Many of us who are involved in supply chain decisions, or invest in businesses that do, will no doubt have been paying attention to the Strait of Hormuz crisis currently underway amid the US/Israel-Iran war in the Middle East, which has played havoc with oil and gas prices in the market and delivery times for businesses, since it broke out in late February. Blockages are a major problem because, these days, roughly one-fifth of the world’s oil flows through this region.

When we talk about the “market,” such as the stock market, it can often feel like we are speaking about an independent natural force, as if we were talking about the weather or gravity. However, as the events in the Middle East continue to unfold, it becomes more obvious that when we look at the market through a political economy lens, what we are really dealing with here is the politics–markets nexus, a system shaped by different social constructs and changing power dynamics.

Markets and the political economy are structurally interdependent:

• Markets are what we see most clearly because they provide the mechanism for exchange. But business training has led many of us to expect that economic efficiency, open markets, and institutional authority are still the order of the day.

• However, it is the power plays, laws, and norms within the political economy that provide the “operating system” that enables those market exchanges.

Together, the marketplace and the wider political economy form a co-evolutionary loop within a single complex adaptive system.

Observable system dynamics amplify this interplay. For example, market success generates wealth, which the financial winners often deploy to lobby politicians toward their preferred market policies (e.g., generous subsidies, tax breaks, or tariffs). This, in turn, just entrenches their dominance in a reinforcing feedback loop, which some call the “swamp” that needs drainage.

Yet politics is also a force for good, acting as a balancing force. When market extremes emerge (which they are periodically prone to do), those that generated much of the success (say, tech monopolies or those benefiting from lax regulation or an environmental free pass) face the wrath of legislatures that respond with antitrust laws, fines, or carbon taxes to restore social equilibrium (though often with delay).

So, given these types of phenomena, if we are active participants in the marketplace, we clearly need more substantive information than just historical performance data.

We need to pay attention to what is happening within the wider political economy, because it is there that the laws, regulations, budgetary decisions, sanctions, and indeed the big decisions about war and peace are set, all of which can impact the value of investments from bonds to currencies, and individual share performance.

From pension funds to sovereign wealth funds, understanding the politics–markets nexus through a political economy lens is fundamental knowledge for business growth and managing wealth. Yet, while it would be expected that sovereign wealth funds consider political risk in their portfolios (given that they are created to help solve future political/economic problems), there are investment mandates, particularly in the private sector, that still don’t (I was on a conference call a few weeks ago, as the US Navy was reported as heading towards the Gulf, and the investment analyst presenting his firms outlook questioned if geopolitics really mattered for markets). Politics matters because of the short-term volatility it triggers and the long-term structural change that it leads to.

The political economy is where political institutions (such as governments, courts, and regulatory bodies) interact with economics and shape outcomes. The nature of this interaction pretty much determines the relative levels of high-trust or low-trust within markets.

For example, you cannot have a market for intellectual property (IP) if the political economy doesn’t enforce patents. You cannot have a rules-based trade regime if one or more of its architects are among the first to break the rules. So, businesses and, naturally, their investors, value stability over volatility or chaos.

When you think about it, a market transaction is, after all, just a socially constructed promise. The political economy that market investors operate in provides the “referee” (the agreed legal system) that ensures those promises are kept. Moreover, the strength of that system is what determines which promises can be kept.

A strong political economy of reliable institutions and norms should be expected to reduce friction in the marketplace. But a weak one, riddled with corruption or bureaucracy, tends to act like a burdensome “tax” on market actions. These domestic dynamics scale internationally.

Geopolitics sits at the heart of international political economy because of its power-oriented dimension. It’s geopolitical issues about geography, state rivalry, and security intersect with economic systems that shape global rules, trade, and the flows of natural resources.

Originating within international relations, it is a lens that studies the interplay of geography and politics in the anarchical global space. It helps answer questions about the risks posed by how territorial control, alliances, and security threats (e.g., wars, borders) influence economic outcomes, such as sanctions or supply chains, often pursued via “geoeconomics” where economic tools such as tariffs and export controls are used for geopolitical ends.

Today, geopolitics sets the macro guardrails for business and the markets their investors trade in. In many ways, the international game of geopolitics is rewriting the rules for business strategy and investor wealth through co-evolutionary loops with domestic politics. Non-state actors (e.g., multinational corporations and global financial institutions) are also increasing their influence. Understanding what is at play puts us in a better position to anticipate and mitigate its impact.

What Can Businesses and Investors Do?

So, how can we build these considerations into our decision-making when participating in the marketplace?

Well, for strategists across business, understanding the politics–markets nexus through a political economy lens is the difference between playing 2D chess and 3D chess. We can no longer win on “product” and “price” alone if the actual “rules of the game” are shifting.

In the first instance, to even know that rules are changing, we need

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When you think about it, the fundamental purpose of most businesses has long been to generate profit and create wealth for their stakeholders. Over time, the methods used to achieve that purpose have evolved, particularly as technological innovation has progressed, financial engineering has become more sophisticated, and social relations transformed.

For more than a century, business advantage largely came from scale and efficiency, the idea that producing more, faster, and cheaper was the dominant approach within the corporate world to deliver a competitive edge and shareholder value. Many still operate on this basis. Pursuing scale and efficiency remain fundamental for competition, but these alone seem no longer sufficient for stellar success. However, for various reasons, not least the social side effects and public pushbacks that these strategies have experienced, those levers increasingly seem to be reaching their limits.

For most businesses, the external environment today looks a lot different from what it was just twenty years ago, when many of today’s leaders and managers first entered the workforce.

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Complexity has become an everyday feature of our modern political and economic systems. It is a decision-making risk, a test of strategic clarity, and ultimately a source of increasing costs at all levels, from the world’s most powerful institutions and businesses to those that are much smaller.

It’s an all-too-common phenomenon today to find many voters struggling to make sense of the government’s latest policy reforms, or customers overwhelmed by too many product choices. Complexity in itself is not necessarily a bad thing or good thing, but from a political and business perspective, it has a cost, so we should ask how much of it is just too much.

Occam’s Razor offers us a useful rule of thumb. It is the idea that the simplest explanation or solution is often the best. But still, oversimplification is not a panacea either because if we strip away too much complexity, we could end up creating new types of dysfunction. So, the art seems to lie in managing the right degree of complexity, that is to say, enough of it to reflect reality and enable adaptability, but not so much that we lose the people we intended to serve.

Complexity and the Bottom Line

In business, complexity has a way of permeating most areas of the modern business operation. This is often clearly visible to the naked eye, where too many products and services, bloated organisational structures, and decision paralysis are all too common. That’s not to forget the increasing complexity also found on the outside, such as today’s unpredictable trading system.

There have been numerous studies from the consultancy industry, the field of management research, and empirical cases that have suggested that excessive complexity can often reduce productivity and business profitability through the fog of hidden costs driven by symptoms such as duplication of effort, slower decision cycles, and disengaged employees.

Prominent examples of where complexity has weighed too heavily on day-to-day operations have included the multinational conglomerate General Electric before its recent breakup. GE was a sprawling conglomerate with layers of bureaucracy that slowed innovation and blurred accountability. Its challenge wasn’t a lack of smart people but an excess of interdependencies facing an increasingly disruptive external environment that ultimately made it too big to succeed. When every decision requires cross-divisional alignment, agility becomes very difficult to achieve. A contrasting example was at Apple under Steve Jobs, who simplified its product line dramatically, focusing on fewer products with deeper integration, which brought speed, coherence, clarity, and a competitive advantage that drove growth in subsequent years.

The problem with complexity is that every additional variable or feedback loop can add further cost, not just in monetary terms, but often in less tangible areas such as information processing, coordination, and attention; costs that can escape a traditional accounts department. The scholar and Nobel laureate Herbert Simon called this the “bounded rationality” problem, where decision-makers can only process so much before outcomes degrade. Businesses that don’t respect these bounded limits often end up burning more time and resources on managing the system rather than innovating further within it.

