Welcome to Cited Authorities. I'm your host, Alexander Powell. Today I'm honored to be joined by Jeffrey Pfeffer, a professor of organizational behavior at Stanford Graduate School of Business and a professor of health policy by courtesy at Stanford School of Medicine. Jeffrey has spent his career studying power, leadership, and how organizations actually work. He is the author of Power Leadership BS, Dying for a Paycheck, and Seven Rules of Power, just to name a few of his books. His work is direct, practical, and sometimes uncomfortable. Merit matters, but it's not the whole story. Today we'll talk about what that means for careers, for artificial intelligence, and for employer health plans, including Jeffrey's recent work on ERISA, fiduciary duties, and private enforcement. Jeffrey, thank you for joining me today. The pleasure to be with you.

Thank you for inviting me. And by the way, thank you also for taking the work that I've done and putting it to practice in your own life. That's why I write what I write and do what I do, to hopefully get people to implement it and have success by doing so. So congratulations to you.

Thank you. I'm very grateful for your work. It is truly life-changing in a very positive way. Jeffrey, for listeners who might not be familiar with your work, you've spent decades studying organizations and power and leadership, evidence-based management, and why institutions often behave differently from the stories that they tell about themselves. How did that become the focal point of a major part of your career?

So, my career, which includes the most recent work on the administration of health benefits and prior to that, evidence-based management, and prior to that, the knowing-doing gap, why organizations don't implement what they know and power, intra-organizational power and interorganizational power. My career really follows a trajectory in which I look at important phenomena that I believe have either been inadequately studied or incorrectly studied or some combination of the two. And see if I can, you know, basically, I think what a good academic does is they find some dark corner or some rock that needs to be turned over, that needs to have a light shined on it so that people can understand better the world in which we all live. Not the world that we would like to live in, but the world in which we in fact do live in. So this has been a theme throughout my career. It began with my doctoral dissertation and continues to the present moment. I'm continually finding things that need better explanations, better theories, better data, and trying to do my little part in illuminating those interesting topics.

Why do you think people are reluctant to look under the surface and analyze power dynamics, even though it would be adaptive and helpful for them to do so?

Number one, people are trained and raised with a set of moral beliefs or ethical beliefs or something that says you ought to look at the world through a certain lens, you ought to do certain things. Good people do X or Y. My Seven Rules of Power book begins with the statement: if power is to be used for good, more good people need power, which I can firmly believe in. But good people, you know, I think people see power used for ill, negative purposes, and they say, I want nothing to do with it. But what I tell my students and every everybody is that power is a tool. You know, it's like fire. You can use fire to heat your house or to burn the house down. And fire in itself is not neither good nor bad. Nor is nuclear power. You can use nuclear power to blow up cities like Hiroshima and Nagasaki, or you can use nuclear power to generate electricity. And by the way, in a if you can figure out what to do with the waste in a very clean way. So power is a tool, but when they see it used for ill purposes, or when they see it used by people that they don't like or find or perceived to be unethical, they say, I want nothing to do with it. But if you if you absorb power to be used only by evil people, it will certainly be used for evil purposes.

Right. Your work, you cite figures such as uh Mel DeMarcos, and you cite historical events such as the Jonestown massacre as well. And there's uh, you know, there's there's two sides of the coin, so to speak. There's there's also figures such as Nelson Mandela, Martin Luther King Jr. I could I could go on, but you see what I'm getting at here, and and I'm echoing what you're saying about how physics professors, when they when they teach principles of physics, they don't say, okay, this is a morally good one and a morally bad one. They just teach what the principle is. And it's up to the student to decide how to best use that principle within their own worldview.

