Why We Tolerate Business Monarchies: A Deeper Look

Why We Tolerate Business Monarchies: A Deeper Look

Two hundred years ago, political monarchies were largely abolished around the world, leaving only a few figureheads. Yet, in the business world, we still see a form of monarchy where a few hold significant power. Why do we tolerate these business monarchies? Is it the golden rule—he who has the gold makes all the rules? Probably not, since most entrepreneurs borrow money to get started. The real reason might be the essential services that business leaders provide to their employees.

1. Leaders Take Risks

That golden rule might not be too far off. Business leaders risk their financial futures by taking out loans, deferring income, and working countless unpaid hours hoping their ideas will succeed. They also risk their reputations by making tough decisions that no one else wants to make. When the team is split between two great solutions, someone has to choose, and if it fails, someone has to take the blame.

Every business opportunity involves risks. The best opportunities come with the greatest risks, and unfortunately, most people avoid risk even if it means facing financial disaster. Leaders who take on these risks earn every reward that comes their way.

2. Leaders Filter Communication

In the Information Age, we are bombarded with data constantly. Without a filter, we might never get anything done. A good leader provides large blocks of uninterrupted creative time for knowledge workers if their role requires it. They consolidate information from various sources and offer summaries as needed. Leaders also take on the emotional feedback, filtering it for actionable information.

On the outbound side, leaders provide a united voice, ensuring that communication is clear and consistent. They reduce the chances of different people getting different answers to the same question. In this way, leaders act like a frequently asked questions (FAQ) page on a website, providing a service that maintains sanity in the workplace.

3. Leaders Set an Example

Leaders lead by example, creating a consistent business culture that customers can rely on as much as pricing, quality, and speed—if not more. Inconsistency can cost time and drive away customers, suppliers, and others.

Leaders must embody the wisdom, generosity, diligence, courage, cooperation, and other character traits required for success in their business. Success as a leader doesn’t depend on the ability to perform every role but on the ability to live up to the standards expected by customers, investors, and society.

Business monarchies persist because effective leaders provide essential services that support their employees and the overall success of the business. They take risks, filter communication, and set examples that shape the company's culture and drive its success.

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