Greed: Greed is good, Greed is right, Greed works: Machiavellian…

“Greed, for lack of a better word, is good. Greed is right. Greed works.” remarks of corporate raider Gordon Gekko in the film Wall Street, played by Michael Douglas.

“There have always been examples of isolated business enterprises engaging in unethical or illegal activities, but the spectacular and concentrated nature of recent events have refocused our attention on what’s wrong with corporate America. Is it Gekko-like greed or the transformation of government watchdogs into lapdogs? Is it a society that operates on the borders of the law without crossing the line?

Is it a general laxity in moral values in our society? Heady questions indeed. An interesting parallel to the previously unchecked behavior of these leaders is the stream of books published in the last third of the 20th century, and reaching a crescendo in the last decade, arguing that the writings of Niccolo Machiavelli, a 16th century Renaissance thinker, could provide the key to effective corporate governance.”

“Given Machiavelli’s reputation this development is perplexing, if not troubling. The application of Machiavelli to management and business raises questions and problems that are generic to the migration and transformation of ideas created in one specific historical and social context to other fields and time periods. What are the presuppositions of such a transformation? What is problematic about applying these presuppositions to the modern business world?

In addition, attempting to transfer such a complex and ambiguous thinker, as Machiavelli raises more specific concerns. How relevant are the precepts on leadership and power formulated for princes in Renaissance Italy as lawmakers to the functioning of 21st century corporate executives?” To what extent are Machiavelli’s precepts applicable to the modern corporate world? These are issues discussed in article “Machiavelli & Modern Business” by Peter J. Galie and Christopher Bopst.

In an article ‘Machiavelli & the art of management” by Shyamal Majumdar, he says that “It’s easy to dismiss the Machiavellian approach to running organizations in today’s kinder, gentler world of new age, team-based management.  But some management experts like James O’ Toole, Senior Fellow of the Aspen Institute, finds some merit in the timeless rules and stratagems penned by Niccolo Machiavelli, who entered public life in 1494 as a clerk and became a secretary of Florence four years later. Make no mistake. O’Toole is not an unabashed admirer of the man who believed that leaders can accomplish their goals only by being tough, manipulative, dictatorial, or paternalistic as the situation requires.”

Indeed, O’Toole feels most of Machiavelli’s principles are outdated in the present context. Take this example of the manipulative and paternalistic style of management. When Henry Ford set up his first plant, he was generous in providing– free schools, hospitals, subsidized food for his workers; something unheard of at that time. The “labor welfare” measures were then termed revolutionary and progressive, but Ford’s approach was essentially Machiavellian (manipulative) in nature. His purpose was that his workers should have more disposable income so that they could turn out to be potential and captive buyers of the cars he produced.

This met with some success. But to Ford’s and the industry’s utter surprise, the Ford workers one day went on strike as they found their owner was trying to be too much of a “paternalistic” manager by trying to control their lives through dictates such as one which said no worker’s children could study in any other school but the one he had set up. It is wrong to assume – as Machiavelli had done – that it’s a jungle of greed and treachery out there in world of business.

But the fact is, however devious his principles may sound to the moral brigade, a careful reading of his ideas in his memorable work The Prince shows he was essentially trying to develop the concept of an ideal prince (CEO in the present context) who would make use of many of the techniques of the enlightened rulers during his time to forge a humane and stable government.

Many may not know that Machiavelli was motivated in his philosophy by the same goals as Confucius – both had a deep underlying concern for the good of the people through stability in government. And their ideas have applications in modern organizations even more than 500 years later.

Why did Machiavelli recommend that a prince must be ready to be cruel and devious? He himself gives the answer: in the long run, this is often kinder than to expose citizens (staffers in an organization) to the turmoil let loose by a weak ruler.

Read it in Machiavelli’s own words: “A man who wishes to make a profession of goodness in everything must necessarily come to grief among so many who are not good. Therefore it is necessary for a ruler, who wishes to maintain himself, to learn how not to be good, and to use this knowledge and not use it, according to the necessity of the case”. The operative word here, as O’Toole points out, is “according to the necessity of the case”, which in other words means, “it all depends”. Your management style cannot be straitjacketed and has to change as the situation demands.

Even the worst of Machiavelli’s critics should find nothing wrong with these arguments. After all, expediency is the name of the game in effective management. His colleagues often derided one of the great business leaders – GE’s Jack Welch – as a modern-day Machiavelli. Listen to the Machiavellian ring in Welch’s own words in 1982: “Managements that hang on to weakness for whatever reason – tradition, sentiment, goodness or their own weakness – won’t be around in 1990”.

But while adopting this seemingly “cruel” style of management advocated by Machiavelli, Welch didn’t forget the thinker’s advocacy of a “human” face. Welch believed the victims of layoffs deserved compassionate treatment – not only generous financial settlements, but humane consideration of their feelings. He personally answered letters of complaint from laid-off employees, and directly intervened in cases of injustice that came to his attention. Executives who mismanaged the downsizing felt his wrath.

The past and present Machiavellis were only practicing a dictum that has now become an all-too-familiar phrase: Business reforms with a human face.