Complexity in Politics

The same type of dynamic plays out in the world of politics. Modern governance is also challenged by complexity. It involves layers of regulations, interdependent ministries, and intricate policy trade-offs. Each is normally designed to solve pressing problems, such as wealth, inequality, or insecurity, but collectively they can create even more complexity that few voters can easily unscramble. The result is often public cynicism or populist backlash.

When voters perceive that their systems of government are too complex to understand, it is not entirely surprising that they will gravitate toward more simplistic narratives. In recent years, examples abound of populist leaders exploiting this by offering clear villains and quick fixes with slogans such as “close the borders” or “take back control”. These types of slogans thrive because they simplify a complex reality into emotionally legible a la carte choices.

But oversimplification also comes at a cost, because we still need to know how things work in order to make informed choices. Democratic legitimacy to a large extent depends on public comprehension of how systems distribute wealth and power. When complexity outpaces comprehension, democratic accountability is likely to erode. This is why reforms such as Sweden’s transparent fiscal framework, which ensures that citizens have insight into fiscal policy, are needed for restoring intelligibility and support.

Not Too Simple, Not Too Complex

Politics and business operate as adaptive systems, that is to say, they are networks of interdependent parts that must continuously adjust to feedback and change. Complexity is inherent to such systems. However, if we could eliminate complexity entirely, we would lose resilience. On the other hand, if we were to allow it to continue to grow unchecked, we would lose direction.

The sweet spot seems to be that point where systems maintain enough diversity and optionality to respond to shocks without becoming unmanageable.

In the political world, this means that we should be designing policies that reflect the real complexity of our economies (such as climate transitions or global taxation) while also communicating them clearly and accessibly. In the business world, it means offering consumers meaningful choices, but without overwhelming them. IKEA is a good example. Most people have shopped there at some point. They offer enough variety for customers to personalise their furniture, but still, not enough products to overwhelm them. Its legendary success hinges on managing immense internal complexity that remains largely invisible to the customer.

In both of these worlds, adaptive change is the name of the game. As the political scientist Charles Lindblom once said, policymaking is often the art of “muddling through”, that is to say, incremental adaptation rather than grand design. Businesses, too, thrive when they exercise caution and treat complexity as a dynamic variable to be balanced rather than eliminated.

Vanilla Isn’t Always a Good Strategy

While excessive complexity is costly, zero complexity can be equally disastrous if it strips away all distinctive value. In the political sphere, overly simple policies, such as blanket subsidies or tax cuts without corresponding fiscal balancing, often create long-term distortions to the economy. Meanwhile, in business, overly simplistic “vanilla” offerings that fail to solve a real problem or meet a market need can quickly lose relevance.

For many products and services, consumers now expect at least some level of choice, customisation, and depth in their experience. Netflix’s recommendation algorithm is a great example with how it manages immense complexity in its backend systems and data algorithms but delivers an experience that feels effortless and personal. Political systems can also work the same way. The European Union, for example, operates through layers of complex institutions and negotiations, yet strives to present simple, unified policies to its citizens and member states.

Managing how complexity is experienced is key. Well-designed systems tend to keep their external appearance clear and intuitive while handling the sophistication internally. It’s a bit like a duck paddling through a pond, all quiet on top, but a lot of activity underneath. The best product designs and public policies make participation easy, even when the machinery working underneath is anything but simple. The worst ones tend to do the opposite.

Making the Best of Complexity

So, to optimise complexity, managing it should be less about elimination and more about channeling it effectively. Here are five practical ideas drawn from political economy, systems thinking, and management strategy that can help master the challenge of complexity.

1. Apply Occam’s Razor, But With Context

Simplify only where it adds clarity, not where it removes meaning. If a layer, rule, or product variant does not serve a useful purpose, eliminate it. Unless, of course, it is something that holds the system together.

2. Use Systems Mapping Before Decision-Making

Visualising interconnections helps to expose where complexity adds resilience and where it just creates noise. This helps us to see which changes create unintended consequences.

3. Design for Comprehension, Not Just Control

In business, this means designing clear product architectures and decision frameworks that pass the “explain it to me on one page” test. If it doesn’t, more work is needed. In politics, it means translating policy into accessible stories and visual models that voters will understand.

4. Institutionalise Adaptive Learning

Complexity tends to evolve. So, it makes sense to build learning loops into our systems. The best systems evolve through feedback-informed adaptation rather than a top-down overhaul.

5. Balance Optionality and Coherence

Whether designing a product or a new regulatory framework, flexibility is needed, and that should be balanced with focus. There should be choice, but organised around a clear narrative or mission, so that there is also coherence.

Complexity and Power

In the realm of political economy, complexity itself has become a form of soft power. It’s a question of how it is harnessed. Nations that can manage complex systems such as financial markets or globally connected supply chains, project stability, and tend to attract more capital. Similarly, businesses that master complexity with nuance tend to become indispensable nodes in value networks.

It’s about aligning the moving parts without overdesigning the system. Amazon’s platform model, for example, thrives on structured complexity. It has millions of independent sellers who share the same infrastructure and follow clear rules. In governance, the European Union’s regulatory “soft power” works in a similar fashion, where it is able to export stability through the setting of standards in many areas, from chemicals to digital services.

Final Thoughts

Complexity poses a real challenge in both politics and business, but the answer should not be oversimplification. To succeed, our goal should be to make complexity more navigable.

Occam’s Razor gives us a good starting point: prefer the simplest explanation when all else is equal. But the right degree of complexity also has its place. Systems thinking completes the picture by recognising when complexity is essential for resilience, diversity, and adaptability. Between these two poles lies what is arguably the real leadership challenge of our data-intensive era: mastering the economics of understanding, because it matters how we spend and invest our attention.

In politics as in business, there is a well-known saying, “if you’re not at the table, you’re on the menu”, which has become a sort of shorthand for how power really works. The idea is that if you’re not involved in shaping decisions, you’ll end up living with decisions that are made for you. So, it’s important to engage multilaterally when it is in one’s interest.

At the top table of the international system, influence rarely rotates. The same core powers, anchored in the UN Security Council, reinforced through institutions like the IMF and World Bank, and extending across the G7 and G20, continue to shape the global agenda and the rules of engagement.

Here’s the former US Secretary of State, Anthony Blinken, making such an argument regarding the international system at last year’s Munich Security Conference:

This table/menu metaphor really captures the blunt realist view that outcomes in international relations are determined less often by the fairness or pure efficiency that many people might expect, and more so by pursuing relative gains and acting in one’s own interest.

But as was evident last year, not everyone in the international system publicly endorses this worldview. When Secretary Blinken used the phrase to describe contemporary geopolitical engagement, China immediately objected, calling it “a stark zero-sum game mentality”. But beneath this diplomatic sparring lies a much bigger question that matters just as much for business leaders as it does for diplomats:

Is power really the only force that determines outcomes, or can smaller, less powerful players also shape the game?

The Realist View

The instinct of the political realist runs deep in both international relations and political economy. From Thucydides’ Melian Dialogue of ancient Greece to modern-day policy lobbying, the pattern is argued to repeat itself in an ostensibly timeless way:

“the strong do what they can, and the weak suffer what they must” - Thucydides

Using this view, financial markets may appear neutral, but they are built inside political systems. Equity prices, trade flows, and investment incentives are all shaped by who writes the rules, who enforces them, and whose interests they serve.

That’s one of the reasons why the metaphor resonates so strongly with many business leaders, because they know from experience that chasing efficiency isn’t enough. If a company, sector, or even a country isn’t part of shaping the framework that governs its operating environment, then it runs the real risk of being governed by somebody else’s framework. We also know this intuitively from history: those who win the war most often set the dominant narrative in subsequent history books.

Today’s political economy, with its tariffs, industrial policies, and strategic subsidies, makes this fairly explicit. From Washington’s Inflation Reduction Act to Beijing’s Made in China 2025, the market is no longer left to its own devices. The ideal of an open global free trade system seems over, at least for now, as political power is increasingly writing the terms of today’s trade.

