8 business lessons in soft power from The Future of Power by Joseph Nye.

Book cover: The Future of Power by Joseph S. Nye Jr.

By Grant Hall.  Founder of League Cultural Diplomacy

Like many business people, I have long been intrigued by The Art of War, the ancient Chinese military treatise attributed to Sun Tzu. Likewise, I have also been intrigued by those who take The Art of War way too seriously, carrying it around in a briefcase like a pastor carts around a bible. There’s even a sad array of books and websites that outline how to implement The Art of War strategies in order to pick-up ‘conquests’ in bars; welcome to Loser-ville!

Whilst it was written for military leaders and not pick-up artists, The Art of War’s concepts and strategies are regarded as being as applicable to other disciplines as much as they are to the battlefield. Replace a few key words like “enemy” for “competition” and “battlefield” for “market” and away you go. Business Insider reports that one could ‘ask a dozen people to name the best business book ever and chances are several of them will say, “The Art of War“’, and it often features in top 10 lists of best business books. Many successful sport stars, such as the former Australian Cricket team captain Steve Waugh, have successfully based their team strategies on those outlined in The Art of War.

Machiavelli’s The Prince is another work with similar multi-disciplinary applications, although at least parts of it, as the acclaimed political philosopher Leo Strauss has suggested in his book Thoughts on Machiavelli, have also been taken too seriously since it’s publication. Whilst the political approaches that Machiavelli advocates were certainly being implemented as he wrote The Prince, I still reckon it was written as satire rather than as a ‘how-to’ guide.  A more recent work that is similar both in thematic terms and in the way that it can be applied across disciplines is Joseph Nye’s 2012 book The Future of Power.

The Future of Power is, as the title states all about power, be it soft, hard or smart power. When Nye talks about power it’s probably worth giving him the time of day on the subject; he is a former US assistant Secretary of Defense for International Security Affairs and a Dean of Harvard’s John F. Kennedy School of Government (amongst other high profile roles) and these days his advice is sought within the upper echelon of international diplomacy. I recall recently reading Bob Carr (former Australian Foreign Minister and Premier of New South Wales) refer to Nye as ‘something of a buddy’ in his book Diary of a Foreign Minister, a hoot of a read by the way.

I specialise in corporate cultural diplomacy (CCD) which, as David Clive Price, the award winning international strategist and author pointed out to me in a recent interview, is ‘in a way related to what the politicians call “soft power”. Corporate cultural diplomacy is just one part of what could be considered ‘corporate soft power’ (corporate social responsibility or CSR is another) and I became interested in the relationships between CCD and soft power whilst I was working for the Australian Department of Prime Minister and Cabinet where I developed new political interests which led me to Nye’s work.

Nye writes:

Like many basic ideas, power is a contested concept. No one definition is accepted by all who use the word, and people’s choice of definition reflects their interests and values. Some define power as the ability to make or resist change. Others say it is the ability to get what we want. This broad definition includes power over nature as well as over other people. For my interest in actions and policies, a commonsense place to start is the dictionary, which tells us that power is the capacity to do things and in social situations to affect others to get the outcomes we want. Some people call this influence, and distinguish power from influence, but that is confusing because the dictionary defines the two terms as interchangeable.

Nye himself coined the terms ‘hard power’, ‘soft power’ and ‘smart power’ in the early 2000’s. Hard power is essentially a nation’s military or economic power and its ability to use this power to achieve its goals. Soft power is an altogether subtler concept and Nye defines it as

the ability to affect others through the co-optive means of framing the agenda, persuading, and eliciting positive attraction in order to obtain preferred outcomes.

 ‘In general’, says Nye,

the types of resources associated with hard power include tangibles such as force and money. The types of resources associated with soft power often include intangible factors such as institutions, ideas, values, culture, and the perceived legitimacy of policies.

In other words:

Hard power is push; soft power is pull

Nye says that ‘soft power is not a form of idealism or liberalism. It is simply a form of power, one way of getting desired outcomes’ and points out that although ‘the concept of soft power is recent, the behaviour it denotes is as old as human history’. He quotes Sun Tzu as saying that ‘it is best to win without having to fight’. Smart power is a combination of both hard and soft power.

My business, League Cultural Diplomacy (LCD), helps its clients build influence abroad or across cultures through corporate cultural diplomacy, which is a soft power tool. LCD makes the soft power techniques that governments have used to develop their national interests for hundreds of years available for businesses to achieve success abroad or across cultures.

