Intro to Organizational Behavior (OB): Power and Politics - Dependency and Power, Bases of Dependency Importance Scarcity Nonsubstitutability

Dependency and Power: Bases of Dependency (Importance, Scarcity, Non-Substitutability)

What This Is

Dependency is the foundation of power in organizations—it occurs when one party (e.g., an employee, team, or department) relies on another to achieve goals. The bases of dependency (importance, scarcity, non-substitutability) explain why some people or resources hold power over others. For managers, understanding dependency helps design roles, allocate resources, and reduce unhealthy power imbalances. Example: Netflix’s recommendation algorithm team holds power because their work is critical (importance), hard to replace (non-substitutable), and rare (scarcity)—engineers with this expertise are in short supply.

Key Theories & Models

• Resource Dependency Theory (Pfeffer & Salancik): Organizations depend on external resources (e.g., funding, talent, raw materials) to survive. Power shifts to those who control scarce or critical resources. Practical implication: Managers should diversify suppliers (e.g., Apple’s shift from single-source chip suppliers) or develop in-house alternatives (e.g., Tesla’s battery production) to reduce dependency.

• French & Raven’s Bases of Power (1959): Power stems from six sources: coercive (punishment), reward (incentives), legitimate (formal authority), expert (knowledge), referent (charisma), and informational (data control). Link to dependency: Expert and informational power thrive when resources are scarce (e.g., cybersecurity experts) or non-substitutable (e.g., a CFO with unique industry insights).

• Emerson’s Power-Dependence Theory (1962): Power is a function of dependency: Power of A over B = Dependency of B on A. Dependency increases when B’s goals are important, the resource is scarce, and no substitutes exist. Example: Zappos’ customer service reps hold power because their empathy and problem-solving skills (non-substitutable) are critical to the company’s brand (importance).

• The Scarcity Principle (Cialdini): People value resources more when they’re rare. In organizations, this explains why employees with niche skills (e.g., AI ethics specialists) or access to limited opportunities (e.g., international assignments) gain influence. Example: Google’s "20% time" policy (allowing engineers to work on side projects) created scarcity—only a few projects got funded, increasing dependency on those who controlled the process.

• Non-Substitutability (Barney’s VRIO Framework): Resources that are Valuable, Rare, Inimitable, and Organized (VRIO) create sustained competitive advantage—and power. Non-substitutable resources (e.g., Coca-Cola’s secret formula, Southwest Airlines’ culture) make others dependent. Practical implication: Protect non-substitutable resources (e.g., patents, culture) to maintain power; reduce dependency by finding alternatives (e.g., open-source software vs. proprietary tools).

• The Iron Law of Oligarchy (Michels): In large organizations, power concentrates in the hands of a few who control critical resources (e.g., budgets, information). This creates dependency loops where lower-level employees must rely on these elites. Example: At Amazon, warehouse workers depend on managers for shift assignments (scarcity of preferred shifts) and promotions (non-substitutable paths to advancement).

Step-by-Step Application: How to Diagnose and Manage Dependency

1. Map the Dependency Network
2. Identify who controls important (e.g., budget approvals), scarce (e.g., specialized skills), or non-substitutable (e.g., client relationships) resources.

3. Tool: Draw a "power map" (e.g., a stakeholder analysis grid) to visualize dependencies. Example: At Microsoft, the Azure cloud team holds power because their product is critical (importance) and hard to replicate (non-substitutable).

4. Assess the Three Bases of Dependency

5. Importance: Does the resource directly impact goals? (e.g., sales teams depend on marketing for leads).
6. Scarcity: Is the resource limited? (e.g., only 3 people know how to operate a legacy system).
7. Non-substitutability: Can the resource be replaced? (e.g., a star performer vs. an easily trained role).

8. Example: At Tesla, battery engineers are non-substitutable (no easy replacements) and critical (importance), making them highly dependent on—and powerful within—the company.

9. Reduce Unhealthy Dependency

10. Cross-train employees to reduce scarcity (e.g., Google’s "Googler-to-Googler" training).
11. Diversify suppliers to avoid over-reliance (e.g., Walmart’s multiple sourcing strategies).
12. Document knowledge to make expertise substitutable (e.g., Netflix’s internal wiki for algorithms).

13. Example: Southwest Airlines reduces dependency on pilots by cross-training mechanics to assist with pre-flight checks.

14. Leverage Dependency for Influence

15. If you control a critical resource, use expert power (e.g., data scientists at Facebook) or informational power (e.g., HR’s access to salary data) to negotiate.

16. If you’re dependent, build coalitions (e.g., junior employees banding together to demand training) or find alternatives (e.g., using open-source tools instead of proprietary software).

17. Monitor Power Imbalances

18. Watch for dependency traps: Over-reliance on one person/department (e.g., a single IT admin who knows all passwords) or power hoarding (e.g., managers withholding information).

19. Example: At Uber, early engineers held outsized power due to non-substitutable knowledge of the codebase—until the company invested in documentation and onboarding.