Yeah, that's completely correct. I couldn't agree with you more. You know, I've I have a friend who's unfortunately now deceased, John Jacobs, who gave me a book by Tim Reiterman with the help of John Jacobs called Raven. It is, in fact, the story of Jim Jones. And Jim Jones actually used many of the principles that I teach to become a very, very powerful figure in San Francisco politics. He was on the San Francisco Housing Commission. He was courted by the mayor, and he was courted by all kinds of other people because of his influence and his uh power in the local political establishment. And when people began to figure out who the hell he actually was and what he was up to, he took his followers down to Guiana. And when the investigators went down to see what was going on, he tried to kill them, wounded Tim Ryderman, which is why John Jacobs had to finish the book. Basically shot, and she almost died. Our Northern California, uh, an A to Leo O'Rion, who then went on to be a congresswoman and is now a board of supervisor individual. So, yeah, you can use, you can use these ideas in a variety of different ways. There's a book which I highly recommend entitled How to Be a Dictator, which talks about Mao Tetong, talks about Benito Mussolini, talks about Adolf Hitler. What is the most interesting thing to learn about Benito Mussolini and Adolf Hitler is how completely ordinary they were. These are not geniuses. These are not figures of great intellectual depth, or they're not even figures of, frankly, great interpersonal skill. But they are people who figured out, basically by trial and error, how to become more powerful. And their effects, of course, were horrible. And I and I think that I think there are two lessons there. The first lesson is the power can be used for good or for bad. But the second lesson is that if you actually understand and apply the principles of power, you don't, this is not like, you know, I'm going to make you the quarterback of the Kansas City Chiefs, and you have to be as good a pass thrower as Patrick Mahomes. What is interesting to me is how how little skill it takes, if as long as you apply the principles correctly. And this is the idea of leverage. What does a fulcrum do? You put a fulcrum on a on a stone or on a le on a something, and you can lift all kinds of weight simply by the principles of physics. This is the same thing. This is a power gives you leverage.

Right. And people are reluctant to use that fulcrum for whatever reason. Um I'm reminded of uh Malcolm Gladwell and David versus Goliath, and as well as the things you cited as far as uh the U.S. soccer team and their unwillingness to to fake injuries to draw fouls when, you know, in basketball, for whatever reason, their rightfully, in my opinion, isn't the same stigma when it comes to drawing fouls. And it seems like more agreeable people from their conditioning or from their environment are going to be more reluctant to accept the principles that you teach, which is interesting because that suggests that more disagreeable people might understand more of these things intuitively. They may.

But the other, so I actually understand this very well. And so what I do in my class, in the online class, and also particularly for the MBA class, the on the on campus class, is I have them actually use the stuff during the quarter because if you learn French and don't use it, you'll forget it in five minutes. So, you know, I actually have them use the stuff. And because they use it and because they find that it works, much to their surprise, then they then they become even more interested in using it. So I had a founder or startup founder in my class this year, who I had actually talked to the class. He said, you know, we we launched this fabulous product. Eight months later, we had had almost no traction. I came to your class, I learned a couple of things, I put into practice, I made more progress in two weeks than I did in the last eight months. So he will, he is now a believer, he's now a user, he will never forget the material. He will implement it. It's not unlike this, it's not unlike your own personal story, where you read this and you implemented it in a variety of interesting different ways, and therefore now it becomes part of you because you've actually implemented it.

Right, exactly. Perception is so important. I think that's a through line through your work as well. Self-perception, getting out of one's own way. I mean, that's rule number one. That's certainly a rule that I've embraced when it when it comes to starting this podcast. For example, I'll admit that that idea had been floating around in my brain for a little while. Uh, and it always seemed like, oh, like somebody else does that. That's for somebody else to do. Then I realized that was ridiculous as far as that line of thinking. There was no reason I couldn't do the same thing. Like you said, there's a a flywheel effect to it as well. You start seeing results, and the results become easier, and other positive results happen, and you know, you're off to the races. Yeah. I I think that's extraordinarily well described. There is a recurring trap in this area when it comes to when people learn about it. I think people hear the research and uh about how perhaps humanity prefers hierarchy. Or the Berkeley Cookie study when it comes to even artificial increases in status or one's position on the hierarchy can cause an immediate change in behavior. That's that's a pretty funny study. It's a study where people are put in a room and they're given uh artificial places on a totem pole, saying, okay, you're you're the top, you're the boss, uh, just pretty much in name only, you know, nothing else to justify that. And they put a plate of cookies on the table, and those that were put in power were more likely to uh take more than one cookie and to not clean up their crumbs and and engage in more uh messy behavior, which is interesting. And getting back to my original point, oftentimes people think, oh, that the these studies apply to other people. Other people, you know, they they chase visibility or status, or other people they like the strong man, strong woman, they defer to authority, but but not me. All this research applies to everybody else except for me, which I think is fascinating.

