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Unexpected leadership lessons gangsters can teach rightful executives

Unexpected leadership lessons gangsters can teach rightful executives

LEADERSHIP is a broad term and applies to those you may not have a positive perception of – including gangsters.

We have found, through rigorous analysis using 70 years of Nobel Prize economics, that mobsters have leadership teams and structures that enable them to succeed despite continuous efforts to disrupt them. Many of these criminal syndicates have survived for over a hundred years, despite enormous law enforcement resources devoted to their daily death. How is that possible if gangsters can’t simply get team members to sign up for an online training course or activate their methods through the Mafia Academy?

In our book Relentless: The Forensics of Gangsters; In business practices, we discovered the governance principles of organized crime syndicates, which form high-performing teams of highly loyal gangsters, incredibly strong brand names and cultures with a long-term perspective and a relentless customer focus. Relentless offers five transformative leadership lessons that must be included and encouraged in leadership training programs. These include:

1. Follow the same basic economic principles as gangsters

All organizations, legal or unlawful, face the same corporate governance problem: How can self-serving employees be attracted, retained and motivated to achieve the organization’s mission and strategy? All companies must provide people with the knowledge and incentives to do the job for the benefit of the organization. Then the performance of these people must be measured and rewarded. Ultimately, leaders need to develop a culture that communicates the organization’s vision and strategy.

The American Mafia survives with well-defined organizational charts that empower small crews of gangsters who specialize in thugs: gambling, loan shark, extortion, union corruption and so on. These crews kept about 75 percent of their illegal profits and passed the rest off as some sort of franchise fee. The mob bosses constructed permanent crime rings using core economic concepts of corporate governance, which even legitimate managers must follow. The same economic principles that underlie the McDonald’s franchise model as a corporate governance system are also applied by mob bosses who run large families of criminals. Relentless teaches these ancient principles using crime syndicates as case studies.

2. Gangsters tirelessly adapted their strategies and corporate governance to an ever-changing world

History is full of countless leaders trying to turn to a new reality when their world suddenly changes. Take Kodak trying to adapt to digital imaging, or JC Penny trying to hold their own in a new retail space, or anyone trying to adapt and survive in a pandemic today. Executives’ ecosystems evolve, as do their strategies. However, new and bold strategies often require a change in company management in order to attract, retain and motivate self-serving employees to implement the often controversial new strategies. It turns out that organized crime syndicates relentlessly seek out new thugs and implement them when opportunities arise.

The national ban in the 1920s gave the local mafias an opportunity to step up their pirated copies to provide the now banned alcohol, generating huge cash profits. During World War II, staples like sugar, meat and even tires were rationed through coupons. Relentless and resourceful gangsters quickly filled the void with stolen or fake rationing vouchers.

Recently, INTERPOL issued a global alert in hundreds of countries expecting organized crime networks to target COVID-19 vaccines both physically and online. The mafia’s corporate governance system created high-performing teams of corporate gangsters who quickly grabbed new openings. This also applies to legitimate executives who relentlessly scour their surroundings for new opportunities and threats, adjust their strategies accordingly, and then make appropriate corporate governance adjustments to empower and motivate their employees to achieve the changed strategies.

3. One size does not fit all

Each leader must design a unique corporate governance system that fits their exclusive strategy. The Mafia, Hells Angels, and the Sinaloa Cartel had different missions and strategies, and so their leaders developed unique corporate governance systems. While rightful leaders cannot easily mimic gangsters’ systems of governance, they must apply the same economic principles gangsters follow to channel employee self-interest and pursue new strategies. In other words, don’t just copy the corporate governance methodology used by successful legitimate businesses, as they are unlikely to apply to your company’s unique mission and strategy. Understand what motivates your workforce and create fulfilling jobs, performance metrics, compensation systems, and corporate cultures that create high-performing teams to deliver products and services that exceed your customers’ expectations.

4. Ensure that all four parts of the organization’s corporate governance are coordinated and complementary

Mafia crews sat around all day planning possible raids. They had informants at airports who gave them information about valuable outbound cargo. The crew hijacked the truck and fenced in the goods, dividing most of the money among themselves. The head of the family authorized this crew to move valuable cargo to airports. The crew had specific knowledge of the cargo. The performance measurements were very simple – money generated and not caught. The performance was rewarded with the money generated. And the culture attracted and maintained immoral, very loyal, resourceful, and relentless criminals.

All four parts of the Mafia’s corporate governance were perfectly coordinated and complemented each other. Too often, legitimate leaders employ far too many performance measures that only confuse and dilute the subordinate’s efforts. The mob kept their performance measurements simple and few.

5. Make the company culture the differentiator

Culture is made up of the values, norms and behaviors of how things are done here. Dedicated leaders know that targeting hundreds and even tens of thousands of employees takes time and storytelling care. They articulate and strive to live the norms, values, and behaviors that increase performance, knowing that no one in the ranks cares if they don’t practice from above.

One of the most surprising lessons we learned while researching Relentless was the importance of their cultures. The mafia values ‚Äč‚Äčimmorality, loyalty, resourcefulness and steadfastness and attracts and withholds gangsters with these values. Wannabe Mafioso often waited decades before turning into men. Once admitted, the Mafia family offered them protection from other evils and enormous prestige. Staying with the family required unyielding loyalty and a code of silence. Survival since the 1920s testifies to the enormous strength of American Mafia culture. Legal leaders should seek to build a culture that differentiates their organization from others.

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Leading forumJerold L. Zimmerman, Ph.D., is co-author of Relentless: The Forensics of Gangsters; Business practices. He is a globally recognized microeconomist and author of seven books. For more than forty years he has taught organizational economics, accounting and finance at the Simon Business School at the University of Rochester. He has consulted with numerous clients, including Fortune 500 companies and management consulting firms, to demonstrate how organizational principles can improve corporate culture and, ultimately, performance. Zimmerman is also the founding editor of the Journal of Accounting and Economics, one of the most cited economics journals, and has served on several public company boards. His fifty published studies and books include textbooks on economics and accounting as well as a textbook on the design of value-adding organizations. More information is available at jeroldzimmerman.com

Daniel P. Forrester is co-author of Relentless: The Forensics of Gangsters; Business practices. He is the founder of THRUUE, Inc, an expert consultancy that helps executives bridge the gap between corporate culture and corporate strategy. He works with CEOs, boards of directors and executives of the C-suite, helping them align with a clear strategy while understanding reputational and cultural risk. Daniel has successfully built advisory practices in the financial services, telecommunications and public services sectors for the past 25 years, utilizing his entrepreneurial strategy approach. His previous book, Thinking: Harnessing the Power of Reflective Thinking in Your Organization, examines how executives respond to the explosion of data and hyperconnectivity affecting organizations and the role reflection can play in dramatically changing business results. For more information, please visit danielforrester.com and follow Daniel on Twitter.

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