This means that politics can no longer be treated as background noise in business. Thus, it makes strategic sense to develop creative ways to be part of the discussion to avoid being sidelined. We saw this play out in the automotive sector’s response to the U.S. Inflation Reduction Act, where American auto manufacturers actively engaged by ‘sitting at the table’ to shape the implementing rules so that they were operationally aligned to their existing supply chains.

The Challenge to The Realist View

Still, as we have seen, not everyone accepts the realist conclusion that power is destiny. There are many international relations theorists who would question Blinken’s metaphor and argue that the world has changed.

For example, there are the liberal institutionalists who argue that rules, alliances, and international institutions can tame raw power and that collective organisation can counterbalance dominance. The EU, WTO, and Paris Agreement all show that even small states can influence outcomes by locking larger ones into shared frameworks. The EU’s High Commissioner for Foreign Affairs, Kaja Kallas, comes from Estonia, one of the smallest member states. A reminder that scale and influence are not always the same thing. Businesses also benefit from leveraging alliances and standard-setting bodies to shape favourable environments.

We also have complex interdependence theory as described by scholars such as Robert Keohane and Joseph Nye, which reminds us that our globalised world makes even the mightiest mutually vulnerable. Today, the U.S. may dominate chip design, but it relies on Dutch lithography, Taiwanese fabrication, and African minerals. No single actor has yet managed to control the full system.

So, that inevitably creates strategic openings for smaller players who find themselves occupying valuable niches. Consider the case of Nvidia. Its dominance in the high-performance AI chips (GPUs) that are the “picks and shovels” of the artificial intelligence gold rush has made it indispensable. U.S. government trade policies use export controls that are based on the technology Nvidia developed. Recognising these linkages helps businesses to navigate risks better and identify strategic partners.

At the same time, dependency and structural power show that interdependence can cut both ways. As described by Dependency Theory in development economics, the world economy often reproduces a core–periphery structure where high-income countries control high-value sectors such as technology, finance, and governance, while lower-income economies remain locked into lower-value, extractive roles. Today, those patterns have evolved into new forms, such as semiconductor chokepoints, energy dependencies, and rare earth monopolies. These days, the tools of structural power no longer rely on colonies or gunboats, but on tariffs, export controls, and data regimes.

For those of us in business, this matters because supply chains are now geopolitical systems. Firms can no longer bracket out politics and optimise for efficiency alone. That would be a major blind spot in today’s political economy. Instead, they must balance efficiency with resilience, diversification, and strategic autonomy. To survive in this era of economic nationalism, businesses must think more like states or regional blocs by being aware of their dependencies and deliberate about their alliances.

Constructivists go further and argue that it is ideas, identities, and shared understandings that shape reality. The international system has no global government, but as Alexander Wendt famously noted, “anarchy is what states make of it”. Using this view, the realist worldview is itself a social construction. There is nothing inevitable or timeless about global power dynamics. It is the political process that matters. Small nations such as Norway (e.g., Oslo Accords) or firms like Patagonia have influenced global norms on peace, sustainability, and governance through credibility and moral authority. In today’s world, legitimacy compounds like capital and soft power can move hard outcomes. Ideas, norms, and legitimacy influence economic outcomes beyond material power. For example, cultivating strong reputations and ethical leadership can also open doors and shape markets.

Systems Complexity

Moreover, complex systems are nonlinear, and even the table/menu metaphor itself tends to break down because change doesn’t just flow from the top. Small, agile actors can shift the conditions of play by altering feedback loops, setting standards, or innovating in ways that others must follow. If we are not at the table, we can always invent a new one. That’s how Estonia became a global voice in cybersecurity (e.g., the Tallinn Manual), or how Nordic countries set the tone in areas such as green tech and corporate ethics. Business leaders should also think beyond linear cause-and-effect to anticipate tipping points and emergent risks.

Feedback Loops

In the world we live in, everything is connected. Politics and markets form one integrated, adaptive system. Every time there is a policy change, whether that’s another new tariff, a supply-chain incentive, or an ESG rule, feedback loops are also created that bring new advantages to some actors but also disadvantages to others.

Those already comfortably settled “at the table” tend to reinforce their existing advantages through policy capture or institutional design. Public Choice Theory explains why this is so. Concentrated interests (such as organised industries) have the resources and coordination to influence policymakers, while more dispersed groups (such as consumers or smaller firms) rarely do. That’s why even the most brilliant minds and smaller innovators often find the rules working against them, and why big constructive engagement matters.

But it is important to remember that influence in itself is not necessarily a bad thing. It does not necessarily mean corruption. In its benign sense, it just means understanding how systems evolve and ensuring that one’s voice is heard and is impactful in shaping their design. This is good for business because power tends to expand through active participation.

Moreover, sometimes it can be a disadvantage to be too comfortably settled around the table, locked into the old paradigm, because it also serves as a blind spot. We know from business the phenomenon of the innovator’s dilemma, where what makes a company successful can ultimately lead to its decline or even downfall. The same principle can also apply to politics.

Smaller Players Can Still Play

Whether we are talking about a small state, a mid-sized business, or indeed a professional hoping to climb the corporate hierarchy, influence without formal power is still possible. Still, we have to know where to look and what to do.

Here are some suggestions:

Build Coalitions: Coordination multiplies leverage. Smaller states use political groupings such as the G77 or Alliance of Small Island States to influence climate negotiations. Businesses also form industry associations or cross-sector alliances to shape regulation. Coordinated interest can substitute for sheer size.

Specialise and Become Indispensable: Everybody has an unfair advantage of some sort, whether that is geography, education, entrepreneurial, or culture. The periphery gains power by becoming irreplaceable. Examples include Taiwan in semiconductors, Denmark in wind power, or a firm owning a critical technology niche; indispensability tends to shift dependence outward.

Shape Narratives and Norms: Narratives are powerful in political economy. If we can control the story better, we can better influence what’s being discussed at the table or whether the table is relevant or legitimate. For example, in a world where legitimacy often drives markets, ethical leadership, sustainability narratives, and transparency can redefine competitive advantage.

Exploit Agility: Smaller players are usually more nimble and can adapt faster than bureaucratic giants that have all sorts of vetoes on their decisions. In volatile systems, speed and learning capacity can matter more than scale. Agility is power in a different form.

Multiple Tables

The table that realists describe, the one where the powerful sit and carve up political outcomes, is still probably the most important table in the international system, but today it is not hegemonic; it is not the only table, and the world no longer dines on its set menu.

It is surrounded by many other tables, for example:

• climate and trade policy tables

• digital governance forums

• open-source software consortia

• Environmental forums

Each one has its own dynamics and entry points. The opportunity for influence is no longer linear or hierarchical; it’s networked, and networking works best when there is more than one venue.

For those of us in business, that means influence isn’t just about having a seat at the biggest table; it’s about knowing which table matters most for our own goals and how to show up there effectively.

Final Thoughts

For a metaphor to persist, there is normally a degree of truth in it. In the end, the table/menu metaphor still stings because it’s partly true. If you’re not at the table, someone else is, and thus they’ll shape the rules, resources, and rewards that you will be expected to follow.

But that is just part of the story, in a world of interconnected systems and distributed influence, being “on the menu” isn’t inevitable. We can also build our own table, join others’, make the menu inedible, or change the ingredients of the menu itself. Just like the international system, political economy is what we make of it.

What if the very strategies that make a company successful can ultimately lead to its decline or even downfall? This sounds counterintuitive, a paradox even, but it is the very idea argued by the Harvard professor Clayton Christensen, in his book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.

Christensen had shown that industry leaders often fail not because they’re badly managed, but because they’re too well managed. They listen closely to their best customers, double down on profitable products, and allocate resources efficiently, all of which seem perfectly rational. But when disruptive innovations emerge, which are often cheaper, simpler, or more accessible, incumbents overlook them because they initially serve the smaller or less profitable markets.

