Acquiring Power Inspires People to Take Risks, Act According to Stanford Business School Research.

STANFORD, Calif. -- In the wake of Barack Obama's "yes we can" victory, a timely study has emerged from the Stanford Graduate School of Business about what motivates people to take action. The prime mover, according to a new study reported in this month's Stanford Knowledgebase, is acquiring a position of power.

Specifically, it is people's new, more elevated perception of themselves after assuming a position with more power that inspires them to take more risks and pursue goals more confidently. Taking on a formal position of power -- be it managerial, political, or cultural -- gives people the illusion they have more control over their organization and their world, which, in turn, can propel them to go for the gusto. In the best-case scenarios, this can lead to achieving unimaginable accomplishments. In the worst, it can lead to poor decision making and devastating losses.

In one study, researchers stimulated thoughts of empowerment among a group of participants by having them describe in writing a time when they had power over others. Another group was asked to write about a time when they were not empowered. Researchers then measured participants' mindsets by asking them to predict the outcome of a roll of a die. Participants' choice either to roll the die themselves or have another person roll it for them served as an indicator as to whether they were feeling confident or not in the moment.

"When people feel they can control the outcome, they want to roll the die. It's a classic measure of the 'illusion of control,'" explains Nathanael Fast, a doctoral candidate in organizational behavior at the Stanford Graduate School of Business, who conducted the study with Deborah Gruenfeld, Moghadam Family Professor of Leadership and Organizational Behavior at the Business School; Niro Sivanathan of the London School of Business, and Adam Galinsky of Northwestern University. In this experiment, 100 percent of the "high power" group chose to roll the die themselves, as opposed to only 58 percent of the "low power" group. "This shows that power boosts people's sense of control over outcomes, even when the outcomes are based entirely on chance," Fast says.

In a second study, one group was assigned to the role of manager, another to the role of subordinate. All participants were told they would do a role play, but first they were asked to complete an unrelated activity that involved reading about an organization and rating how much control they thought they could have working in that organization, as well as how optimistic they were that the organization could do well.

Those designated as managers were significantly more optimistic about the organization in the material they read; they thought they would have more control over the organization's fate than those in the subordinate group. "People with a position of power believed they could control outcomes that stretched beyond their actual power," says Fast.

This finding may explain why CEOs sometimes make over-optimistic decisions, such as paying too much for mergers or acquisitions. "Because of the illusion of control that their role gives them, they may tend to overestimate how much influence they will have in turning such transactions into huge profits," Fast observes.

In a third study, participants were again primed by being asked to write about situations in which they had been either empowered or disempowered. They then took a self-esteem test and were asked questions such as whether they would vote in the next election, to what extent they thought their vote would affect the outcome, and how much influence they believed they had over the national economy.

Participants who were primed for power had much higher self-esteem scores and a much greater illusion of control than those primed for disempowerment. They were more likely to say they would vote and that their actions could have an impact on the world.

The investigators ruled out the argument that mood drives people to act. They found that "happiness" levels were similar regardless of which group they were in. "It's because power gives people a sense of control, not happiness, that it inspires more confident action taking," he said.

"One implication of this work is that powerful people shape our world not just because they have resources, but because they believe they can shape the world -- and therefore they try," says Fast. "People with low power mindsets do less than they otherwise could."

Because those who believe they are empowered are more active and productive, managers may want to create more confident employees by giving them a say in their organizations, he suggests. On the other side, leaders need to caution against over confidence. "When someone takes on an air of invincibility after being promoted to a more powerful position, the effects on an organization can be devastating," says Fast.

What is required, he suggests, is a system that ensures critical thought. "Research shows that carefully evaluating the pros and cons of a decision tends to reduce the illusion of control," he says. Instituting mechanisms that require deliberation is the key to preventing snap decisions by CEOs with little time and big egos.

(This story reports on research at the Stanford Graduate School of Business and appears in the January 2009 issue of Stanford Knowledgebase, the free monthly information source for thoughts, ideas and research at the Stanford Graduate School of Business. For related research citations and to dig deeper, visit http://www.gsb.stanford.edu/news/knowledgebase.html.)