Well, it's fascinating. It's also not very good for the people because we are all susceptible to this. I'm as susceptible to flattery as anybody else. I think we are all susceptible to the processes of social influence. By the way, if you were to read, and I haven't kept up with all of the versions of his book, but if you're to read Robert Cialdini's book on influence, at least the one version of that book begins with a story of him, the master of influence, of one of the most brilliant social psychologists you can ever possibly meet, and by the way, a close personal friend who I admire and love dearly. He talks about being sold, I think, an encyclopedia by a door-to-door encyclopedia salesperson. And, you know, he talks about he is just as susceptible to all the influence principles. And Kahneman and Tversky, Danny Kahneman won the Nobel Prize. They talk about cognitive bias. And they said, can we do through training, can we reduce cognitive bias on the part of other people? And the answer to that question is no. That knowing about all of the various cognitive biases that they study and the availability heuristic and all these heuristics does not make you immune to them. Does it help at all? No, apparently not. By the way, teaching people, there's been a bunch of studies done. Teaching people ethics, of course, also doesn't create ethical behavior. Right. Right. So it's, you know, so we are all susceptible to this. And so I tell the students on the very first day of class they're going to go through the stages of learning about power. The first stage is denial, which is you've described beautifully. This doesn't apply to me, it doesn't apply to my country, it doesn't apply to my culture, doesn't apply to startups, doesn't apply in the Silicon Valley, doesn't apply, whatever, denial, then denial is followed by anger. How can I tell them what I'm telling them? And then sadness. Oh my God, this is how the world works, but it I'm depressed by it. And if we are successful, and over the years I've gotten more successful at this, they will come to acceptance. This is how the world works. The Stanford Business School motto is change lives, change organizations, change the world. And I believe in that motto. We ought to be changing lives, organizations in the world. But if you're going to change, you need influence. Because if change were going to occur without influence, it would have happened already.

These principles are essentially timeless, and it seems like they are evolutionarily hardwired to some degree. I think people are reluctant to accept that as well. It doesn't mean that we're hopeless necessarily, but it it does mean that an awareness of these principles can cause a sense of agency. That's the last stage of grief that you describe. Acceptance. If you accept them, then you're able to work within the confines of that and metaphorically break free because you're able to understand the principles and then use them in a pro-social way.

I think that's exactly right. And I love the use of the word agency. I think one of the things that I try to do in my class is make people more agentic. Tell them that they can change lives, organizations in the world. But in order to do this, they're going to have to master the art of power and they're going to have to use it.

One idea you discuss is the just world assumption. People want to believe that the world is basically fair. So success must mean that someone earned it. But there's a dark side to that too, because it also implies that if someone fails, that must mean implicitly that they did something wrong, morally or otherwise.

