In the present business scenario, where business dynamics are changing faster than ever, top executives are no longer expected to be just good managers. They need to be motivators, regulators, decision makers and above all, leaders. An organization looks to its top management for direction and inspiration and as such, it is the top management that decides the path that the organization will take.
There are many schools of thought on how a leader should conduct himself and lead his charges, with each one emphasizing on certain characteristics and traits, either ingrained or acquired. Perhaps surprisingly, Machiavelli’s ‘The Prince’ offers some very thought provoking insights into leadership and how a leader at the top can hope to retain his/her position and ensure the welfare even in this day and age. Niccolo Machiavelli (1469-1527) was an Italian philosopher and writer at the forefront of Renaissance philosophy and played an instrumental role in the shaping the political ideologies of the time.
‘The Prince’ is perhaps his most famous work, so much so that Machiavelli himself is sometimes referred to as 'The Prince'. It describes how any leader who hopes to gain new territory, retain existing dominions or regain lost principalities must act. The text, written which a cynicism that characterizes Machiavelli, lays down rules of conduct for princes and rulers in a period of constant warfare and power struggles. What is indeed amazing is that the ideas put forth in a book written around 500 years ago remain relevant even today.
The guiding principle of the Prince is that “All armed prophets have conquered, while all unarmed prophets have been destroyed”. While this may seem to be leaning towards rule of the mightiest, it is interesting to note that it is the nature of might that Machiavelli stresses on. A chapter of the book is devoted to how Alexander the Great, with his superior tactics was able to not only defeat Darius and the powerful Persians but also to how Alexander’s successors were able to hold a majority of Asia without much effort for a long period of time. Machiavelli attributes this to a concentration of power at the top where Darius as king was the sole authority figure in the Persian Empire. This made easy for Alexander to subjugate his conquests after Darius was removed. A comparison can be drawn between this incident and the usurping of the photocopying industry by Canon from Xerox. Xerox was the undisputed market leaders in photocopiers and held a dominant position in the world market. Due to a few slip-ups in foreign markets, Xerox started to lose some of its dominance and it is at this juncture that Canon struck. The consumers of photocopiers had allegiance only to Xerox and once Xerox was replaced by Canon, the consumers shifted to Canon as the new ‘prince’ of photocopiers.
Another wonderful insight to emerge from ‘The Prince’ is that second and subsequent generations of leaders find it easier to gain acceptance from their people. The goodwill that their lineage carries makes it considerably easier for them to be seen as worthy leaders. In the modern world, such examples abound. The most obvious one perhaps is that of the Ambani brothers, Mukesh and Anil, who were accepted by Reliance employees and indeed the whole country as natural successors and hence have been able to not only expand but retain their respective conglomerates even in the face of bitter familial feuds, lawsuits and the like.
Consider then, a polar opposite to the example quoted in the prior paragraph. Ratan Tata had to face a monumental struggle both to succeed JRD Tata as the chairman of the TATA Group as well to retain his place. This can be explained through Machiavelli’s theory that in a principality which has many figures of authority, it is difficult for a prince to grasp and retain control. The TATA group was structured as various subsidiaries, each having its own chairman, and was connected through a central chairman. When Ratan Tata was named successor, there was skepticism over whether he would be able to survive the attempts to destabilize him and prosper as chairman. Time has proved the he was indeed capable, but it has been far from easy.
The perfect example of a leader losing the trust of his people would be that of Michael Eisner, the former CEO of Disney. For the entirety of his tenure, he faced constant opposition from within his own organization, mainly from Roy E. Disney, the son of co-founder Roy O. Disney. Constantly firefighting to survive in his own company, Eisner was pushed to the edge by declining revenues, the failure of Euro Disneyland in Paris and increased competition in the entertainment industry. He was all but forced to resign in 2003 following a massive 43 % no confidence vote against him by the company’s shareholders. To say that his exit was orchestrated by internal dissidents would not be an understatement. According to Machiavelli’s theories, Eisner committed the cardinal sin of not crushing opposition within the organization when he had the chance and was always viewed as an outsider. He let foreign powers prosper within the company and was subsequently forced out when opportunity presented itself to the dissidents.
The topic of annexation and/or merger of principalities has found mention quite a few times in Machiavelli’s treatise. It was a prevalent practice of the time for rulers to consolidate their holdings through hostile annexations or through collaboration with dissidents to undermine the incumbent ruler. Although the mergers and acquisitions of today are far more civil and involve a lot less bloodshed, they are still, in essence, consolidation of business by corporations for financial and strategic reasons. Machiavelli says that for an annexation to be successful a few conditions are to be met. The two entities must be similar to each other in nature, culture, customs etc. Failing this, the conqueror or buyer must make sure that he establishes his presence either by moving to the annexed principalities or by sending colonies in his name. Machiavelli advises against forcing abrupt change onto the annexed populace and favours gradual change by weeding out dissenting elements. Looking at one of the more successful mergers, that of AT&T and Bell Laboratories, it is evident that the success of the merger can be attributed to the similarities between the companies in terms of their orientation towards research and innovation and cultural and lingual similarities. Considering the case of the acquisition of Vredestein Tyres, a Dutch tyre manufacturer by Apollo Tyres, it can be seen that even though the two companies belong to the same industry, problems arose due to the vast differences in culture, structure of industry and indeed sensibilities. The reason Apollo has been successful in this profiting from these transactions is that they have maintained a constant stream of emissaries from India to Vredestein in order to establish their credentials as the new owners. At the same time, they have retained the Vredestein brand, albeit for financial reasons. They have also not laid off any Vredestein staff members. These steps have acted as confidence building measures and have led to Vredestein accepting Apollo as benevolent masters. With the success rate of Mergers and Acquisitions at less than 20 %, potential acquirers would be wise to pay heed to Machiavelli before they attempt any such transaction.
Principally, ‘The Prince’ deals with individuals who by birthright, force or fortune find themselves rulers and leaders of kingdoms. A part of the book talks about successors and indeed the rite of succession. In the Indian context, the current times are witness to massive changes to the business landscape, as many captains of industry step down and the search for successors begins in earnest. The most intriguing of these scenarios has to be that of the TATA Group. With Ratan Tata ready to step down after an illustrious career, potential successors eagerly await their chance. While the favourite is Noel Tata, one feels that Machiavelli’ words may prove to be right this time too. He says that a worthy successor is one who divides his competition to keep them weak and at the same time gathers the support of the people so that they many support his bid to succeed the current ruler. One can’t help but feel that this may be just what happens in the TATA chairman saga.
Another interesting example is that of Infosys. With SD Shibulal, the last of the founding members not to have been at the helm taking over as CEO, it remains to be seen if the snubbed potential successors remain at Infosys or try to destabilize the company in an effort to hamper SD Shibulal’s reign as CEO.
With a spate of second and third generation leaders ready to take over, the times ahead promise to be very exciting for those who watch power struggles closely. Individuals such as Siddharth Mallya of UB Group, Gayatri Reddy of Deccan Chronicle and many more are waiting to step up and take their places as the next generation of business leaders and opinion makers. All this makes for a absorbing scenario and gives us a chance to see Machiavelli’s theories in action.
Niccolo Machiavelli was a thinker of note and his works remain relevant to this day. Indeed, it is astonishing to see the eternal importance of Machiavelli’s treatise and it will remain so for years to come.