Let’s now examine 8 lessons that business leaders can learn from Joseph Nye’s The Future of Power:

Lesson #1: Size doesn’t matter

Nye discusses how small states have wielded soft and smart power well beyond their physical size and allowed them to punch above their weight on the global stage of international relations:

Small states are often adept at smart power strategies. Singapore has invested enough in its military resources to make itself appear indigestible in the eyes of neighbors it wishes to deter, but it has combined this approach with active sponsorship of diplomatic activities in the Association of Southeast Asian Nations, as well as efforts to have its universities serve as the hubs of networks of nongovernmental activities in the region. Switzerland has long used the combination of mandatory military service and mountainous geography as resources for deterrence, while making itself attractive to others through banking, commercial, and cultural networks. Qatar, a small peninsula off the coast of Saudi Arabia, allowed its territory to be used as the headquarters for the American military in the invasion of Iraq, while at the same time sponsoring Al Jazeera, the most popular television station in the region, which was highly critical of American actions. Norway joined NATO for defense but developed forward-leaning policies on overseas development assistance and peace mediation to increase its soft power above what would otherwise be the case. Historically, rising states have used smart power strategies to good avail. In the nineteenth century, Otto von Bismarck’s Prussia employed an aggressive military strategy to defeat Denmark, Austria, and France in three wars that led to the unification of Germany, but once Bismarck had accomplished that goal by 1870, he adapted German diplomacy to create alliances with neighbors and make Berlin the hub of European diplomacy and conflict resolution.

In each of the four examples that Nye lists above, Singapore, Qatar, Norway and Prussia, he demonstrates the importance that the roles of networks, alliances and collaboration played in helping these small nations ‘punch above their weight’. Superior networks and alliances are avenues for collaboration which can provide businesses with the means to achieve superior levels of success. Living and working in Asia, I see first-hand how this is the case; take for example the importance that many western companies are placing on developing guanxi when doing business in China. The internet has changed the way businesses form networks; a very interesting study by Lisa Harris, Alan Rae and Ivan Misner confirms

‘that effective online networkers can stay small and flexible but still ‘punch above their weight’ in competition with  larger organisations that are often more traditional in their approach and structure’.

The importance of relationships in international business is something I have explored in previous posts including International business, trust and putting the horse before the cart and International business relationships; prevention, maintenance and repair through Corporate Cultural Diplomacy.

Lesson #2: Soft power makes you more credible, attractive and persuasive

It doesn’t require much thought to conclude that credible, attractive and persuasive businesses are more likely to be successful than those that aren’t, and these are qualities that all businesses should aspire to – but is it that easy?

Nye says that

Attraction is more complex than it first appears. It can refer to drawing attention—whether positive or negative—as well as creating alluring or positive magnetic effects. Like magnetism or gravitational pull.

 Examining concepts of attraction further, Nye says that according to psychologists,

“Years of research suggest that empathy and social intelligence are vastly more important to acquiring and exercising power than are force, deception, or terror.”

 We all know that some companies demonstrate their empathy and social intelligence better than others and there are companies that appear to use force, deception and terror as business strategies. These days, as consumers become increasingly socially mindful of the products they buy, companies with less socially empathic reputations are being forced to re-evaluate the very basis of their business operations.  This is highlighted by a piece by Katie Levans for Ecowatch, which contrasts McDonalds with Shake Shack:

Earlier this year McDonald’s announced that its CEO Don Thompson was stepping down after one of the iconic burger chain’s worst years on record. The very next day, Shake Shack, a scrappy young burger cart turned global restaurant chain with something of a cult following, announced the value of its initial public offering had increased to $675 million. While Shake Shack’s value pales in comparison to McDonald’s longstanding multi-billion dollar business, it’s a signal of changing restaurant trends…

 Levans describes Shake Shack as an ‘emerging “fast-casual” restaurant’ that provides customers with ‘elevated, healthier, ethical and more sustainable food experiences’. ‘Shake and McDonald’s both serve burgers’ says Levans, ‘but that’s where similarities end’.  Future business leaders will understand how corporate empathy and social intelligence make a corporation more credible, attractive and persuasive.

Discussing another area of attractiveness, Nye says that

Psychologists tell us we like those who are similar to us or with whom we share group membership, and we are also attracted by physical characteristics as well as shared attitudes

Which tallies with what many international business leaders have learned about doing business abroad; that it’s important to appear to be as local as possible. The business cards that I hand to people in Vietnam, India or Australia are each uniquely designed for each country. My Indian business card has my university qualifications highlighted as this is the norm in a country that respects academic achievement, whilst my Vietnamese business card is written in Vietnamese and uses colours that have positive traditional connotations, my Australian business card is black and white and contains no details of my university qualifications.

