Power Lives Upstream - Wednesday June 24
Economist Paul Krugman recently argued that global power increasingly belongs to those who control production, energy, logistics, and critical supply chains rather than those who simply consume what others produce.
That observation highlights a principle that extends far beyond geopolitics. The same pattern appears inside organizations. Leaders often assume power resides where decisions are made. In reality, it frequently resides much further upstream—in the information, resources, and dependencies that make those decisions possible.
In this episode, I explore why understanding any system requires following its dependencies rather than its hierarchy.
Listen to the episode above or read the transcript below.
Welcome to the Tempered Signal Podcast and Im Norm Applegate your host.
I recently listened to a talk by economist Paul Krugman on the changing balance of global power. Whether you agree with all of his conclusions or not, one observation stood out.
Power may not belong to the country with the biggest market.
It may belong to the country that controls the things everyone else depends on.
Krugman framed this in terms of supply chains, rare earth minerals, manufacturing capacity, energy, and shipping routes. His argument was that recent events have exposed a weakness in how many people think about power. We tend to focus on where things are consumed rather than where they originate.
That idea extends far beyond geopolitics.
The same pattern appears inside organizations.
Most leaders think power resides at the point of decision. The executive team. The boardroom. The customer meeting. The quarterly review.
But the real leverage often exists much further upstream.
Power resides in the quality of information flowing into those decisions.
A company can have brilliant executives and still fail if the information reaching them is distorted, delayed, filtered, or incomplete. Decisions are only as good as the signals that feed them.
Manufacturing understands this intuitively.
A plant manager can demand more output. A supervisor can push harder. A schedule can be rewritten.
None of it matters if the material is not available, the equipment is unreliable, or the information about what is actually happening on the floor is inaccurate.
The constraint is almost never where people think it is.
This is the core claim of Norman’s Law: when external pressure exceeds internal regulation, the system reveals where it was never actually in control.
The same principle may now be playing out globally.
For decades, many assumed power belonged primarily to those who controlled markets and consumption. Increasingly, power appears to belong to those who control production, resources, logistics, energy, and critical supply chains.
The lesson is simple.
When trying to understand any system, whether it is a nation, a company, or a team, follow the dependencies.
Ask what must continue flowing for everything else to function.
Ask what happens if that flow stops.
Ask who controls it.
That is usually where the real power resides.
Not downstream where the outcomes are visible.
Upstream where the conditions that create those outcomes are formed.
The most important question in any system is not:
“Who makes the decisions?”
The more important question is:
“What are those decisions dependent upon?”
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