But by the time these new technologies mature and capture mainstream demand, the established players are structurally and culturally locked into the old paradigm and become unable to compete or adapt effectively. It’s a phenomenon often found in the political world, where even the greatest armies can be defeated because they are best prepared for the last war rather than the current one.

A Systems Lens

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A few weeks ago, in an article I wrote about power, The Power Playbook: The Three Faces of Power, the insights of the political scientist Steven Lukes were discussed. He had argued that power operates at three levels: visible, agenda-setting, and ideological. In this framework, it’s not just who wins the debate that matters, but who decides what gets discussed and, ultimately, what people believe is even possible.

This is very much a layered understanding of power, and what it reveals is that authority and influence are rarely the same thing. The org chart might show who’s in charge, but it doesn’t explain why certain ideas still thrive while others die quietly in the meeting notes, never to be seen again. Moreover, the org chart fails to show who really shapes culture or how people actually internalise norms.

To build on those ideas, it is useful to consider that power, ultimately, is more about participation and connection than coercion. If we look at political theory or the literature on the corporate world, the most enduring forms of power tend to be relational rather than hierarchical. That is to say, they depend most of all on trust, alignment, and a sense of a shared purpose.

The Political World

In classical political thought, power was most often seen in terms of domination and hierarchy. Thomas Hobbes had described it as the ability to impose one’s will. For Hobbes, the sovereign’s monopoly on coercion was deemed necessary to prevent chaos. But over time, political thought evolved to reveal that power operates in much more subtle ways. Hannah Arendt, for example, has made the argument that “power corresponds to the human ability not just to act but to act in concert”. The idea here is that power arises whenever people come together around a shared purpose. In other words, it is relational and collective, not coercive or owned.

Michel Foucault deepened this insight by showing that power is everywhere, embedded in relationships, language, and institutions. It produces possibilities, shaping what people see as normal, rational, or legitimate. Antonio Gramsci’s concept of cultural hegemony offered a complementary power lens to this, where in his view, dominance is maintained not only through force or policy, but also by shaping the narratives people accept as “common sense”, a phrase that is frequently used in political discourse today.

Nowhere is this relational and cultural dimension of power more visible than in political leadership practice. Just think of South Africa’s former president, Nelson Mandela, who understood power as both connection and moral authority rather than command. In the new South Africa that he led, the prioritisation was on inclusion. Despite everything that went before, his leadership brought former adversaries into dialogue and framed reconciliation as a shared national project. Mandela’s approach in many ways exemplifies Foucault’s idea of relational power and Gramsci’s cultural framing, by replacing fear and domination with participation and legitimacy.

This distinction between domination and legitimacy runs deep in international relations. Max Weber had emphasised that authority, the stable form of power, depends on legitimacy. Without that relational dimension, power just devolves into mere force. Probably the best example of this was the fall of the Soviet Union, which was not so much a military defeat as a collapse of legitimacy. Its own people no longer believed in its inefficient command system.

A foundational concept for understanding this dynamic is Joseph Nye’s idea of “soft power”. Nations do not exert influence just through coercion (hard power) or payments (economic power); they also shape the preferences of others through the softer powers of attraction and connection. The United States’ global influence has, for decades, rested just as much on its cultural and institutional appeal as on its extensive military reach. Just think of the influence of Hollywood or its legal and governance system, and how they have influenced other countries around the world. A rising China, in turn, seeks to cultivate its own soft power through initiatives like the Belt and Road Initiative, blending financial leverage with relational diplomacy, though sometimes not without tension when connection turns into accusations of dependence, demonstrating the difficulty of converting economic strength into genuine soft power.

The same principle applies in economics. Markets, at their core, are really networks of trust. After all, money is only as powerful as the belief that others have in it. Financial markets function because of confidence rather than coercion. When trust is gone, confidence collapses. This was demonstrated during the 2008 financial crisis. In short, the real power behind markets, as in politics, is less about command and more about connection.

The Business World

In the business world, as is the case in the political world, power is often presumed to be synonymous with hierarchy. The traditional corporate pyramid, with the CEO commanding from the top, the managers controlling from the middle, and the employees executing at the bottom, in many ways mirrors the old sovereign model of power. While this is often the default position, modern organisational theory and management practice have evolved to show that sustainable power comes from networks.

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Recently, I have been looking at how political and business leadership have changed over the last fifty years. Every now and then, it is a good idea to get behind the news headlines. Leadership styles in politics and business tend to blend into each other. I have been trying to understand shifts in decision-making, power dynamics, and societal impact, and to see whether today’s leaders, when faced with similar challenges, stand on the shoulders of those who came before, or whether leadership is really something that evolves in fits and starts, capable of both progress and regression depending more on the environment it confronts rather than the personalities involved.

My thinking was that if history tends to rhyme with itself, then it is perhaps helpful to look back to an earlier period that in many ways mirrors our own, to see how leaders navigated some of the most complex political, economic, and corporate challenges of their time and what those insights could mean for today.

A lot has obviously evolved over the last fifty years; however, the mid-1970s were such a pivotal time that they seem to have marked a turning point in the leadership style of political and business leaders. The oil crisis, rising inflation, and the first waves of modern globalisation tested leaders’ ability to navigate complexity.

However, while they all faced the same macro environment, this period reveals contrasting styles of leadership that continue to shape the political and business world today.

Back then, President Gerald Ford approached the White House with a pragmatic, situational style; In the U.K., Prime Minister Harold Wilson tended to rely on a more democratic consensus approach at 10 Downing Street; while in France, President Valéry Giscard d’Estaing brought a visionary approach to the Élysée Palace with modernisation efforts, social reforms, and closer European integration.

In the corporate world, the titans of the era faced their own array of complex threats. CEO’s such as Reginald H. Jones at General Electric had a pragmatic, cooperative approach in dealing with sprawling operations and rising regulatory scrutiny, while the transformative visionary Walter B. Wriston at Citicorp confronted modernity by helping to build the technological and global financial networks, ATMs, electronic transfers, and cross-border currency systems that would transform banking. At Royal Dutch Shell, the leadership team fostered a culture of foresight that pioneered scenario planning, helping the company anticipate energy shocks and geopolitical uncertainty.

This got me thinking in broader terms about how different styles of leadership have evolved over much longer time frames and across various geographies. While there are also other influences on successful leadership styles in other parts of the world that emphasise harmony or community over individualism, one thing seemed clear: leadership style tends to move with history, changing form as societies evolve, economies expand, and institutions rise or fall.

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I have recently been reading about how, throughout history, the sea has been both a highway for commerce and a battlefield for power. From the spice routes of the Indian Ocean to the naval blockades of the World Wars, control of maritime lanes has shaped global prosperity and national destinies. Scholars such as Alfred Thayer Mahan and Nicholas Spykman argued that mastery of the seas lies at the heart of international influence, a reality still reflected in today’s trade patterns.

That got me thinking in broader terms about how the sea is also a useful metaphor for the global political economy. Trade and conflict remain the core forces shaping international relations, while politics acts as captain and navigator, steering flows of investment, resources, and opportunity across shifting waters.

The Sea as a System

The world economy functions like an interconnected ocean defined by currents, tides, and storms. Disturbances in one region tend to ripple globally. When politics prioritises trade, it raises the tide, lifting most boats. Open access to ports and secure sea lanes are crucial milestones that enable goods and capital to flow, driving growth through comparative advantage and shared opportunities.

War, however, is different; it is collective violence. It acts like an undertow, dragging progress under. As Clausewitz observed, it is the continuation of politics by other means. It represents a breakdown of diplomacy and is engineered by political leaders seeking relative gains. Those exposed to fragile routes or alliances tend to bear the greatest risk. The victors of violent conflict tend to reshape trade in ways that are best aligned with their priorities.

Trade, however, can itself generate disruptive undertows: large job losses in vulnerable sectors, intellectual property theft, discriminatory trade practices, and the turning of interdependence into leverage can lead to heightened tension and open conflict. And while war’s destruction is undeniable, it has also historically fueled innovation, from radar to the internet, boosting civilian standards of living, but also disrupting traditional industries.

