Pirates, Mafia, and Business in the Real World

I just finished reading Everything I Know About Management, I Learned From Pirates at the Business Pundit blog. It’s fascinating. Author Peter Leeson published the paper which came out this month. “To effectively organize their banditry, pirates required mechanisms to prevent internal predation, minimize crew conflict, and maximize piratical profit.”

Rob May posted that he thanks  Matt Demeusy for the pointer to the original post.

This reminds me of how well the late Eugene Webb used Mario Puzo’s  The Godfather to teach organizational behavior and leadership in a class I took at Stanford University during my MBA days. Remember when the Don chides Sonny for letting on what’s he’s thinking? How enemies take advantage of Sonny’s predictable anger and loss of control? One particularly telling point Webb made was how much of the Don’s strength rested in consistency. Empty threats reduce your power. Offers that can’t be refused increase your power. Consistency builds latent power, like the energy in a bow drawn back and ready for release. In time, the threat itself works without the need to carry it out.

There’s also a great deal of business value in the Godfather’s deep understanding of the opponents’ needs and wants and point of view in every transaction. Why didn’t the producer help the singer? Why did the Turk need the Corleone family? This all applies to business negotiations — well, maybe not the horse head scene, but that’s art, not science.

A generation later, my daughter Megan’s at Stanford now and she just finished an essay on the Godfather for Andrew Rutten‘s class in political science. They compared the Godfather to Lyndon Johnson’s power management in the U.S. senate. That class talks about “a favor bank,” doing favors for people to build power in the accumulation of a positive favors balance. One of the most effective managers I ever worked with — name withheld here, but if you know him or me, you know who I mean — built a very successful career on the foundation of doing favors for other people. Like the Godfather, he always kept a positive balance. As was true with people who had received favors from the Godfather, people who received favors from this man were also happy to pay them back.

Some things wear well with time.

Also, sometimes looking at something from a different point of view makes it easier to see.

— Tim


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