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You're listening to the MentalNotes Podcast. In this episode, founder Scott Dow explains the power paradox and how to gain informal power.

If you want to influence your peers or lead people that don't work for you, you need to know about the power paradox. I'm going to explain what it is, and I'm going to use a story about a friend of mine to do it.

My friend was one of the most powerful women on Wall Street. In fact, she was one of the most powerful people on Wall Street. She had a 35-year career defined by three major economic crises, the dot-com bubble that burst in 2000, the subprime mortgage crash in 2007, and the COVID pandemic in 2020.

And through each crisis, she gained even more power. She grew her career. She didn't gain power and lose it, she gained power and used it. She used it in a way that led to even more power, even more influence on Wall Street.

So how'd she do it? I had the good fortune of being invited to a retirement party and a who's who of Wall Street came to pay their respects. And as you might imagine, most of them were men. Each spoke, and as they did, a picture of her leadership style emerged. They described a person that was curious and self-aware, magnanimous and humble, open-minded, but very confident.

They described her as empathetic and supportive. They talked about her self-deprecating sense of humor and her team-oriented style. Now the picture they painted was a stark contrast to the stereotypical Wall Street power broker, and these were all the power brokers talking about her admiring her.

As the night went on, I had a chance to hear more detailed stories about her. These stories weren't told by her employees, her former employees, but by the power brokers she worked with that shared their power that ceded some of their authority and control to her.

Here's how they described her leadership style; she asked a lot of questions and was always seeking knowledge, she asked for feedback and acknowledged her shortcomings, she was quick to offer assistance and very interested in other people's opinions, she wasn't too proud to ask for help, and she was very encouraging of others, even those she disagreed with.

She was willing to poke fun at herself and she always showed a genuine interest in everybody else. That style, those behaviors is how she gained power and how she stayed in power. So what's this got to do with you?

If you manage in a matrix organization, you're often sitting around the table with other leaders and you're making decisions and solving problems. You're all pretty equal on the org chart, so there's no formalized power structure. So to influence outcomes, you have to be skilled at developing informal power.

Informal power is the ability to influence others without the benefit of an official leadership title over. That's what my friend did and she was a master of it, and she used the power paradox to do it. So let me explain the power paradox. Wall Street financial markets are built on incentives, and incentives are based on self-interest.

It's in your self-interest to gain power. But to gain power, you have to set aside your self-interest. That's the paradox. Your business is going to be the same way, people act in their self-interest. To gain informal power, you have to set aside your self-interest.

When you do, the group starts to listen because you're no longer a threat. It's not about you, it's about them. You become the solution, not part of the problem. This is especially true during times of crisis and chaos. When people feel threatened, their self-interests hardened and they dig in. The natural reflex is to dig in too, but then the groups at loggerheads.

My friend grew her power and influence during three financial meltdowns, and she did it by using the power paradox. A lot of her female contemporaries were digging in trying to mimic the alpha male behavior of the Wall Street power brokers. But my friend, she busted through the glass ceiling, the glass ceilings by being true to herself and using the power paradox.

The power paradox holds true for both men and women. Whatever your race, nationality, or background, the power paradox applies. Try it and your self-interests are going to be well-served just as my friends were.

She can do it on Wall Street, you can do it in your company.