4 Business Principles that Entrepreneurs can Learn from Mobsters

On today’s show, we’re pleased to welcome globally recognized microeconomist and author, Dr. Jerold Zimmerman, and we’re also joined by author and founder of THRUUE, Daniel Forrester. In this segment, the pair discuss their recently released book, Relentless: The Forensics of Mobsters’ Business Practices, which lays out the underlying economic principles to construct relentless organizations.

Transcription:

Jim Fitzpatrick:
Today, we’re happy to have with us on today’s show microeconomist and author Dr. Jerold Zimmerman, and we’re also joined by author and founder and CEO of THRUUE, Daniel Forrester. Thank you, gentlemen, for joining me on the show.

Daniel Forrester:
Pleasure.

Dr. Jerold Zimmerman:
Thanks for having me.

Jim Fitzpatrick:
Congratulations on the book, Relentless, which is a phenomenal name, The Forensics of Mobsters’ Business Practices. Talk to us about the motivation behind writing a book like this. I’ll start with you, Daniel.

Daniel Forrester:
Well, the book’s idea was really Jerry’s, and I’ve been a student of his and I’ve known him for many years. We met at the University of Rochester, which as soon as you mention that word, it ties you to a microeconomic understanding of human behavior, which I’m sure Jerry will talk about. The motivation was delicious. Jerry asked me to comment on a draft of this book and it gave me a chance to tie 25 years of working with CEOs and boards to think about a group of leaders in the form of mobsters that this good Catholic boy had never thought about before, Jim. It made me a little uncomfortable, and from the day I met him, Jerry Zimmerman’s been teaching me how the world works, so that’s how I got interested in the project.

Jim Fitzpatrick:
Jerry, maybe I should ask you. What was the motivation behind coming up with a concept like this?

Dr. Jerold Zimmerman:
Well, for 45, 50 years, my research and teaching has been on the general area of corporate governance, which is trying to understand how to attract, retain, motivate a workforce to achieve an organization’s objective. I’ve always been fascinated with the genre of mobster criminal enterprise going back to The Godfather movies and even before that.

Dr. Jerold Zimmerman:
I was always struck by the conundrum that all of these movies usually end badly for the bad guys, but organized crime persists, which raises the whole question of, what sort of corporate governance mechanisms do these bad guys use to allow them to persist despite enormous law enforcement efforts aimed at their demise? Trying to answer that question started me on this path about 15 years ago.

Jim Fitzpatrick:
Yeah, that’s fantastic. You know, every time I watch the movie Godfather Part I, II, or III, there’s always takeaways. As an entrepreneur myself, I’m saying to myself, “Wow, there’s a lot to be learned here watching this movie.” There’s a lot of things that we can take away and use in just how we manage people in some cases and from a standpoint of loyalty and never taking sides against the family and things like that that I think a lot of corporate executives watch that movie and say, “There’s a lot of good things in here,” which is strange because, obviously, to your point, it’s a mobster movie and people are getting killed every day in the movie, but nevertheless.

Jim Fitzpatrick:
Let me ask you, why should lawful managers take the time to learn from business practices of mobsters? I’ll open up to either one of you.

Dr. Jerold Zimmerman:
Let me take a crack at that first, and then Daniel can fill in the gaps. What I’ve taught and what economists teach in business schools about corporate governance is you have to have what we now call in the book four pillars or four management devices that we don’t talk about. We know you have to have a way of delegating decision-making authority, whether you’re centralized or decentralized. Who makes what decisions? We teach that in order to motivate people, you have to measure their performance, so you have to compensate them, and you have to have a business strategy that drives those three pillars.

Dr. Jerold Zimmerman:
Then, to wrap the whole thing up, you need a corporate culture. Every organization has these four pillars. Every organization’s pillars are different from every other organization’s pillars, and so what we do in this book is we say, “What are the four pillars of these organized crime syndicates?” They have different pillars among themselves. Daniel, what did I miss?

Daniel Forrester:
Not much. The one piece on corporate culture I’ll just add, Jim, that really grabbed my attention, we work with CEOs and boards and leadership teams and we help them to think about exercises such as, “What are your core values?” Well, there is a distillation of core values that happens in these mobster groups that, frankly, companies that are some of the best corporate culture characters, REI, Southwest Airlines, companies would kill to have, and pardon the pun, kill to have the types of corporate cultures these organizations… Jerry and I actually went through an exercise to think through, what are some of the core values of these groups? Toughness, respect, brotherhood, loyalty you mentioned earlier, steadfastness, resourcefulness.