Business card for India
Business card for India

Larger organisations design their offices in local styles and have the capacity to hire local staff and sponsor local arts or sports events so that their physical attributes and attitudes and group memberships appear or come to be shared with their local environment and the target groups or people they want to influence. I wrote about some similar concepts in International business strategy, differentiation and the need to connect at a local level, and in You, me and the refugees, getting to know each other through arts, sport and culture I wrote about a study that discovered how the strongest relationships are built on shared activities, that is, doing things together, rather than simply enjoying shared interests. 

Nye also points out that

“Research has consistently shown that exchange students return home with a more positive view of the country in which they studied and the people with whom they interacted,” and foreign-educated students are more likely to promote democracy in their home country if they are educated in democratic countries”.

Which is why successful companies go to great lengths to develop and promote their corporate values to the public. Just as exchange students develop an elevated level of trust for countries in which they have lived, companies have learned that customers trust them more when they are engaged with them in one way or another; it’s all about ‘getting-to-know-you’. Social media has been an important tool for companies that seek to develop a relationship with their customers. Facebook pages enable companies to tell their ‘fans’ about new product releases, news, events, social responsibility projects and more, whilst obtaining valuable customer feedback and data. As customers get to know a company better, trust and loyalty is built which in turn strengthens competitive advantage. The ability to create a dialogue with consumers builds what Nye calls the ‘enhanced credibility that reciprocity creates’. He also points out that ‘actions speak louder than words’ which is why events and social responsibility initiatives are so important.

Lesson #3: Storytelling is important

Storytelling in business has been the rage for some years now. The influential business publications have all run feature articles on storytelling, and a personal favourite of mine is Harrison Monarth’s The Irresistible Power of Storytelling as a Strategic Business Tool for the Harvard Business Review. As Nye states:

In persuasion, rational argument appealing to facts, beliefs about causality, and normative premises are mixed with the framing of issues in attractive ways and the use of emotional appeals.

Before going on to say that

…outcomes are shaped not merely by whose army wins but also by whose story wins

Just as the modern communications era has changed the way companies make themselves appear more attractive, credible and persuasive, it has also provided an environment that rewards good storytelling for business purposes. ‘Competitive struggles over legitimacy’, says Nye, ‘are part of enhancing or depriving actors of soft power, and this is particularly true in the information age of the twenty-first century’. He also points out that ‘narratives are particularly important in framing issues in persuasive ways so that some “facts” become important and others fall by the wayside’.

Lesson #4: Soft power can be a prevention or a cure

In international business, relationships are assets that need to be maintained. Nye says that ‘all too often, policymakers treat public diplomacy as a bandage that can be applied after damage is done by other instruments’, whereas soft power can also be used to lay a foundation for good future relationships or to maintain current relationships. Just like many things in life, prevention and maintenance is usually less costly that repairs.

As I wrote in International business relationships; prevention, maintenance and repair through Corporate Cultural Diplomacy:

Businesses can implement corporate cultural diplomacy (soft power) activities before they arrive in a new market location. When they do so they are investing in a preventative measure that will reduce the costs of cultural maintenance and repair at a later date.  Businesses that do this are creating beneficial and trusting relationships that might save them down the track. 

Businesses can implement corporate cultural diplomacy activities as ongoing maintenance.  Ongoing cultural maintenance is needed to keep your essential business relationships in foreign markets in good working order.  In the same way that good ongoing maintenance of a car reduces the risk of breakdowns and expensive repair bills, good ongoing cultural maintenance can help prevent expensive breakdowns of key strategic relationships when working in foreign markets.

Businesses can implement corporate cultural diplomacy activities to make repairs when their international business venture is not going according to plan.  Cultural engagement activities can be used to repair broken relationships and help rebuild trust, be it with the public, key-decision makers, strategic partners, governments or any range of stakeholders.  For example, cultural engagement activities can repair the damage of a PR disaster.

Lesson #5: Soft power is not a short cut

Nye details how incorporating soft power into strategy is more difficult than may first appear and makes the following important points in regards to soft power.

  • ‘success in terms of outcomes is more in the control of the target’

  • ‘the results often take a long time’, and stakeholders are often ‘impatient to see a prompt return on their investments’

  • soft power ‘is often hard to use, easy to lose, and costly to re-establish’

  • ‘if a narrative is too transparently manipulative and discounted as propaganda, it loses persuasive power. Again, it is not just the influence effort by the agent, but also the perceptions by the targets that are critical for the creation of soft power’.