Politics as Captain and Navigator

It is political leaders who decide if nations ride trade’s tide or succumb to the undertow of conflict. Nations come in all shapes and sizes: some are like aircraft carriers, commanding the ocean and setting the currents. Others are smaller vessels, such as a tugboat or frigate, that have little choice but to adjust their course and follow the path carved out by the larger fleets.

After the 2008 crisis, key governments in the largest economies acted as captains steering through turbulence, flooding markets with liquidity, and calming investor nerves. Smaller nations followed these currents with borrowing and investment.

Post-COVID, the tides shifted sharply: inflation rose, energy routes faced disruption, and great-power rivalry intensified. At this point, politics managed to navigate through this crisis by pivoting toward resilience over efficiency, tightening monetary policy, and prompting supply chain realignments. These dynamics demanded that businesses rethink routes and trim their sails.

Institutions: Masters of Arms and Lighthouses

Institutions, meanwhile, act as a sort of master of arms. They enforce the rules, keep fleets in line, and maintain order within the lanes. Central banks such as the Federal Reserve or the ECB, trade organisations such as the WTO, military alliances such as NATO, and financial regulators all seek to shape how trade, war, and politics interact by ensuring the rules are applied and consequences observed.

But even so, the master of arms is not infallible. Policies imposed by governments or political blocs, such as sanctions, tariffs, or sweeping regulations, can backfire or create unintended risks, and institutions have to respond within those constraints.

At the same time, institutions can also appear like steady lighthouses, guiding vessels through dark or stormy waters. Yet they don’t always shine for the common good. Built and maintained by politicians, they can float with the currents of rivalry and power. So, business leaders must see institutions as both enforcers and imperfect guides; they are anchors of order, but they can also drift, refracting rather than clarifying the light.

Weather, Fog, Icebergs, and Wind Shifts

Every voyage faces weather. In the political economy, it could manifest itself as inflationary storms, economic winds, and diplomatic squalls. Hidden dangers lurk beneath, too. Fog symbolises uncertainty and misinformation, for example, ambiguous AI regulation, cybersecurity breaches, and grey-zone conflicts disrupting trade under the radar. Icebergs are those sudden shocks, those Titanic-like moments where debt crises, fragile supply chains, and climate disasters erupt without warning. Meanwhile, wind shifts reflect sudden changes in sentiment. That could be investor selloffs, consumer panics, or backlash against inequality. The seas are inherently unpredictable; reading these forces is as essential as knowing the tides.

Navigating the Political Economy: A Leader’s Mandate

Trade, conflict, institutions, and shocks tend to form feedback loops. A storm in one place sends ripples worldwide. For example, EU sanctions on Russian energy reshaped routes, forcing fleets to adjust. The rerouting of energy trade away from Russia, for instance, directly inflated European manufacturing costs, while simultaneously handing a competitive advantage to U.S. producers. This is a prime example of how systems change matters and a reason why business leaders must move beyond observation to active navigation.

Here is a practical voyage plan:

• Chart Your Exposure: Map supply chains, markets, and inputs such as sea lanes. Identify vulnerabilities to geopolitical undertows.

• Build Resilience, Not Just Efficiency: Maximise redundancy, diversify suppliers, and improve agility to weather inflation, regulation, or conflict.

• Read Institutional Signals: Treat central banks, regulators, and trade bodies as both lighthouses and masters of arms. Monitor their directives as early warning for capital and market shifts, and remember to pay attention to who their decision-makers are.

• Scan for Grey-Zone Threats: Hidden risks, such as disinformation, cyberattacks, or economic coercion, can cause costly disruptions. Scenario planning and intelligence are indispensable investments.

Recent surveys reveal 76% of business leaders now rank geopolitical risk as a top concern, with supply chains under pressure due to geopolitical rivalries and trade protectionism. The global trade outlook shows slowing growth with trade wars, including newly announced tariffs, projected to reduce global GDP. One recent analysis suggests by 0.5% and world trade volume by 3.4% by 2030. The WTO plays a critical role in mitigating fragmentation and protecting the rules-based system to maintain global economic stability. But this is only possible with the support of its members, which is an open question.

Geopolitical fluency is no longer optional. Leaders who master these currents will navigate their organisations through turbulence and uncertainty, building vessels robust enough to sail an ever-shifting global ocean.

Long before nations, corporations, and stock markets came into being, human beings throughout history have been asking themselves these timeless questions:

How much protection do we need? And how much should we trust in freedom?

Ancient philosophers such as Plato and Aristotle had thought about these issues. Later, political philosophers such as Hobbes and Locke had provided the initial frameworks for this dilemma. The pessimistic Hobbes had imagined life without an overarching authority as chaos, while the more optimistic Locke insisted that liberty was essential for trust and progress. But centuries later, their debate is still alive and well, not just in the political science departments of universities, but also outside the academy; this perennial debate is at the core of how societies are governed, how people go about their work, and how we invest for the future.

But it would not be accurate to say that security and freedom are simply opposites; rather, they are more like twin forces that oscillate within every system, pulling and pushing, shaping outcomes. Too much of one and not enough of the other can intuitively feel wrong. Just like a scale that can tip too far in either direction, the systems we operate in seem to always be in a scramble for balance.

If we think back to just the middle of the last century, when the Cold War divided the world, nations had discovered that while security can make you feel safe, too much of it could become a trap. During this time, endless stockpiles of nuclear weapons built tight feedback loops of fear, creating a dilemma where one side’s defence became the other’s threat. The end of this period saw the Soviet system collapse and the world transform. That collapse showed that too much security without enough freedom left the system unable to adapt. Later, after the events of 9/11, Western societies once again tipped the scales, sacrificing personal freedoms for protection against unseen risks.

In workplaces and job markets, a similar story has unfolded over time. The loyal Japanese salaryman (サラリーマン) found stability in his work life, but at the cost of creativity. Meanwhile, restless Silicon Valley workers who have embraced freedom also discovered job volatility and burnout. Investors also face this same sort of dilemma: bonds offer financial safety, but with little growth, equities offer the promise of greater freedom through higher returns, but they are also exposed to wild swings in the market. Everywhere, it seems, the same dynamic is played out with political, financial, and workplace systems tugged between the comfort of security and the energy of freedom.

But the more security we build up, the more brittle the systems also become. We have seen many examples of this quest for certainty across society. Nations have been locked down, employers have demanded loyalty from their employees, and investors have often clung to guarantees. Taking the demand for security to its extreme, we would have maximum security, a prison or police state where rules smother creativity, and feedback is stifled. Yet rigidity leaves us unable to adapt when shocks arrive.

On the other hand, too much freedom has brought chaos, such as financial crises, political instability, and, increasingly today, precarious gig work that leaves people vulnerable without any safety net. Taken to its extreme, this quest for unknown possibilities can become aimless drift, characterised by a lack of structure and purpose, where opportunities without anchors leave individuals and systems adrift.

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When we talk about change, we often focus on new policies, trends, or structural reforms. Change derives from decision-making. Sometimes government plays a role, a business or industry may be a key player, or the market is the main driver. These shifts are often visible, and we have a good idea of who the decision-makers are. However, beneath the surface, the shaping of those decisions that bring about change is often nudged and shaped quietly by more powerful interests.

It could be environmental regulation, tax reform, antitrust enforcement, or ESG reporting standards. In an ideal world, government policy should be made to serve the greater good; that’s why they are elected, that is the game. However, in reality, there is often a game behind the game where policy is often influenced, steered, and sometimes captured by those with the power to do so.

Understanding how policy gets captured, and by whom, really is essential for anyone serious about transformation. Leaders who fail to understand this risk may end up designing strategies or reforms that stall, backfire, or get quietly rewritten. Those who do understand it can better protect their institutions, shape fairer systems, and build resilience.

