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The iron fist describes a way of doing or relating to disciplining or business. Whether that is through parenting, schooling, business, politics, foreign affairs etc. The velvet glove basically means that it hides the iron fist with a softer outside glove. The person who hides an iron fist in a velvet glove is the type of person with enough diplomacy and tact to resolve things rationally, and the guts to unleash the iron fist when circumstance demands it.

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Q: What is the Iron fist in the velvet glove approach?
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