That is why soft power can’t be treated as a short cut. Soft power requires a rare expertise to be exerted. Companies can recruit staff who are experts in corporate soft power (CSR or CCD for example) or outsource the management of soft power initiatives to external businesses such as mine. Experts are people who know how to design initiatives that will maximise the likeliness of successful outcomes so that the benefits of the investment are reaped. Whilst Nye was primarily talking about the challenges that nations face in implementing soft power, it’s my observation that time-frames and success rates are higher for corporations than governments and that corporate use of soft power can help speed up other business operations. For example, companies that use soft power to build relationships in advance of opening operations in new locations will often find important external decision making processes are speedier and deliver more favourable results than those experienced by companies that haven’t invested in soft power.

Lesson #6: To implement soft power you need to understand the context in which it is wielded

Nye says that ‘it is useful to distinguish three different aspects of relational power: commanding change, controlling agendas, and establishing preferences’. Developing this concept and drawing on the work of  the economist Kenneth Boulding and social theorist Steven Lukes, Nye details ‘three faces of power’:

‘FIRST FACE: A uses threats or rewards to change B’s behavior against B’s initial preferences and strategies. B knows this and feels the effect of A’s power.

 SECOND FACE: A controls the agenda of actions in a way that limits B’s choices of strategy. B may or may not know this and be aware of A’s power.

THIRD FACE: A helps to create and shape B’s basic beliefs, perceptions, and preferences. B is unlikely to be aware of this or to realize the effect of A’s power. Some theorists have called these the public, hidden, and invisible faces of power, reflecting the degrees of difficulty that the target has in discovering the source of power.’

In terms of understanding the context in which you are operating, when wielding power you need to know which ‘face’ or combination of faces you are using and if those faces are appropriate to your needs and the culture and context in which you wish to use your power. Nye offers some wise words of caution in relation to both context and culture:

‘Having a larger tank army may produce victory if a battle is fought in a desert, but not if it is fought in a swamp. Similarly, a nice smile can be a soft power resource… but if I smile at your mother’s funeral, it may destroy soft power rather than create it’.

‘The production of soft power by attraction depends upon both the qualities of the agent and how they are perceived by the target. What produces attraction for one target may produce revulsion for another.’

 Three examples of which he provides below:

‘…a given cultural artifact, such as a Hollywood movie that portrays liberated women acting independently, may produce positive attraction in Rio but revulsion in Riyadh. An aid program that is seen as manipulative may undercut soft power, and a slick television production that is perceived as pure propaganda may produce revulsion.‘

As shown above, an inability to successfully understand the context of your soft power initiatives can have dire consequences. Understanding context requires ethical businesses to consider if their use of power correlates with their corporate values.

Lesson #7: Soft power needs networks and relationships

Nye quotes political theorist Hannah Arendt as saying that “power springs up among men when they act together” and memorably points out that ‘soft power is a dance that requires partners’.

‘Networks’, says Nye ‘are an important type of structural power in the twenty-first century’ before going on to describe how

Networks are becoming increasingly important in an information age, and positioning in social networks can be an important power resource. For example, in a hub-and-spokes network, power can derive from being the hub of communications. If you communicate with your other friends through me, that gives me power. If the points on the rim are not directly connected to each other, their dependence on communication through the hub can shape their agenda.

One company whose strategy relies on being a ‘hub of communications’ to gain power is Telstra, an Australian communications company. This is evidenced through their ‘Telstra Exchange’ initiative which states ‘building a brilliant connected global brand’ as a core aim and details how their ‘international team offers connectivity solutions’ not just in regards to phone and internet connectivity, but in building people-to-people and business-to-business links. My own business, League Cultural Diplomacy also aims to be such a hub; this is necessary to deliver our key corporate aims, which are to help our clients build relationships, trust and influence abroad or across cultures. We can’t help our clients build relationships without making some introductions first!

Building relationships is discussed at length in The Future of Power; as Nye says, ‘public diplomacy’, a branch of soft power that incorporates cultural diplomacy, ‘also involves building long-term relationships that create an enabling environment’. Which again mirrors the experience of governments and corporations that use soft power. In Corporate cultural diplomacy; how it works in practice (with examples) I cite six real life examples of corporate cultural diplomacy and in each of the examples one can see how the organisation seeking to gain influence has done so through a partnership arrangement with other people or organisations; the casino partnered with local arts organisations and the bank with an orchestra as two examples demonstrating Nye’s point about soft power being ‘a dance that requires partners’.

