Power Relations

Michel Foucault, a French historian and philosopher (1984ⴕ), was obsessed with the workings of power. His central claim was that power operates less through visible ‘top-down’ commands than through discourses: shared systems of language, narratives, concepts, classifications, and norms.

According to him, prevailing discourses dictate what is reasonable, acceptable, and sayable, or, on the contrary, inaudible and outrageous. By extension, discourses produce knowledge and truth, as explained, for example, in ‘Power/Knowledge’ (1980). Depending on the dominant discourses at a given point in history, ‘each society has its own regime of truth’.

It follows that the most effective form of power is internalization: individuals subject themselves to the prevailing regime of truth, i.e., to standards of normality, without explicit commands. To remain on the ‘true’ side is to remain employable and respectable. Thus, power shapes what is true or false and, in turn, individual and collective identities (e.g., the ‘Versailles OS.’).

Foucault’s framework helps explain changes in behavior observed in the countries where new discourses are being introduced (e.g., populism, nationalism): what used to be unacceptable (words or actions) can become normal once it is firmly anchored in a new discourse – in a new regime of truth. I see this as best evidenced by the evolution of the definition of ‘free speech’ and, behind it, ‘freedom.’

I would argue that firms, too, are governed by discourses. Mission statements, strategy decks, equity stories, financial and non-financial targets, leadership principles, and performance reviews all help define what can be seriously proposed and what will be quietly dismissed.

Internally, employees learn what sounds ‘smart’, what is ‘common sense’, what will ‘never fly’, and, ultimately, what is sayable. Consistent with Foucault’s theory of power, internalization and self-censorship replaces explicit, top-down management control: employees ignore invitations to challenge the status quo, which they see as traps to identify and discipline deviants.

Externally, investors act as the ultimate enforcers of the prevailing market discourse. Acceptable business models, valuation frameworks, and peer selection for benchmarking dictate whether a company is investible, what it is allowed to be, and how its equity story should be crafted. Any incoherence is punished by investors. Thus, corporate strategies are self-censoring, subjecting themselves to the power of ‘market logic.’

Attempts at strategic repositioning, therefore, often fail because of the inertia caused by the diffuse nature of power, both internally and externally.

Transformational change, whether at the political or corporate level, requires that the unthinkable of the old regime of truth becomes thinkable. To achieve this and shift the power relations woven into a system’s fabric, discourses must be deconstructed and reconstructed.

This process, too often underestimated, requires more than a new strategy or political vision; it demands an extraordinary exercise of power – leadership with commanding force.