Policy Capture: What It Means

Interest groups have, of course, a legitimate right to explain their viewpoint to lawmakers. However, Policy capture does not occur in a vacuum; it often reflects and reinforces broader social and economic inequalities. It occurs when public decisions are disproportionately shaped by vested interests at the expense of the broader public or long-term good. This can happen in politics, but also in corporate governance or regulatory agencies. It can happen anywhere rules are made.

It’s worth clarifying that lobbying and policy capture are not the same. Lobbying is a tool, the act of trying to influence policy, often legally and transparently. Policy capture is the outcome. It happens when policies end up disproportionately serving specific interests rather than the broader public. Lobbying can drive capture, but capture can also happen quietly, through internal advisers, regulatory bias, or dominant firms shaping standards. In short, lobbying is one piece of the capture puzzle, not the whole game.

Institutional theorists, such as George Stigler, Mancur Olson, and Douglas North, and international organisations, such as the OECD and the World Bank, have long noted how capture erodes trust, weakens institutions, and distorts incentives. Capture does not always appear corrupt. It can be subtle, legal, or normalised, in the sense that it is embedded in lobbying rules, campaign finance, or the ways professional expertise frames what should count as “sound policy”.

Forms of capture include:

• Regulatory capture – when regulators serve the interests of the industries they oversee.

• Cognitive capture – when decision-makers internalise the worldview of insiders, advisers, or powerful donors rather than broader stakeholders. Policies may look sound on paper, but are actually out of touch with public needs. Controlling the narrative is a key power play.

• Legislative capture – This is when lobbying, campaign financing, or revolving doors skew the laws that end up on the statute book.

• Standards capture – in business and global governance, where dominant firms are well placed to shape ESG, audit, or sustainability rules, they could do so in ways that lock in their advantage over others.

In each of these cases, influence becomes a tool not for the type of adaptation or innovation that could drive growth, but for insulation, protecting incumbent interests from disruption, accountability, or competition.

The dynamics of capture reflect those of the prisoner’s dilemma: each actor, pursuing narrow advantage, may end up contributing to a collectively worse outcome than would have been the case. For example, a rules environment that is less fair and harder to reform. Over time, policy capture can lock institutions into suboptimal situations where trust erodes and innovation stalls. A win for the few can result in a loss for many more.

Why It Matters

Policy-making is not always just a neutral response to current or anticipated problems; it is also a terrain of struggle among competing interests, where each player is trying to define the problem on their terms and offer solutions in ways that suit them, but may not suit you or your business.

That’s why bold policy ideas, even by the most inspiring leaders, often stall, while watered-down compromises find a way to sail through. That’s why transformative reforms rarely survive implementation as originally intended. Politics is about compromise, but policy capture tends to be driven by those who are not elected. When policy is captured by vested interest, it’s not just about what’s right or efficient; the focus is on what’s strategically possible in a field of asymmetrical influence.

Business and Government Aren’t Immune; They’re Both Players

Influence isn’t just external. Even ministers can be captured by their own staff: when advisers steer decisions toward their own preferences, policies can drift out of touch with the people they’re meant to serve. Scholars call this a form of cognitive or internal policy capture, a form of bureaucratic drift in principal–agent terms. Recognising this inward pull is as important as spotting external lobbying. This is particularly true for politicians who are not experts in their brief.

In the business world, the dynamics are similar. Some companies will undoubtedly win from policy capture. It may be justified using the political term of “soft power,” which in this scenario includes influence over standards, lobbying regulators, shaping public narratives, or staffing government advisory boards. Examples of capture include tech platforms that help draft data privacy rules. Oil majors that shape climate transition pathways, or the titans of finance who write the rules for “responsible investment.”

Sometimes the goal is to block change. More often, it's to shape change in a way that transforms without threatening core power. Ironically, many transformation programs in business, such as DEI, ESG, climate, or stakeholder capitalism, become vulnerable to capture unless leaders recognise the influence dynamics inside their own organisations. Power tends to bend change to preserve its core advantages, even if on the outside, there is a social veneer of reform.

Three Lessons For Leaders

Transparency isn’t enough. Capture thrives not only in secrecy but also in complexity. Rules and disclosures can be co-opted to serve narrow interests, whether the pressure comes from lobbyists outside or advisers inside.

Power must be mapped, inside and out. One should ask: Who benefits? Who decides? Who pays? Recognising the subtle pull from advisers and internal stakeholders is just as important as spotting external lobbying, if we are to understand how influence networks operate. Both directions matter.

Influence can be democratised. Capture isn’t inevitable. Whistleblowers, civil society, investigative media, activist investors, and reformers inside organisations can rebalance the game if they know where influence is being applied. Spotting both internal and external pressures is key to shaping change that lasts.

Resisting Capture: What Can Be Done

Societies know capture is a problem, and efforts to push back are not uncommon. In the US, “drain the swamp” has become a rallying cry against lobbyists and special interests in recent election cycles; yet, lobbying expenditures in Washington still run into billions each year. In the UK, scandals such as Greensill Capital’s access to government ministers reveal how the revolving door appears to remain wide open, and at the very least, there is a good case to strengthen lobbying rules. In the EU, corporate lobbying in Brussels has led to stricter disclosure requirements in recent times, but advocacy groups continue to highlight loopholes and weak enforcement. Just this summer, it was reported that several high-profile companies were revealed to have misreported their lobbying expenditures in Brussels, where as many as 25,000 lobbyists are believed to operate. These examples show that while there are rules regarding policy capture, strategies also adapt as fast as the rules designed to contain it.

Leaders can create a fairer playing field by acting on both fronts. Policymakers can strengthen institutions further, build better anti-corruption safeguards, and support public-interest lobbying and better transparency. Observing influence networks regularly will help spot risks early, rather than reading about them in the press. But the key to all of this is getting the balance right between influence that informs versus influence that captures.

Business leaders can take a similar approach: understanding how capture could reshape their sector, auditing influence footprints like any other risk within their business, and avoiding engaging in strategies such as performative ESG or greenwashing, which just erodes trust. Taken together, these steps don’t just resist capture; they can help steer change that really lasts and promotes trust.

Final Thoughts

The shape of influence is the shape of change. Every debate about change needs three questions: change for whom, by whom, and in whose interest?

Policy capture isn’t just a democratic problem; it also poses risks to business performance and economic resilience, erodes trust, and slows innovation. Influence can flow from outside lobbyists and powerful corporations, or inward, from advisers and staff shaping decisions behind the scenes. The costs are widely spread, while the benefits are narrowly concentrated, giving the majority a strong incentive to push back.

Leaders who recognise and resist both internal and external capture aren’t just protecting their institutions and businesses; they’re shaping change that lasts. And lasting change brings stability, trust, societal good, and, ultimately, a healthier market and bottom line for business.

Most of us are taught to think in averages. Average cost. Average returns. Average customers. Average outcomes. We’re told that being above average is “good enough.” And when we think about things such as economic development, business, or progress, we often frame it through that same lens.

But averages can be misleading. Imagine an aid worker in a food-insecure region telling a child, “On average, children here are not hungry.” That average hides the very real suffering of individuals.

The problem is that in politics, economics, and business, many of the most important dynamics don’t follow neat averages. They follow power laws.

And if you’re involved in economic development, leading a company, or navigating a complex career path, understanding this pattern can transform how you perceive risk, success, and influence. It’s the first step toward becoming more effective.

What Exactly Is a Power Law?

In statistics, the shape of how outcomes are spread is called a distribution. Some shapes (like the bell curve) suggest most people cluster around the average, while others, like a power law, suggest a few dominate and most will barely register.

A power law distribution describes those situations where a small number of things account for a very large share of the results. It underlies the famous 80/20 rule, where 20% of inputs drive 80% of outcomes.

But power laws run deeper than productivity insights: they explain why a handful of companies dominate markets, why in geopolitics a few nations can reshape the international system, and why a single decision can alter the trajectory of an entire career.

Formally, the probability of an event scales with its size raised to a power of a negative exponent. To put that in plain English: big outcomes are rare, but not as rare as a simple average would suggest. That’s why blockbuster movies, billionaires, or viral posts on social media appear more often than intuition based on averages would predict. It also explains why the same few business books appear on the airport bookshelves, no matter where you are in the world, a power law of publishing in action.

