The Godfather MBA

June 20, 2011

Everything you ever needed to know about business you could learn in one movie (okay 2 movies) The Godfather I and The Godfather II. In fact, the movie(s) can be thought of as a crash MBA program if you pay close enough attention. I am not condoning crime syndicates, money laundering, murder or pretty much any other crime here. What I am condoning is the hard-working grind-it-out attitude from the movie that anyone trying to launch a business absolutely must have to grow their venture.

Chianti photo by Machu via Flickr Creative Commons

 Entrepreneurship

You do not need anyone’s permission or any level of formal education to start a business. I say formal education because some knowledge is certainly required. There are many examples of successful entrepreneurs who learn their craft from the streets and apply this education to running the business. Little Vito Andolini arrived from Sicily with only the clothes on his back and spoke no English. Vito was named after the town he came from, Corleone, by the U.S. agents at Ellis Island. He grew up learning the ways of the streets and carried this knowledge with him until he needed to take action. He was fired from Abbandando’s Grocery store because his adopted father was forced to hire a guy by the local Mafioso. Vito was left with no food, a wife and a sick baby. He was forced to take all the knowledge he acquired from the streets and from Abbandando and strike out on his own. He launched Genco Olive Oil and grew it into the most successful olive oil importer in the country. Vito didn’t invent olive oil and there were undoubtedly many other olive oil importers, but he did it better and beat them out (I am ignoring all allegations of prohibition-era rum running here).

Real Estate Investing

Being the landlord is better than being the tenant as long as you plan on owning for the long-term as I wrote in The Death of the Starter Home. If you can stomach living in apartment building that you own as Vito did in the early years, you can bank your own rental payments or better yet put that cash towards your business.

Marketing

Build a good reputation and business will come to you. Your brand IS your business. Similarly, perception IS reality. Eventually, all Vito had to do was meet with prospective business partners like The Turk which you will read about next and decide if he wanted to do business with him or not.  Spend the time to ensure your brand is of the highest quality around. Then maybe you to will carry all the politicians in your pocket like the Don. Although, I would probably steer clear of politicians in my business to keep things on the up and up!

Finance/Risk and Return

Don’t bet the farm on one high-risk project. Vito heard the proposal from The Turk and decided that getting into the drug business was too high-risk and could topple everything he has built. Always diversify your investments and your income. Starting a high-risk business is not a good idea. A low-risk business you can start part-time from your home is always preferable. It takes a long to get a business of the ground. Ensure you will have the proper cash flow to support your endeavor before you go at it full-time. Also, do your due diligence instead of taking an associate’s word for it.

Contingency Planning

Always have a contingency plan. You never know when your son will speak out of turn during a business meeting and set forth a chain of events that will get the old man shot up at the fruit stand. People fall ill. It’s part of life. Have an emergency management structure set up to avoid in-fighting with the family. Make certain that all business partners have a company life insurance policy that will pay the surviving partners enough money to buy the deceased’s estate out of his ownership interests.

Competition

Keep your friends close, but your competition closer. You should ALWAYS be shopping your competition. Your customers aredoing it and you need to view your company through their eyes. Check out their websites, stores or anything else you can. It is acceptable to perform this task under the guise of a potential business arrangement. Who knows, any contact could very well be a new business partner down the road!

Management

Don’t become complacent, clean out the bad blood every few years. Just like the five families have to do, a company needs to be dynamic. Always review your product line, methods, operations and your people to see what/who is and is not working out as planned. Don’t be afraid to make some difficult decisions and trim the fat when the situation calls for it.

Human Resources

Sometimes an associate needs to get whacked I meant let go. This goes hand in hand with not becoming complacent through the years. In the new knowledge-based economy in which the United States is now in, your people are everything. Make sure the good ones are happy and the bad ones are not working for you for very long.

A second very good point under human resources is that you should not promote by seniority, but rather skill. Fredo Corleone was passed over by Vito for Michael – the youngest and most skilled of the brothers. Choosing Michael was a tough choice for Vito, but entrepreneurship is full of tough choices and its all on your shoulders to choose correctly. It is for this reason that you should keep a competent Consigliere by your side at all times.

Accounting and Legal

Have competent support personnel to take care of the specialized tasks. Tom Hagen was Vito’s Consigliere or legal advisor. Tom was German-Irish and not Sicilian as the Consigliere typically is. This fact should let you know just how important having good legal and accounting advisors is. You need to through convention out the window as it is of paramount importance to retain the absolute best lawyers and CPAs available for your business. You are probably not an expert an laws or accounting regulations so having great advisors will free you up to run the operations end.

Statistics

Don’t become one by keeping your mouth shut when expected to. Operate with honesty and integrity in all your business affairs. See my article on the downfall of Jim Tressel for more on this.

So, now you have the quick rundown of the Godfather MBA. Now go out and get the DVDs and take diligent notes for the next 7 or 8 hours and watch these films again! You can get them here if  you would like.

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