on the other.[x]

These centuries-old instances help us gauge the importance of organizational culture and behavior. Organizational synergy cannot be achieved unless the culture, management, and human resources of the merging entities are in sync. The peace agreements mentioned above can be a guiding strategy for the corporates today while designing the post-merger cultures.

Why Do Corporates Need to Plan for Sustenance?

“Corporate sustenance” beyond present reign depends on succession planning of a power base. Poor power transitions often impact organizations adversely. Confrontations and conflicts divided most of the religions apart. For example, Islam fragmented when prominent people got divided between the Shias and the Sunnis on the rightful inheritance of leadership after the Prophet Muhammad. This event teaches the importance of maintaining balance among “succession forces”—positive relations with leaders and also their supporters. Reliance Industries Limited reflected a similar pattern when the company split into two in 2005 because of the tension between two Ambani brothers. However, the organization revived after Mukesh Ambani had held rein of the business. Businesses can reflect on these historical events to make a cohesive and evolving work culture.

Power and Politics: Are They Two Sides of the Same Coin?

Now, we are on our third coordinate: Politics. Politics, at its core, is about the dynamics of power. In a government, a macro-organization, we see that the distribution of power varies across centralized and decentralized forms, in autocratic and democratic governments, in capitalist and communist rules, and so on. Also, within a government, we see the division of power between the states and the center, the houses of the parliament, the executive and the judiciary, the legislature and the judiciary, among various levels of the judiciary, the executive and the legislature, and many more.

Power distribution among various departments while working on cross-functional projects is very crucial. It is very important to understand whether any department can overrule the other department’s decision. Can any department curb the powers, aim, or budget of any other department?[xi]

Political Power Dynamics Can Help Us Arrive at Creative Solutions to Division of Power

Three major components of governance—the legislature, the executive, and the judiciary—have different relations and power distribution in different governments.

For instance, in India, the executive is answerable to the legislature and holds power till it has the legislature’s confidence. Whereas, the judiciary is an independent system that ensures the right conduct by the other two arms of the government. It has the right reserved to challenge any decision by the legislature or the executive and even strike it down. Although the judiciary is an independent entity the legislature can influence the judiciary system.

For projects in which strategy, execution, and compliance teams work together, this model can be helpful to ensure the right balance of power. Often within a party, executive decision power is diluted by the collective decision leading to performance criticism. As it happened to Dr Manmohan Singh, the former Finance Minister of India and one of the pioneers of Indian Financial Reforms, who faced extreme criticism during his regime for numerous corruption scandals and policy paralysis that were in place. When we look at business cases, we find Tata Sons and Cyrus Mistry indulged in conflict on the moves to reduce conglomerate debt. This resulted in an abrupt expulsion of Cyrus Mistry from the position of the chairman at Tata.

In the US, the political system is designed in a slightly different way. The executive has a strong veto power over the legislature, and only two-third majority can override the veto. Also, the legislative doesn’t have control over the executive. The judiciary has more power and is independent of the other two bodies.

A Combinatorial Approach

There can be different combinations of examples from each reference points of scatter space that can shed light on the various aspects of power distribution.

So far, we have seen three variables in our scatter space: football, history, and politics. We can express various power attributes, such as fostering power, control and authority, synergy, transition, and succession, as a combination of relations of these scatter variables. We can even try out different combinations of these coordinates of scatter place and arrive at another set of solutions with respect to organization’s distribution of power. For example, in a political system, the process of nurturing a political spokesperson is analogous to creating in-house leadership. The decline of the Byzantine Empire highlights the need for a strong succession planning.

Creativity: An Integral Approach in Differential Thinking

At an initial level, creativity and power seem quite unrelated to each other. But, mapping of different domain variables with an observed variable indeed needs creativity. Creativity triggers cues to discover a pattern. At times, these are a pattern of words, phrases, colors, thoughts, and of various other ways. From a broader organizational perspective, this pattern visualization is called strategy and vision. The CEO of Amazon, Jeff Bezos, visualized the pattern of technology usage and translated that into one of the key business drivers—AWS (Amazon Web Services). Thus, creativity exemplifies the power of contextualizing a contrasting thought. It has a double-edged impact on the principle of the Scatter Diagram. Creativity twines the scatter points together. Also, while applying the Scatter Diagram approach, we foster creativity in parallel. Hence, creativity is the heart of the Scatter Diagram and one of the most influencing parameters.

Scatter Diagram is a continuous process. This can be applied even if you have a different problem statement and a different set of points. Each experience of problem-solving with a Scatter Diagram widens the scatter space and so does the diversity of solutions. And the process goes on. However, as the saying goes, “Practice makes a man perfect,” similarly, the efficiency of our mind depends on the frequency of application of the Scatter Diagram. Every time our mind traces back the scatter points and associates with problem-solving, it develops both System Thinking and Creativity. Gradually, we arrive at “out-of-the-box solutions” from our existing experiences.

Ushasi Sengupta is a research analyst at Tata Consultancy Services. She completed her Post Graduate Diploma in General Management from XLRI, Jamshedpur in 2019. She is a sports enthusiast. Other than working from home and working for home, in parallel, she is spending her quarantined days exploring the unchartered territories. Running is her newly developed habit.

We are grateful to Mr. Shahrukh Moin Khan for drafting the foundation version of this article.

References

[i] https://www.parthapd.com/introduction-to-the-scatter-diagram/

[ii] https://www.parthapd.com/scatter-diagram-in-a-scatterbrain-a-story-of-self-compassion/

[iii] Obisi, C. (2003)., “Organizational Behavior Concepts and Applications”. Malthance Press Ltd, Lagos.

[iv] “Beckham drives Madrid to top of money league” https://www.theguardian.com/football/2006/feb/16/newsstory.sport

[v] Vanderschee, D. 2002. “Crown Point Cabinetry.” https://mba.tuck.dartmouth.edu/pages/faculty/chris.trimble/osi/downloads/20010_CrownPoint.pdf

[vi] Hu, C. and Ramsey, L. May 2018. “The rise and fall of Theranos, the blood-testing startup that went from a rising star in Silicon Valley to facing fraud charges over a wild 15-year span.” https://www.businessinsider.in/science/health/the-rise-and-fall-of-theranos-the-blood-testing-startup-that-went-from-a-rising-star-in-silicon-valley-to-facing-fraud-charges-over-a-wild-15-year-span/articleshow/64319477.cms

[vii] Weber, M. (1978). “Economy and society: An outline of interpretive sociology (G. Roth & C. Wittich, Eds.).”, Berkeley: University of California Press. (Original work published 1921)

[viii] Christine Porath and Christine Pearson, “The Price of Incivility”, Harvard Business Review, https://hbr.org/2013/01/the-price-of-incivility

[ix] Gelfand, M, “One Reason Mergers Fail: The Two Cultures Aren’t Compatible.” Harvard Business Review, https://hbr.org/2018/10/one-reason-mergers-fail-the-two-cultures-arent-compatible.

[x] Maier, F. 1995. “Megaorganisation in Antiquity: The Roman Empire.” Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift Für Die Gesamte Staatswissenschaft, 151 (4), 705–713, http://www.jstor.org/stable/40751852.

[xi] Zaleznik, A. May 1970. “Power and Politics in Organizational Life.” Harvard Business Review, https://hbr.org/1970/05/power-and-politics-in-organizational-life.

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