Leading Blog






02.05.21

Unexpected Leadership Lessons that Mobsters Can Teach Lawful Leaders

Lessons that Mobsters Can Teach

LEADERSHIP is a broad term, and it applies to those who you might not have a positive perception of — including mobsters.

We discovered through a rigorous analysis applying 70 years of Nobel-prize winning economics that Mobsters have leadership teams and structures that enable their success despite continuous efforts to disrupt them. Many of these crime syndicates have survived over a hundred years despite enormous law enforcement resources devoted to their daily demise. How is that possible when mobsters cannot simply have team members sign up for an online training course or activate their methods through “Mafia Academy?”

In our book, Relentless: The Forensics of Mobsters; Business Practices, we discovered the leadership principles of organized crime syndicates that forge high-performance teams of very loyal gangsters, incredibly strong brand names and cultures with a long-term perspective and an unrelenting customer focus. Relentless offers five transformative leadership lessons that leadership training programs must incorporate and promote. These include:

1. Follow the Same Fundamental Economic Principles as Mobsters

All organizations, lawful and unlawful, face the same corporate governance problem: how to attract, retain, and motivate a self-interested workforce to achieve the organization’s mission and strategy. All firms must empower people with the knowledge and incentives to execute the task to benefit the organization. Then these individuals’ performance must be measured and rewarded. Finally, leaders must develop a culture that communicates the organization’s vision and strategy.

The American Mafia survives using well-defined organization charts that empower small crews of mobsters that specialized by racket: gambling, loan sharking, extortion, union corruption, and so forth. These crews kept roughly 75 percent of their illicit profits, passing the remainder up as a type of franchising fee. The mob bosses constructed enduring crime rings using core economic concepts of corporate governance that lawful managers also must follow. The same economic principles underlying McDonald’s franchising model as a corporate governance scheme also are used by mob bosses running large families of criminals. Relentless teaches these time-honored principles using crime syndicates as case studies.

2. Mobsters Relentlessly Adapted Their Strategies and Corporate Governance to An Ever-Changing World

History is replete with countless leaders trying to pivot to a new reality when their world suddenly changes. Take Kodak trying to adapt to digital imaging, or JC Penny trying to compete in a new retail space, or everyone today trying to adapt and survive in a pandemic. Leaders’ ecosystems evolve, and so too must their strategies. But new and bold strategies often require modifying corporate governance to attract, retain, and motivate a self-interested workforce to implement the often-controversial new strategies. It turns out that organized crime syndicates relentlessly search out and implement new rackets as opportunities present themselves.

National Prohibition in the 1920s offered local Mafias the opportunity to ramp up their bootlegging to provide the now banned alcohol, thereby generating enormous cash profits. During World War II, basic staples like sugar, meat, and even tires were rationed via coupons. Relentless and resourceful gangsters quickly filled the void with stolen or counterfeit rationing coupons.

Recently, INTERPOL issued a global alert warning law enforcement in hundreds of countries to expect organized crime networks to target COVID-19 vaccines, both physically and online. The Mafia’s corporate governance system created high-performance teams of entrepreneurial mobsters who quickly seized new openings. So too must lawful leaders relentlessly scan their environments for new opportunities and threats, adjust their strategies accordingly, and then make appropriate corporate governance adjustments to how they empower and motivate their workforce to achieve the amended strategies.

3. One Size Doesn’t Fit All

Every leader must design a unique corporate governance scheme that matches its exclusive strategy. The Mafia, Hells Angels, and the Sinaloa Cartel had different missions and strategies, and so their leaders developed unique corporate governance schemes. While lawful leaders cannot simply mimic gangsters’ governance schemes, they must apply the same economic principles mobsters follow that channel employees’ self-interest to pursue new strategies. In other words, don’t merely copy the corporate governance methods used by successful lawful companies because they unlikely will apply to your company’s unique mission and strategy. Understand what motivates your workforce and design fulfilling jobs, performance measures, compensation schemes, and corporate cultures that create high-performance teams to deliver products and services that exceed your customers’ expectations.

4. Ensure That All Four Pieces of the Organization’s Corporate Governance Are Coordinated and Complement Each Other

Mafia crews sat around all day scheming possible heists. They had informants at airports who fed them information about valuable outbound cargos. The crew would hijack the truck and fence the goods splitting most of the money among themselves. The family boss empowered this crew to boost valuable cargo at airports. The crew had specific knowledge about the cargo. The performance measures were very simple – money generated and not getting caught. Performance was rewarded by the cash generated. And the culture attracted and retained immoral, very loyal, resourceful, and relentless criminals.

All four pieces of the Mafia’s corporate governance were perfectly matched and complemented each other. Too often, lawful leaders deploy far too many performance measures that only confuse and dilute the subordinate’s efforts. The mob kept their performance measures simple and few in number.

5. Make Corporate Culture the Differentiator

Culture consists of the values, norms, and behavior of how things are done around here. Engaging leaders know that alignment across hundreds, and even tens of thousands of employees takes time and nurturing through story-telling. They articulate and strive to live the norms, values, and behaviors that will drive performance and know that if they don’t practice it from the top, no one down the ranks will even care.

One of the most surprising lessons we learned in researching Relentless was the importance of their cultures. The Mafia values immorality, loyalty, resourcefulness, and steadfastness and attracted and retained mobsters with these values. Wannabe Mafioso often waited decades before becoming made men. Once admitted, the Mafia family offered them protection from other bad guys and enormous prestige. Staying in the family required unyielding loyalty and a code of silence. Surviving since the 1920s testifies to the enormous strength of the American Mafia’s culture. Lawful leaders should seek to build a culture that differentiates their organization from others.

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Leading Forum
Jerold L. Zimmerman, Ph.D., is the co-author of Relentless: The Forensics of Mobsters; Business Practices. He is a globally recognized microeconomist and author of seven books and has taught organizational economics, accounting, and finance at the University of Rochester’s Simon Business School for more than forty years. He has consulted with numerous clients, including Fortune 500 companies and management advisory firms, to demonstrate how organizational economics principles can improve a firm’s culture and, eventually, its performance. Zimmerman is also a founding editor of the Journal of Accounting and Economics, one of the most highly referenced peer-reviewed journals in economics, and has served on several public company boards of directors. His fifty published studies and books include textbooks on economics and accounting and a trade book about designing organizations that create value. For more information, please visit jeroldzimmerman.com

Daniel P. Forrester is the co-author of Relentless: The Forensics of Mobsters; Business Practices. He is the founder of THRUUE, Inc an expert consultancy that assists leaders in bridging the gap between corporate culture and corporate strategy. He works with CEOs, boards of directors, and C-suite leaders, helping them align around a clear strategy while understanding reputational and cultural risk. Daniel has spent the past twenty-five years successfully building consulting practices in the financial services, telecommunications, and public services sectors, utilizing his entrepreneurial approach to strategy. His previous book, Consider: Harnessing the Power of Reflective Thinking in Your Organization, examines how leaders responded to the explosion of data and hyper-connectivity impacting organizations and the role reflection can play in dramatically changing corporate outcomes. For more information, please visit danielforrester.com and follow Daniel on Twitter.

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Posted by Michael McKinney at 12:36 AM
| Comments (0) | This post is about General Business



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