Where Did the Power Law Come From?

The idea goes back to Vilfredo Pareto, the Italian economist and sociologist, who in 1896 noticed that 80% of Italy’s land was owned by 20% of the population. This observation became known as the Pareto Principle.

Mathematicians and statisticians subsequently formalised this into power law distributions. Unlike the bell curve (normal distribution), where things cluster around the middle, power laws describe systems where the “tails”, the extremes of the distribution, dominate.

Power laws appear across disciplines:

• Physics and statistics: Benoît Mandelbrot (the father of fractal geometry) used power laws to explain complex patterns in finance and nature.

• Computer science: They describe the size of networks (why a few websites get most of the clicks).

• Economics and business: They reveal why most startups fail, but a few flourish and become unicorns.

Why Power Laws Matter

Once you know how to look, it will become more apparent that power laws are everywhere:

• Business: A handful of products or people generate most of the profits. This means we should focus our energy on these vital few.

• Markets: Just a few firms dominate the major indices. Understanding their scale and network effects is key.

• Politics: A small number of regions, donors, or voter blocks can swing outcomes. We should find the leverage points.

• Media: A few voices or stories capture most of the attention. So we should build our presence where it counts.

• Wealth: A tiny group holds outsized capital. We should expect feedback loops that reinforce inequality.

Example: The Hollywood Film Industry

Hundreds of thousands of actors exist; everybody believes they are going to make it big if they move to Hollywood, but only a tiny handful consistently land blockbuster roles. The most famous directors attract disproportionate funding and attention. Producers with the right track records get to greenlight the biggest projects. But the rest are most often left to fight over the scraps in the long tail of B movies and direct-to-video.

Yes, it's not “fair,” there is lots of talent out there yet to be discovered. But it’s not random either. What's happening here is the power law in action. Power laws emerge from feedback loops: success attracts more success, attention begets attention, and wealth creates more wealth. Systems tend to reinforce themselves. It’s not that some are predestined to make it. Rather, small and sometimes random breaks get amplified through reinforcing loops, so the system magnifies differences over time.

What It Means for Your Career

Careers are not distributed like school grades; they rarely follow a neat bell curve.

• In a bell curve world, steady effort ensures steady returns.

• In a power law world, positioning, leverage, and visibility tend to matter more than raw effort.

• Opportunities, recognition, and resources tend to compound: success attracts further success, and small advantages can scale into outsized rewards.

While some industries (e.g., civil service, mid-level corporate roles) may have more bell-curve-like distributions, a lot of the time this is not the case. In many fields, a handful of projects, relationships, or opportunities can drive the majority of career growth.

That means it makes sense to:

• Focus where the leverage is—don’t spread effort evenly.

• Build a unique edge to avoid being interchangeable.

• Recognise tipping points: moments when one opportunity can shift us into the head of the curve.

Being better than the average colleague may mean you keep your job, but the few who learn to play at the head of the curve capture the majority of rewards.

Change Under the Power Law: Rare but Radical

Change in power law systems does not happen gradually. It comes in spikes. Most meetings, projects, or hires may matter little. But a single high-leverage hire, breakout product, or bold strategic move can redefine the game. This is the realm Nassim Taleb calls the Black Swan—rare, unpredictable events that carry massive impact. Recognising that most change comes from these outliers is essential for navigating uncertainty.

Politics tends to work the same way: there are long periods of calm, punctuated by revolutions, reforms, or shocks. As Lenin (often cited) observed:

“There are decades where nothing happens; and there are weeks where decades happen.”

That is not to say that what we do every day is not important; rather, the insight is knowing that most activity is noise, but a few moments can be significant.

Insight for Leaders

In a power law world, effective leadership requires:

1. Prioritise leverage – allocate energy where outsized returns are likely.

2. Watch the long tail – outliers often matter more than averages.

3. Guard against fragility – reliance on a few dominant elements increases systemic risk.

4. Reframe failure – most bets won’t pay off; one success can offset many setbacks.

5. Design for tipping points – create conditions that allow success to compound until breakthroughs occur.

Power, Systems, and Distribution

Power laws intersect with political economy, inequality, and legitimacy. When wealth or influence gets too concentrated, backlash tends to follow. But redistribution and regulation aren’t just ethical; they are also mechanisms to keep systems from breaking. What the power law world gives, it can also take away.

Implications for leaders:

• Understand your position in larger systems.

• Anticipate political and public responses to concentration.

• Think systemically, not in silos.

Final Thought

The “average case” is comforting, but it is also misleading. In reality, most things don’t matter much, and a few things matter a lot. Intuitively, if we open a newspaper with this in mind, this makes a lot of sense.

By spotting the vital few, while ignoring the trivial many, and preparing for disproportionate change, leaders gain an edge.

In a world defined by outsized events and asymmetric returns, power belongs to those who understand the shape of the system and then act accordingly.

In most companies, we’re often led to believe that the org chart tells us everything we need to know, who reports to whom, who approves what, and who signs the cheques. But anyone who’s spent time inside a real business organisation knows that’s only part of the picture.

Big decisions don’t always follow formal structures. Strategies stall, initiatives quietly fade out, and people with no official title somehow manage to steer the ship. So what’s going on?

Well, the real world is a bit more nuanced: power isn’t just about structure. It’s also about strategy, perception, and silence.

This is exactly what British political scientist Steven Lukes uncovered in his classic “three dimensions of power” model. He wasn’t thinking about corporations when he developed it, but political science and business often blend into each other, especially when it comes to change, conflict, or transformation. And if we’re grappling with resistance or internal complexity, Lukes gives us a sharp lens for understanding how power actually operates.

The Political Science Model

Lukes’ Three Dimensions of Power challenged the old idea that power only has one face—that it is only about who wins a debate or a vote. That’s just the surface. Below that are two deeper, subtler layers of influence—what gets discussed, what doesn’t, and what people believe is even possible.

Here is how the model works:

Different approaches have been used to illustrate the model graphically, such as a pyramid and concentric circles with visible power in the centre. However, I think the iceberg approach works really well in illustrating the power that is visible and invisible above and below the surface.

Visible Power (overt power)

• Who prevails in a formal decision or vote?

• For example, a budget signed off, a key leader appointed, or the approval of a new strategy.

Agenda Power (the mobilisation of bias)

• Who decides what even makes it onto the table?

• For example, you may have a transformative proposal, but if you can’t get it on the agenda, it's not going to happen.

Ideological Power (deep cultural assumptions or unspoken norms)

• Who shapes what people believe is possible, normal, or acceptable?

• For example, cultures that make dissent feel disloyal, or status quo assumptions that never get questioned. In the corporate world, this can include internal branding, mythologies about “what makes us successful,” or unspoken taboos that shut down dissent.

This model shows that power isn’t just about outcomes; it’s also about the battles that never get fought.

Why This Matters for Business

This might sound theoretical, but once you see it, you really can’t unsee it.

In today’s organisations, all three faces of power show up in strategic and subtle ways:

• Visible power sits with formal leadership: executives, budget holders, and boards. Clear, necessary, and trackable, but often reactive.

• Agenda power lives with gatekeepers: chiefs of staff, respected insiders, project leads. These are the people who shape what gets attention.

• Ideological power is embedded in culture, language, and mythologies. It’s why some companies can’t pivot, even when the writing’s on the wall.

Take a stalled transformation effort. On paper, everyone’s aligned. But behind the scenes? Middle managers keep “raising concerns,” or there’s quiet discomfort with the direction of change. That’s agenda and ideological power doing their work.

In moments of disruption or internal conflict, this model helps unscramble why plans fall apart: because formal authority alone wasn’t enough to overcome the other two dimensions of power.

How Some Teams Are Adapting the Model

Here’s how some forward-looking organisations are beginning to apply Lukes’ model explicitly:

• Stakeholder mapping tools help leaders track both formal and informal influence, who people listen to, trust, and follow.

