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Democracy is great – except in the workplace

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The Soviet Union I left behind was a dictatorship, but the workplace was a democracy; America may be free but the workplace is a dictatorship,” Len Erlikh said after I hired him in 1986 at First Boston — now Credit Suisse First Boston. Being of the Jewish faith, he had fled the USSR's religious persecution.

Erlikh's words have always stuck with me. It is true that in capitalism, the workplace is mostly autocratic. You do what you are told and don't have any say in the company's strategy and operations. The Soviet collectives allowed much greater worker participation — and that is probably why they failed.

Business leadership is not a popularity contest; the best companies are run by enlightened dictators.

Chief executive officers must listen very carefully to their employees, but they have to do what is best for the company, employees and shareholders. They have to make tough decisions and take responsibility when things go wrong. They expect that once the decision is made, everyone will comply — whether the decision was good or bad. The best leaders share the credit when they achieve success and take all the blame when things go wrong.

I know that dictatorship doesn't sound nice, but it is what business leadership entails. People love to follow strong leaders. They want to be led by people with vision, conviction and good values. They may not agree with everything the leader decides, but as long as ethical lines are not being crossed, employees will follow directions, work hard and be loyal.

Look at some of the most successful business leaders:

• Walt Disney would ask employees for their ideas through surveys, but would then dictate his requirements. When employees didn't perform, he would fire them immediately. He had a clear vision and was coherent, moral and demanding. Disney did end up becoming excessively autocratic and losing touch with what made him successful. Yet he touched the hearts and minds of billions all over the world and created one of the greatest companies of its time.

• Henry Ford was known as a tough leader who had a hand in every significant decision. He was so demanding of his employees that he monitored their activities outside of work. He was, however, resolute in vision. Ford defied his investors when they demand he build a car for the wealthy and increased average wages to $5 a day while reducing the work day to eight hours. He ended up revolutionising transportation and setting new standards for the workplace.

• Steve Jobs ruled with an iron fist and demanded absolute secrecy and loyalty from his employees. He was egotistical and moody. Yet Jobs had a brilliant vision, unwavering determination and uncanny understanding of what consumers wanted. He built the world's most valuable company and set new standards for technology design.

• Elon Musk, the greatest technology innovator of today, is a highly imperfect human being who makes extreme demands and sets unrealistic public deadlines for his employees. Yet he is single-handedly changing several industries, including space, energy and transportation.

Autocratic leadership works only until it doesn't, however. And then everything goes wrong; entire companies collapse. Autocratic CEOs often become the bottlenecks in decision making because everything has to be approved by them. And they cause employees to stop taking risks because they become fearful of making the wrong decision. These CEOs start believing their own press and lose touch with what made them successful. If you look at any list of defunct companies that were household names, you will find misguided autocrats at their helm.

There needs to be a balance between strong leadership, autonomy and empowerment of employees. And leaders need to step aside when they have peaked, as Cisco CEO John Chambers did last year. He, too, was an autocrat who said to The New York Times: “I'm a command-and-control person. I like being able to say ‘turn right', and we truly have 67,000 people turn right.”

Chambers realised technology was making it possible for leaders such as him to rule in a better way, with more collaboration and teamwork. He said in 2009: “If you had told me I'd be video-blogging and blogging, I would have said, no way. And yet our twentysomethings in the company really pushed me to use that more.”

The job of manager today is to lead, articulate goals, inspire, motivate and enable. CEOs must facilitate rather than control, as well as listen and communicate. With technology, they can get input from every part of the company and explain the unpopular decisions. Through e-mail, internal social media, and idea exchanges companies can have everyone participate in problem solving.

Employee engagement can be done on small decisions as well as big ones. In February, IBM made a big decision to revamp its global performance evaluation system by crowdsourcing the solution. It explained the deficiencies of its old system to its 380,000 employees in 170 countries through its internal social-media platform and asked them to suggest solutions. Based on the 2,000 comments it received, IBM ended yearly reviews and replaced these with a system for shorter-term goals and quarterly feedback. This are the types of structural changes that are needed in today's era of exponential technologies — in which a year is a lifetime and shifts in strategy are needed every few months.

Leaders can be dictatorial yet inspire and motivate if they listen and communicate effectively — and honestly. To survive the disruptions that technologies will cause in practically every industry, companies will need enlightened dictators who have a heart.

Vivek Wadhwa is a fellow at Rock Centre for Corporate Governance at Stanford University, director of research at Centre for Entrepreneurship and Research Commercialisation at Duke, and distinguished fellow at Singularity University

Apple CEO Steve Jobs
Greatest technology innovator of today: Elon Musk

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Published June 09, 2016 at 9:00 am (Updated June 09, 2016 at 8:35 am)

Democracy is great – except in the workplace

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