Daniel Forrester:
Underpinning it all, let’s just be clear, they value immorality, so this is not something that most companies value is immorality, but all of those other values, these are things that I think most CEOs would love to have to galvanize people to come to your firm, to align around a cause, to believe in it. If you activate the four pillars, as we talk about here in the context of having a clear strategy, you have a higher probability of getting through moments like we’re living through in COVID-19 and faster recovery.

Jim Fitzpatrick:
Yeah, for sure, and before we jump into the impact that COVID-19 has had in business overall and on leadership, let’s talk a little bit about, what examples of overlapping economic principles that both lawful and unlawful leaders must follow?

Dr. Jerold Zimmerman:
The lesson that we would like the reader to take away from this book is that not only do all firms have these four pillars, but they have to be very carefully coordinated with each other and they have to reinforce each other. We see that in the corporate culture of the bad guys here, that they create an environment where people want to be there. People want to be a mafioso, that they want to be a Hell’s Angel, and that culture is then wrapped around with the way who makes what decisions, that the fascinating here is that because these criminal organizations can’t go to the court systems and hire lawyers to adjudicate disputes, they have to come up with their own way of solving these disagreements. Some of them did it better than others.

Dr. Jerold Zimmerman:
The American Mafia formed what they called The Commission, and it was the five families who policed each others. They could never get that to work in Mexico and the cartels. They had at one time a similar kind of organization, but then it just fell apart. We see massive amounts of warfare going on among the cartels, which you don’t see among the Hell’s Angel gangs. They don’t fight each other because they have a court system, and so all lawful and unlawful organizations have to have a way of arbitrating disputes among people in the organization.

Jim Fitzpatrick:
Interesting, interesting. Daniel, did you want to add to that at all?

Daniel Forrester:
Yeah. Jim, you asked what these groups have in common with lawful leaders. The immutable laws of economics sort of proceed everything that we write about in the book. We put out a model that’s been timeless, that people are resourceful, people are evaluative. People are maximizing and we’re individuals. Shorthand way of saying, Jim, I hate to tell you, you’re self-interested. I’m self-interested. Jerry’s self-interested. Every lawful organization has to figure out when you’re at home having your coffee with the deep self-interest that we all have at the coffee table, how do you bring yourself fully to work? How do you-

Jim Fitzpatrick:
Yeah.

Daniel Forrester:
… activate one, 10, 50, a thousand, 200,000 employees to achieve a noble end? Our mobsters and our lawful leaders each face the unrelenting idea that self-interest is the precursor before you can have any good outcome. What we posit in the book is that whether you are doing it implicitly or through serendipity, and Jerry and I have had that debate.

Daniel Forrester:
None of the mobsters went to the University of Rochester to learn economics from Jerry, but there’s a set of timeless principles here that either they adapt on their own intuitively, maybe serendipitously, but for lawful leaders, if you apply this methodically, we think you have a higher probability of achieving your strategy and keeping people inside the firm to lean into a noble cause or to grow again.

Jim Fitzpatrick:
Totally makes sense. Are you risking anything by buying a book like this for your leaders and your managers? Just by the title alone, would they look at you sideways as they go, “What is this book about? Why are you giving me this as president of the company?”

Daniel Forrester:
That’s an interesting question. I’ll say no more than… I don’t think you risked anything by watching The Irishman on Netflix, Jim. I mean, we’ve learned that there’s a reason our society is fascinated by these groups and we have a healthy detachment. It’s not as though Jerry and I spent a lot of times with these mobsters. What we did was these mobsters in these groups, they’ve published their stories. They’re out there on the web. The amount of content Jerry Zimmerman consumed just to create the hypothesis of this, they want to tell their stories and there’s been a fascination there.

Daniel Forrester:
Again, we’re not celebrating the violence. We’re not celebrating the products. None of the products and services are anything Dr. Jerry Zimmerman or Daniel Forrester want, but what we’re celebrating is the timeless ideas of how to align inside the firm to achieve high outcomes.

Jim Fitzpatrick:
Right, right. It’s fascinating. It really is. The book details instances of mobsters who were quick to seize on changes in their environment. After a very difficult 2020, as you know, with the pandemic, how can business leaders adapt these examples and thrive in 2021?

Dr. Jerold Zimmerman:
That’s a great, great question, and first of all, we don’t know what 2021 is going to look like. We know that 2019 is never going to come back. We already know what some of the major trends are like telemedicine and a lot more retail. We really don’t know where higher education is going to end up after all of this. We really don’t know where lots of things are. What’s going on right now is that everybody, whether you’re a small restaurant owner trying to figure out how to survive and deciding whether I put up a tent or not, to big corporates, are trying to figure out what new strategies will we have to adapt in order to go to the new normal because strategies that worked in 2019, we’re going to have a different world in 2021 and 2022.