Lesson #8: Soft power initiatives need to be strategic

Nye says that ‘converting resources into realized power in the sense of obtaining desired outcomes requires well-designed strategies and skilful leadership’ and provides us with some suggestions for how a soft power strategy might be designed. Some of these suggestions have been tested and are practical whilst others are theoretical and largely philosophical, but seem sensible nonetheless. Drawing on the work of international relations expert Alexander Vuving, Nye challenges us to look at the outcomes we want to achieve in regards to how we want to be perceived, and then offers suggestions how to attract these perceptions:

“Benignity” is an aspect of how an agent relates to others. Being perceived as benign tends to generate sympathy, trust, credibility, and acquiescence. “Brilliance” or “competence” refers to how an agent does things, and it produces admiration, respect, and emulation. “Beauty” or “charisma” is an aspect of an agent’s relation to ideals, values, and vision, and it tends to produce inspiration and adherence. These clusters of qualities are crucial for converting resources (such as culture, values, and policies) into power behavior. Without such perceived qualities, a given resource may produce indifference or even revulsion.

As someone who designs cultural diplomacy activities for a living, the above provides some interesting yet theoretical guidelines that I would like to investigate and experiment with. Supposing the above hypothesis is correct, and to my mind it appears sound, if one was to use an orchestra as the centrepiece for a cultural diplomacy activity, if the instigator’s intentions are to attract ‘admiration, respect, and emulation’, they would be best served by having the orchestra perform a work known for its brilliance, Beethoven’s 5th for instance.  On the other hand, if the instigator wanted to develop an image of ‘inspiration and adherence’, the performance of a work known for its beauty, such as Barber’s Adagio, would be a better selection. This is very interesting food for thought.

The importance of careful consideration, cultural and contextual awareness and strategy are themes that run throughout The Future of Power. In designing a well-considered and appropriate soft power strategy, Nye proposes six questions that need to be asked from the outset and which I will examine one-by-one.

What goals or outcomes are preferred?

The answer to this question will detail your desired endpoint. It will detail who you want to influence and why, and how you want to be perceived by the target(s) of your soft power initiatives.

What resources are available and in which contexts?

The answer to this question will detail what resources you will use to deliver your soft power initiative and why they are culturally and contextually appropriate. A corporate cultural diplomacy initiative might include a program of artistic performances or a CSR initiative might include establishing a charitable foundation, and in adequately answering this question, you will detail precisely how these initiatives will be delivered and what resources you will use to deliver them (for example, in-house delivery or outsourcing).

What are the positions and preferences of the targets of influence attempts?

Sun Tzu says:

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

The same philosophy needs to be applied in developing your soft power initiative, although ‘target’ would usually be a more appropriate word than ‘enemy’, although soft power can certainly be used to counter your business competition. I formerly worked with government departments alongside mining and resource companies who wanted to build and maintain good relationships with Indigenous communities in Australia. One lesson both the government agencies and the mining companies learned through hard experience was that their initiatives would fail if the target communities weren’t consulted and largely involved in the planning and delivery of the initiative. In the past, the government and the miners would dream up initiatives that sounded wonderful to their own ears but wondered why no one from the Indigenous community showed up or involved themselves in their initiatives, relegating the initiative into the expensive failure bin. Essentially, the failure was due to not knowing their targets and misunderstanding the cultural and contextual environment for their endeavours.

Which forms of power behaviour are most likely to succeed?

The answer to this question will detail which ‘co-optive behaviour’ or ‘face of power’ you will use or which combinations of ‘agenda-setting, persuasion, and attraction’ will provide you with the strongest likeliness of success and why.

What is the probability of success?

Working out the probability of success is important in deciding whether to implement the strategy or not and has a role to play in considering the amount of investment. A low-cost initiative might have a low probability of success but just might be worth a shot whilst high cost initiatives with a thin chance of success are probably not worth proceeding with. If the calculated probability of success is low it is worth reconsidering and redesigning your strategy.

The Future of Power is a great book for business readers who want to gain more influence or power for themselves or their organisation. It provides good insights and directions into using the techniques of soft power that have served nations so well for hundreds of years. Whilst this is not a business book and large parts of it are dedicated to speculating about international power balances, particularly in relation to China and the US, these parts remain interesting and build worthy environmental knowledge that would be particularly useful for those involved in international business. Creative and desparate types who have looked to The Art of War to improve their strike rate in singles bars might also like to try some of the the soft power approaches outlined in  The Future of Power, but perhaps that’s a blog post for another day!

You can read more about Corporate Cultural Diplomacy here.

Here is Joseph Ny discussing soft power:

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