20. Design Roles to Balance Power

21. Job rotation reduces scarcity (e.g., rotating project managers at Spotify).
22. Decentralize decision-making to distribute power (e.g., Zappos’ holacracy model).
23. Example: Patagonia’s "Let My People Go Surfing" policy reduces dependency on managers by empowering employees to make decisions.

Common Misconceptions

• Misconception: "Power is only about formal authority (e.g., job titles)."

• Correction: Formal authority (legitimate power) is just one source. Expert power (e.g., a junior developer who knows a legacy system) and referent power (e.g., a charismatic team lead) often matter more. Example: At Apple, Jony Ive (SVP of Design) had no formal authority over engineers but wielded immense power due to his expertise and Steve Jobs’ trust.

• Misconception: "Scarcity always increases power."

• Correction: Scarcity only increases power if the resource is also important and non-substitutable. Example: A rare but irrelevant skill (e.g., typewriter repair) doesn’t confer power. At Netflix, algorithm engineers are scarce and critical—hence their power.

• Misconception: "Reducing dependency weakens the organization."

• Correction: Reducing unhealthy dependency (e.g., over-reliance on one supplier) strengthens resilience. Example: Toyota’s "just-in-time" manufacturing nearly collapsed during the 2011 tsunami because of over-dependency on single-source suppliers—prompting diversification.

• Misconception: "Non-substitutability is permanent."

• Correction: Non-substitutability is context-dependent. Example: BlackBerry’s physical keyboards were non-substitutable—until touchscreens made them obsolete. Companies must continuously innovate to maintain non-substitutability (e.g., Amazon’s AWS vs. competitors).

• Misconception: "Power is zero-sum (if I gain power, you lose it)."

• Correction: Power can be expanded (e.g., through collaboration) or shared (e.g., decentralized decision-making). Example: Google’s "20% time" policy increased power for engineers by giving them autonomy, without reducing managers’ power.

Exam / Case Interview Tips

1. Spot the Dependency Base in Scenarios
2. Common question: "Why does [Person/Team X] have power in this organization?"

3. How to answer: Identify the base of dependency (importance, scarcity, non-substitutability) and link it to the resource they control.

   • Example: "The data science team at Airbnb holds power because their insights are critical to pricing algorithms (importance), there are few experts in this niche (scarcity), and their models are proprietary (non-substitutability)."

4. Distinguish Between Power and Authority

5. Tricky distinction: Authority = formal right to make decisions (e.g., a manager’s title). Power = ability to influence others (e.g., an admin who controls meeting schedules).

6. Example: At Netflix, Reed Hastings (CEO) has authority, but the content acquisition team holds power because they control what shows get made (importance + scarcity).

7. Apply Resource Dependency Theory to External Stakeholders

8. Common case prompt: "How should a company manage its relationship with a key supplier?"

9. Answer framework:

   1. Assess the supplier’s importance (e.g., do they provide a critical component?).
   2. Evaluate scarcity (e.g., are there few alternatives?).
   3. Determine non-substitutability (e.g., can you switch suppliers easily?).
   4. Recommend strategies to reduce dependency (e.g., vertical integration, long-term contracts).

10. Avoid the "Power = Control" Trap

11. Misstep: Assuming power is about domination (e.g., "The manager should fire the difficult employee to show power").
12. Better approach: Frame power as influence (e.g., "The manager can reduce dependency by cross-training others, making the difficult employee’s skills less critical").

Quick Practice Scenario

Scenario: At a tech startup, the only employee who knows how to maintain the company’s legacy database (written in COBOL) is threatening to quit unless they get a 30% raise. The CEO is reluctant to pay but fears the system will crash without this person. Using the bases of dependency, explain why this employee holds power and suggest two ways the company could reduce their dependency.

Answer: - Why they hold power: The employee controls a non-substitutable resource (COBOL expertise is rare), which is critical (importance) to the company’s operations. Their skills are also scarce (few COBOL programmers exist). - How to reduce dependency: 1. Document the system (e.g., create runbooks, record training sessions) to make the knowledge substitutable. 2. Hire or train a backup (e.g., send another employee to COBOL training) to reduce scarcity.

Last-Minute Cram Sheet

1. Dependency = Power: Power of A over B = Dependency of B on A (Emerson).
2. 3 Bases of Dependency: Importance (critical to goals), Scarcity (limited supply), Non-substitutability (no alternatives).
3. Resource Dependency Theory: Orgs depend on external resources; power shifts to those who control them.
4. French & Raven’s 6 Bases of Power: Coercive, reward, legitimate, expert, referent, informational.
5. Expert power thrives on scarcity + non-substitutability (e.g., cybersecurity experts).
6. Non-substitutability-permanent (e.g., BlackBerry’s keyboards).
7. Reduce dependency by: Cross-training, diversifying suppliers, documenting knowledge.
8. Power-authority (e.g., an admin who controls schedules has power but no authority).
9. Scarcity alone doesn’t create power—must be important and non-substitutable.
10. Iron Law of Oligarchy: Power concentrates in those who control critical resources (e.g., budgets, info).