December 13, 2017

Rent-seeking leadership

I’ve been thinking about value creation for the last week or so. I had beers with a friend and he made the crazily provocative statement that he felt like in his career there were only a couple of times where he felt that he was actually putting new value into the world, rather than just moving it around.

Hmm…

His line of thinking was that most of our working activity is spent moving value from one place to another, and that it’s rare that we ever actually put new value into the world. We talked about how design agencies we’ve worked at seemed to do a pretty good job of creating value for the founders/owners, which is nice but not exactly what we signed up for - despite my cynical tendencies, I fundamentally believe that the work I do is about adding value into the wider world rather than a few individuals.

Since then I’ve been thinking about how the larger organisations I’ve worked for might better be understood as systems designed to distribute power and money to the people at the top of the organisation rather than as systems to bring new value into the world.

The thought crystallised around the idea of rent-seeking, and the tendency I’ve seen amongst some senior managers and leaders to focus more on increasing their share of personal power and reward from their position than in creating new value from their position.

What does this look like in practice?

I think there are some common behaviours that you can attribute to rent-seeking leaders.

  • Prioritising the appearance of productivity over progress
  • Hiring of generalists and jack-of-all-trades
  • Deep dissatisfaction in the team
  • Focus on increasing the size of the team
  • Excessive, often unnecessary knowledge brokering (usually between effective parties)
  • Participant inflation in meetings

Appearance of productivity over progress

When a team is led by a rent-seeking manager, you can expect to see a lot of talk about progress and examples of interesting or innovative thinking. Out of context these seem impressive but don’t bear up under scrutiny and will mask a lack of significant progress. There will of course be explanations for this, often attributed to rogue team members or external factors.

Hiring generalists

A rent-seeking leader will tend to prefer team members who they can move around as a fungible resource. This allows them to appear effective by putting people where the most noise or demand is, rather than where they’re needed. By doing this, they avoid the accusation of bad hiring or the risk of their team being a bottleneck.

Dissatisfied team

Related to the previous point, this is the outcome when your team is treated as resources to be moved around to keep other people (and with the rent-seeking leader that usually means superiors) happy. Expect to see people complaining about the cost of context switching, feeling like they’re skimming the surface of a problem, and in permanent fire-fighting mode.

Focus on increasing the size of the team

It’s pretty rare that anyone is specifically paid to have a larger and larger team, but a rent-seeking leader will almost certainly make this their core objective. Having a large team justifies their existence, and of course a large team is an effective tactic to gaining seniority in a big org. A large team also gives you plausible deniability (“I’m over-worked managing the team”) and people to lose should the business tighten its belt.

Unnecessary knowledge brokering

To get the most rent from your team, it’s important not to let other people get too much directly from them. Rent-seeking leader will place themselves between the team and other parties, controlling the information flows to ensure that they are perceived as the valuable contact.

Participant inflation in meetings

Rather than attending, processing and disseminating information from meetings this kind of leader will tend to pull in their team into as many meetings as possible. For the leader this means that their role in the meeting is simply one of presence, rather than adding knowledge, making decisions or saving time.

One way not to be a rent-seeker

Writing these down was easier than I expected, partly because I’ve spent enough time alongside and working for people like this, but never really managed to capture why I was so irritated by them.

Going back to my friend’s observation, and having thought about him and the work he does I’d suggest that one of the things he does, as a good leader is to invest his time and energy into helping his team become better practitioners and in creating an environment where they can explore and grow. That to me is a very tangible kind of value being created that might otherwise not come into the world.


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