Why That Seemingly Irrational Decision Makes Perfect Sense
Understanding Power with Selectorate Theory
One of the most useful mental models I've stumbled upon for understanding how the world really works doesn't come from business school or tech blogs, but from political science. It’s called Selectorate Theory, primarily developed by Bruce Bueno de Mesquita, and it provides a startlingly clear lens for looking at power dynamics – not just in dictatorships, but in large companies, investor circles, and yes, even within the chaotic world of startups.
I first encountered these ideas properly through the highly readable "The Dictator's Handbook: Why Bad Behavior is Almost Always Good Politics" (Amazon Link) – though the core concepts underpin their denser academic work like "The Logic of Political Survival" (Amazon Link). If you prefer visuals, CGP Grey did an excellent explainer video summarizing the key points (CGP Grey YouTube Link), and the Netflix series "How to Become a Tyrant" (Wikipedia Link) vividly illustrates many of the tactics.
The Core Idea: It's All About Staying in Power
The theory is elegant in its simplicity. It argues that all leaders, whether a CEO, a prime minister, or a startup founder, primarily want to gain and maintain power. To do this, they rely on a subset of key supporters – the "Winning Coalition" (or the "Essentials"). These are the people whose backing is absolutely necessary to keep the leader in charge.
This winning coalition is drawn from a larger group called the "Selectorate" (or the "Influentials") – basically, everyone who has some potential influence or theoretical say in choosing or removing the leader.
The Magic Ratio: W/S
Here’s the crucial insight: the ratio of the size of the Winning Coalition (W) to the size of the Selectorate (S) dictates a leader's behavior and how they distribute resources.
Small Winning Coalition (Low W/S ratio): If a leader only needs a small group of essential supporters (like a dictator needing only a few generals), it's rational to reward that small group with private goods – direct payments, special privileges, targeted bonuses, projects that benefit them. Keeping this small group loyal is paramount, often prioritized over broader welfare.
Large Winning Coalition (High W/S ratio): If a leader needs a large portion of the selectorate to stay in power (like a democratic leader needing millions of votes), they are incentivized to provide public goods – things that benefit most people, like strong overall company performance, fair policies, or widely shared benefits. Relying solely on private rewards becomes too expensive.
Beyond Politics: Seeing Selectorate Theory Everywhere
What struck me is how universally applicable this framework is once you start looking for it:
Large Organizations & Interactions: Inside a large company, why does a CEO seem to cater heavily to certain board members or a small clique of powerful executives? They likely form the CEO's essential winning coalition. Resources might flow disproportionately to departments run by these supporters. Seemingly "bad" strategic decisions might make perfect sense if they consolidate the loyalty of this core group. This internal dynamic, driven by who needs whose support, even extends to how organizations interact externally.
Consider enterprise sales, for instance. When you're selling into a large company, your contact person isn't just evaluating your product based on its objective merits for the entire organization. They operate within their own internal political system. They have their own boss (a key figure in their selectorate or winning coalition) and internal stakeholders they need to keep happy or impress. Selectorate Theory provides a useful lens here: a successful sale often hinges on understanding how your product helps your contact achieve their goals within that landscape. Does adopting your solution make their boss look good? Does it solve a critical problem for one of their key internal allies, strengthening that relationship? Does it provide them with a visible "win" they can use to enhance their own standing? Seeing the purchase decision partly through the lens of your contact needing to satisfy their own winning coalition adds a crucial dimension beyond just features, benefits, and company-wide ROI. It helps explain why the 'best' product doesn't always win, but the one that best serves the internal political needs of the key decision-makers often does.
Investors (VCs): Think about the relationship between General Partners (GPs) at a VC firm and their Limited Partners (LPs). The LPs are the selectorate, and the key LPs whose continued investment is crucial form the GPs' winning coalition. This might explain why VCs sometimes prioritize signaling specific types of success (e.g., rapid markups) that resonate most with their essential LPs.
Startup Dynamics: This theory has been incredibly insightful for navigating startup life.
Early Stages: Founders rely on a tiny winning coalition – maybe a co-founder, a key early engineer, the lead investor. Keeping this group aligned is paramount, sometimes leading to decisions about equity or strategy that seem narrowly focused from the outside but are essential for survival.
Scaling: As the company grows, the selectorate expands. The founder/CEO might need to broaden their winning coalition, bringing in professional managers ("Soldiers") and implementing more formalized structures ("public goods") rather than just relying on personal loyalty ("private goods") with the early crew. This transition can be challenging.
Internal Politics: Factions form as leaders cultivate their own winning coalitions. Understanding who needs whom helps decode internal dynamics.
A Powerful Mental Model
For me, Selectorate Theory isn't about cynicism; it's about realism and understanding incentives. It provides a powerful mental model for looking past stated intentions and seeing the underlying structures that often drive behavior. It helps explain why rational people might make decisions that seem suboptimal from one perspective but are perfectly logical when viewed through the lens of securing their position by satisfying their essential supporters.
It helps anticipate reactions, understand hidden motivations (in sales, in management, in investment), and navigate the complex human dynamics inherent in building any organization – especially a startup.
If you find these ideas intriguing, I highly recommend checking out "The Dictator's Handbook" for an accessible overview, or the CGP Grey video below, The Rules for Rulers, for a quick summary. It might just change how you look at the organizations and power structures around you.