• Agenda-setting rituals such as reverse town halls or open-priority weeks create space for ideas to surface from outside the usual centres of control.

• Culture audits, internal storytelling campaigns, and norm-resetting initiatives help loosen the grip of ideological power, challenging what’s seen as acceptable or possible.

These are practical ways to rebalance influence. And they reflect a growing awareness that managing power means managing systems.

Power is Not Just Positional

Yes, titles still matter. But they’re only one piece of the power puzzle.

If we want to drive real change, we must read between the lines: watch for what’s not being said, notice who’s shaping the agenda, and challenge the assumptions holding the system in place.

Lukes’ model isn’t just political theory. It’s a toolkit for leading through complexity, navigating resistance, and unlocking transformation.

And the truth be told, that’s the world most of us are working in.

There’s a simple reason why even the smartest strategies can struggle or even fail. It is because people forget that change, any kind of change, is normally political.

Whether you’re trying to grow your business, shift direction, take on a leadership role, or roll out something new and important across your team, there is one truth that tends to show up time after time: success rarely hinges on the quality of your ideas alone. Great ideas are necessary but not sufficient. The truth is that success also hinges on how well you understand who holds power and how to go about working with them.

Now I am not making a Machiavellian argument here. Many offices already have a Machiavellian character who ends up doing more damage than good. Instead, I am approaching this topic of power in a more systems-aware way. In business as in politics, ethics matters for long-term success, and long-term success often depends on dealing with the world as you find it.

This is where stakeholder management becomes more than just another corporate buzzword to drop at some point during meetings. It becomes a strategic game-changer that allows you to see the power dynamics at play, which could make or break what you are ultimately seeking to achieve. It’s a skill everybody can learn, sharpen, and apply across any project, role, or career stage, making it a factor that works with them rather than against them.

Behind every great change, every bold pivot, and every business transformation that makes an impact, there’s usually a map. Not just of the marketplace but of the people involved.

Seeing What Others Don’t

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Volatility is the new normal. In today’s VUCA world, businesses face a dense network of interlinked risks, spanning energy shocks, regulatory changes, digital disruption, and shifting consumer dynamics. These risks don’t exist in isolation. Instead, they reflect the constant interaction of political decisions, economic forces, social shifts, and technological breakthroughs. Understanding this interplay is at the heart of political economy, where governance, markets, and power collide to shape business realities.

As discussed in a recent episode of the Forces and Signals podcast, oil remains the lifeblood of the global economy, powering logistics, manufacturing, aviation, and national security, while geopolitical instability in resource-rich regions can trigger price spikes that ripple through supply chains, reduce consumer spending, and drive inflation. From the Middle East to Africa and the Eurasian continent, these shifts reflect not just market forces but political power struggles and economic policies that shape global resource distribution.

At the same time, artificial intelligence is reshaping industries, not just automating tasks, but redefining competitive landscapes with new opportunities and emerging risks, including ethical dilemmas, data governance challenges, energy consumption, and algorithmic bias.

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Business and policy leaders increasingly find themselves leading through chaos. Just a generation ago, the world appeared more stable, more predictable, linear, and manageable. But since the fall of the Berlin Wall and the end of the bipolar Cold War era, we’ve entered an era of accelerated, interconnected change, which has only intensified in recent years.

Today, an event on one side of the world can ripple throughout the rest of the world in real time. The COVID-19 pandemic made this visible to all, impacting not just public health and security but also economies, supply chains, and local business operations. The whole world has become deeply interconnected. Inevitably, this has led to even the most local of businesses being exposed to global events.

Leaders in politics and business increasingly sense that they are leading their teams through chaos, where a new crisis could break out at any moment, requiring them to revise their plans and push in a new direction. The biggest driver in this new norm is a shifting context.

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Sometimes, workplace change can feel inevitable, yet somehow still stuck.

In the office, maybe we have been trying to embed more agile ways of working. Or perhaps we have moved to a hybrid setup, but the business culture is dragging its heels behind the policy. Staff politely nod and agree in meetings, say all the right things, and use all the current buzzwords, but in practice, change very little when they return to their desks.

Or perhaps it’s digital transformation? We have bought the new tools, but the adoption just isn’t resonating. If we have felt that invisible pushback from colleagues when rolling out something new, we are probably not imagining it. We are feeling the system pushing back on us.

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Moments of transformation in business or society often arrive cloaked in tension. It can be a time of heightened uncertainty; it can feel like navigating stormy weather. Expectations shift, structures realign, and long-held routines face disruption. Yet if we are to succeed amid all this flux, one element remains central to navigating complexity: communication. Without it, even the best strategies will crumble under confusion, resistance, or just inertia.

As change is essentially people-driven, communication becomes the vital force behind it. Without clear communication during such times, we risk being exposed to potentially more damage than we expected at the start of a change journey.

The Role of Communication in Change

Transformation, by nature, alters the status quo. If everything stayed the same, nothing would change. Yet the world around us is changing. In business, change is not just a strategic shift for staff; it’s a lived experience that impacts routines, identities, and well-being.

For leaders and managers, communication is the necessary bridge between vision and implementation, between strategy and behaviour. However, communication doesn’t merely mean the transmission of instructions, such as a public safety alert; it frames understanding, aligns incentives, mitigates fears, and creates the emotional and rational buy-in required to move forward.

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Regular readers of this newsletter know that change isn’t new, but its pace and scale are redefining how industries compete, markets function, and organisations operate.

Trade tariffs, financial crises, breakthrough technologies, regulatory shifts, pandemics, and fierce industrial competition can upend even the most well-run businesses.

In such an environ…

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A few weeks back, I wrote a piece on strategy and why understanding the external environment is an essential early step in developing a business strategy.

Drawing on the classic business tool of PESTLE analysis, I used the fictional Unscrambled Beans Café, an independent speciality coffee shop based in a large international city with growth plans, to illustrate in this article how business founders can begin to anticipate and adapt to external changes.

Here’s that article:

I argued that, by using tools like PESTLE, businesses can gain early clarity on political, economic, social, technological, legal, and environmental shifts that affect their future, helping them craft a strategy that prevents strategic drift and positions them to thrive in a changing environment.

PESTLE helps map the broad, systemic forces shaping the business landscape. However, to build a truly resilient strategy, business leaders also need to focus on the specific industry dynamics and competitive pressures they’re facing.

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As I’ve discussed in some recent articles, the return of geopolitics has an impact on business. In many respects, business and geopolitics are becoming inseparable. From global supply chain shocks to sanctions, climate diplomacy to AI regulation, businesses are increasingly navigating not just markets, but the worldviews that shape them.

There are many worldviews out there. Some are grounded in international relations theory, while others are more narrative-driven, shaped by political messaging or ideology. Among those rooted in theory, two dominate how governments, and by extension markets, behave on the global stage: Realism and Liberalism.

You may not know them by name. You may even use a different vocabulary to describe them. But no doubt you’ve felt their effects through trade agreements, foreign policy decisions, regulatory shifts, global crises, or travel restrictions. Whether you’re exporting abroad, leading a business strategy, investing capital, or rethinking your career direction, understanding these two lenses is a competitive advantage.

So what are Realism and Liberalism in the global context? How do they help us understand how the world is shaped? And most importantly, which lens is most useful for business?

Let’s unscramble these two global visions and see what they mean for you.

Two Theories, Two Worlds

Theories matter most when they are useful. Think of them as grammar. International relations theory, or IR theory, is the grammar of international relations, an academic discipline that traces its roots to the aftermath of the First World War. Just like grammar structures language, theory structures how we understand global interactions.

Grammar doesn’t tell you what to say, but it does give you the rules to make sense of how things are said. Similarly, IR theory doesn’t predict events directly, but it does help us understand why states and other international players act the way they do. Without grammar, language is just noise. Without theory, world politics can feel chaotic. We might focus on the wrong signals or fall into magical thinking. Theory helps us spot patterns, rules, motives, limits, and opportunities that actually matter.

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