The research on the just world phenomenon, which is what you're describing, suggests that one of the reasons why that is held so firmly is because it gives people a sense of control. If the world is a just and fair place, and there are a set of rules, I just need to follow the rules and everything will be fine. It's like your, you know, your parents probably told you, work hard and you'll be successful. This is, I think, particularly true in Asian cultures and in immigrant cultures. You know, work hard, keep your head down. Your good work will be recognized. That gives you a sense of, I know what I need to do. I need to work hard. I need to be modest and self-effacing. I need to do all these things, and everything, everything will take care of itself. So it gives me a sense of control in an otherwise uncontrollable world. I try to give people a sense of control by teaching them the rules of power, which is another way of having them believe that they can take charge of and be agetic with respect to their own career and their own lives. It's just that the principles are different. Has less to do with hard work and more to do with the fact that if you do good work but nobody notices, it's like a tree falling in the forest. No one hears it. If you do good work, but nobody sees it, because you haven't, you or your colleagues haven't done something to make that work visible, gonna do you any good. So my my good friend Deborah Liu, former CEO of Ancestry, very senior executive at Facebook, talks about she and her team did this early product on Facebook, I think it was Facebook Markets, that was responsible for when Facebook went public, about 15% of the company's revenue. But, you know, she, Asian American, taught to be modest, self-effacing. Nobody, nobody inside the company knew what she had done. And and basically they got no credit, even though it was a huge chunk of revenue. And uh so when she did another project, another product, she said, this time we're gonna let people know what we're doing. We're gonna publicize it inside the organization. And uh with the first product, you know, it turns out that if you don't get credit for what you and your team are doing, the team leaves. So basically everybody on that initial team, responsible for 15% of the company's revenue, they all quit. They've done this good work, nobody's paid attention to them. They they feel unre it's like unrequited love or something. So they all go they they all left. So it is not just that you need to do this for your own career, but you need to do this for your team. Because if you're not promoting the work that your team is doing, your team is not only aren't you getting credit, the team isn't getting any credit.

Yes, right. And that's a powerful reframe, too. I think some people it comes easily to think, okay, I'm gonna engage in this behavior for myself. You know, I'm not one of those people, I would say. I think I'm not alone in that. But when it's reframed as, okay, I'm doing this for my team, I'm doing this for my family, then it's a it's a very, very different situation at that point because then it seems like, okay, it's not quote unquote selfish in a in a negative way. Selfishness is sometimes warranted, taking a broad definition because, like you said, being selfish under some circumstances can mean more credit for your team. It can mean uh a better life for your family.

You know, I think there's a biblical saying the Lord helps those who help themselves. And there's another saying, I think, in the in the Bible that says, don't hide your light under a bushel. Of course, there's almost everything in the Bible, but I think you have a responsibility. One has a responsibility to advocate for yourself, because if you don't advocate for yourself, I don't there are not many other other people who will advocate for you.

Right. They might, but they probably won't. I mean, that's just people are concerned about their own lives. That's that's natural. Professor, one timely question is how artificial intelligence changes business defensibility, uh, otherwise known as motes. In plain English, a moat is whatever protects a business from competition at a base level. Do you believe that artificial intelligence will substantially weaken MOTE or just change what kinds of motes are the most powerful?

I'm not an expert on that question, but my sense is from talking to my good friend Renee Casey, who started a company called Metaloop, which is in the business of artificial intelligence applied to medicine. And the company is doing very well. Renee is a both a physician and now the CEO of this company, a fabulous human being. When he came to my class, he said, when I started this company, I put Jeffrey on the advisory board. And Jeffrey, of course, who can hardly use his cell phone, said to me, You know, this tech forward company, why the hell am I on your advisory board? And Renee said to the class, and he said to me many times, he said, in the in today's world, the idea that you are somehow going to build a sustainable barrier by having a better product is completely nuts. Artificial intelligence is moving so quickly, and I can go out and hire essentially the same engineers or the same quality of engineers that you've hired. I can reproduce your product given Claude and all of their and all and all of its capabilities. I can reproduce your product with almost no cost or expense or time. He said, the moat today is relationships. The moat today is relationships. You know, it's all it's funny. I have all these friends who've gone to work for these Silicon Valley companies, all engineers, no sales and marketing people. And, you know, sooner or later you have to take your fabulous product and you actually have to distribute it. You have to sell it. Somebody has to do something with it if you want to bring in revenue. Renee's comment to me is he said, actually, this is all about who you know and the connections you have. That will become increasingly important as everything else becomes equilibrated. So I don't know if he's right, but I'm just giving you his insight.

That is something that people are not talking about enough as the discussion about business defensibility in the AI world uh continues to evolve very rapidly. Relationships, and to some degree, that's that's nothing new. That's uh always happening to the next one. That's correct. Right. Right. But it's increasingly uh important now subscribe on Substack to hear the full episode.