Dr. Jerold Zimmerman:
The first thing is, everyone is scrambling around in the strategy space trying to figure out, “What sort of strategies do I need to have?” Once you come up with a new strategy, if it’s a big change in strategy, how do you realign your four pillars? That’s what the book is really about is taking you through the process by which these gangsters when they… When Prohibition went away, why didn’t the Mafia go away? Well, the reason is because they found other lucrative vices and rackets to run. INTERPOL just put out a warning that criminal syndicates are going to be selling fake vaccine, so they’re adapting to this new normal very quickly.

Jim Fitzpatrick:
Incredible.

Daniel Forrester:
You know, Jim, and the other thing I’d just add to it, too, we tell all of our CEOs we’ve all watched in this unbelievable moment that we’re living through in COVID a new set of behaviors showing up inside your company. Suddenly, everyone’s working from home. That’s privilege, by the way. We’re the privileged people that get to that.

Jim Fitzpatrick:
Right, I agree.

Daniel Forrester:
The question that you are asking about, how do you lean into this as we come out of into a post-COVID world? The questions CEOs should be asking themselves, what are the behaviors and norms that arose in the context of how we behaved separate in this context that we want to preserve? What are we going to do to incentivize that behavior? I’ve been amazed by agility. I’ve been amazed by collaboration. I’ve been amazed by resiliency. Why when we come back to whatever the new normal… Jerry and I have no crystal ball here. Why would you suppress those behaviors? If anything, the book… The back of the book, by the way, is a bit of a pathway for leaders to apply it.

Daniel Forrester:
One of the things I know from my work in culture is that people crave recognition, Jim. You crave a pat on the back, you crave to know that your work is good as much as Jerry and I do. All three of us crave one more dollar to one less. Leaders now, as you think through the reset, understanding and align around the incentives tied to recognition, that is a timeless piece. Our mobsters, by the way, are quite good through symbol action and rhetoric at recognizing those inside their groups. It would be amazing and astounding to watch lawful companies take into that recognition of symbol action and rhetoric. It’s what galvanizes, it moves your soul, and it keeps employees.

Jim Fitzpatrick:
Yeah. There’s no question about it, and 2021 I think will, to your point, bring a lot of the things that we didn’t learn in 2020 about our companies, about how strong we can be, and how we can pivot and bring those right into 2021 to face that head on. I’m excited to jump into 2021. I think it’s going to be a great year for business.

Jim Fitzpatrick:
Gentlemen, thank you so much for joining me on The Atlanta Small Business Show. Before I let you go, how can viewers get Relentless?

Dr. Jerold Zimmerman:
Amazon. Where else? Everything is-

Jim Fitzpatrick:
They’ve got everything on Amazon, right?

Dr. Jerold Zimmerman:
Yes.

Jim Fitzpatrick:
For business owners out there, I highly recommend you get the book Relentless. Needless to say, these guys have narrowed this down for you to bring out the principles that they’ve learned and they’ve took note of of some of the mobster organizations out there, which I think we’ve all seen these different mobster-type movies before and said, “There is a lot of similarity here.”

Jim Fitzpatrick:
These two gentlemen have really brought it right down and brought it home in a phenomenal book that is sure to be a number one best-selling book. Gentlemen, I want to thank you so much again for joining us here on The Atlanta Small Business Show. Hopefully, we can do a followup with you and see how things are going in 2021.

Daniel Forrester:
We’d welcome that, Jim, and I’ll offer Jerry said to go to Amazon, and here’s a little punchline for your viewers. If you type in www.relentless.com, guess where it takes you? It takes you to Amazon. Relentless was the word and the name that Jeff Bezos was going to call Amazon before Amazon, so our book title brings you right to the place where we hope we can sell a few of these books.

Jim Fitzpatrick:
Was that by design?

Daniel Forrester:
Jerry figured it out and he sent me a link and I couldn’t believe it, and then I thought, “Well, look at Jeff Bezos. That’s not surprising that he might want to name a company Relentless.”

Jim Fitzpatrick:
That’s exactly right, that’s exactly right. For those of you looking, either Relentless, or at Amazon you can find it there. The book is Relentless. Thanks so much again, gentlemen, and as I said, I’d love to have you back on the show to see how things are going and coming along in 2021.

Daniel Forrester:
We’d welcome it. Thank you Jim.

Jim Fitzpatrick:
Great. Thanks so much.

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