What do today's celebrity CEOs have in common with 17th-century pirates? A fearsome affinity for branding, for one
Drawing parallels between pirates and modern business is a popular pastime these days, and not just because a ragtag cast of Somali free-booters lucked into capturing more than two dozen Russian tanks earlier this year. In the past 18 months, a raft of books and articles have emerged arguing that, contrary to the half-crazed sea dogs portrayed by the likes of Johnny Depp, real pirates of the Caribbean made rational, intelligent business decisions, based on their dual goals of maximizing revenues and keeping down costs.
One of the men responsible for this explosion was Peter Leeson, an economist at George Mason University. In The Invisible Hook: The Hidden Economics of Pirates, his new book being released this spring, he contends that the world of 18th-century pirates--their business practices, social contracts and even the mythology that surrounds them--was more sophisticated than anyone previously assumed. Not only were pirates great managers, he says, they were experts at branding, developing some of the strongest and most consistent trademarks of all time.
"They wanted to avoid violence as much as possible," says Leeson. After all, conflicts were costly. Crew members might be harmed in a fight, their ship could be damaged or, worse, they might destroy the ship they were attacking. "Pirates wanted other ships to give up without a fight. One way to do that is to have a reputation that is so heinous it's scary." A great example of this was the Jolly Roger flag, "one of the most memorable corporate logos in history," says Leeson. That the skull and crossbones persists today, on T-shirts and books and candy bars, "is an incredible testament to the power of pirate branding." The flag's message is a simple one: Resist us, and you will be slaughtered.
The pirate brand didn't stop at a winning logo. We know that pirates like Edward Teach, otherwise known as Blackbeard, actively worked on their personal images. "They looked a certain way and they had a particular reputation, and they cultivated that to the greatest extent possible because they understood the benefits it generated for them," Leeson says. Blackbeard actively encouraged the worst rumours about his methods of torture and his sanity. He was so universally feared that, to this day, there are no verified accounts of his actually having to resort to murder--most of his victims submitted without a fight.
What does this mean for business today? While corporations can't resort to threats of violence to get deals done, a reputation for hostility is as valuable as ever. The Recording Industry Association of America is an example of this: Its reputation for aggressive litigation (suing little girls and grandmothers with equal vigour) is designed to discourage illegal file-sharing. Likewise, Wal-Mart's reputation for undercutting the competition causes many small businesses to simply roll over when it moves into town. Whether the business is privateering or private equity, "consistency is important for a message to become institutionalized," Leeson notes. To many small business owners, Wal-Mart's smiling yellow happy face is as scary as the skull and crossbones ever was.
But what happens when a company has so intrinsically linked its fearsome reputation to the personality of its captain? In the case of Apple, the company owes much--if not all--of its talent for bending others to its will to an enfant terrible CEO, Steve Jobs. Even within the company, the notoriously authoritarian chief is viewed as "a terror-inspiring taskmaster who's forever screaming at his workers," as Wired editor Leander Kahney wrote in his book Inside Steve's Brain. How does a company ever crawl out from under that cult of personality?
Maybe it doesn't have to. In the movie The Princess Bride, the black-clad hero Westley made his fortune by assuming the identity of the Dread Pirate Roberts, the original having long since handed off his mask and retired a wealthy man in Patagonia. Now consider Apple: Rumours surrounding Steve Jobs's health--fuelled by the fact that Bloomberg accidentally published a draft version of his obituary last October--have investors wondering what might happen to the company if he died. Perhaps Jobs's persona, black mock turtleneck and all, could be passed on down the line, for the next plucky privateer to play Dread Jobs.