How to run a company like a pirate ship
This article is part of a forthcoming series on management structures of seafaring businesses in the 17th and 18th centuries. Later articles will cover the Dutch East India Company’s rapid expansion and the explosive asset growth of Chinese pirates like Cheng Yi Sao and Cheung Po Tsai.
There’s a scene in the 1983 Monty Python film “The Meaning of Life” in which bandanna wearing accountants moor their office building next to a rival and swing across, shattering glass and completing a successful, if bloody, hostile takeover.
As insane as it sounds, pirates were in fact, pioneers in the art of management. Pirate ships were tightly run business ventures. There was significant risk of failure, so pirates, or more accurately, buccaneers, would vote a captain into power. When they captured a prize, they all took shares. When they chose routes to hunt in or ports to stop at, this too was largely democratic.
Pirates were remarkably forward thinking as well. If I told you that pirates invented workman’s comp, would you believe me? If a pirate lost a limb or organ during battle, he was compensated by his crew in pieces of eight. Ironically, this was centuries before workman’s comp was normal in companies or factories.
Currently, businesses are coasting along. Businesses are not being run radically (aside from deliverable-based Agile management structures). Most businesses are waterfall-structured pyramids, with HBS or Wharton grads somewhere near the top, running the business they way they’ve been taught from people who were taught that way, and so on back for a few hundred years.
However, there’s another way. A way that defied the harshness of life at sea in the late 17th century. A way of running a company that made Caribbean buccaneers an organizational force that allowed them to make Port Royal Jamaica and Nassau Bahamas capitals of a decentralized empire of blue water. Compared to the Spanish, French, and English navies and their waterfall structure, pirates like Henry Morgan, William Kidd, and Bartholomew Roberts reached levels of success unknown for men of their class.
There are three defining precepts that all pirate codes had that lent them extraordinary sticking power, huge efficiency of work, and a nimbleness in direction that left their rivals rolling in their wake.
“The captain and navigator shall have two shares, the quartermaster one and one-half shares, and all else one share.”
This law of pirates was unique to companies of this time. Pirates shared profits on all prizes taken. The captain usually owned the ship, and they would get a larger share for their financial risk, but otherwise when money came in, it was shared more or less equally among all men. This happened after the prize, not the voyage. Pirates would see their sea chest filling with winnings during their voyage. This meant that every single sailor aboard was deeply and personally invested in the success of the venture.
“We already profit share” I might hear you say. To whom? Senior sales, some of the key stakeholders, and who else? Does the secretary get profit sharing? How about the janitor? The mailroom clerk? A business that is run like a pirate ship would calculate what is needed to keep the lights on with a bit extra in case of unfair winds, and then the rest is cut into equal shares and spread to each employee. Ideally, employees would receive a base salary, and that base can be allocated according to experience or task complexity, but at the end of each major contract or quarter, each member should get their share. This gives every single member a deep, personal stake in the business. Much like Dan Price’s vaunted $70,000 minimum salary experiment, this begs the question. What happens when you treat every job as essential?
“Every man shall have an equal vote in affairs of moment. He shall have an equal title to the fresh provisions or strong liquors at any time seized, and shall use them at pleasure unless a scarcity makes it necessary for the common good that a retrenchment may be voted.”
Pirates were wary of whom they brought on board, and in their hiring processes, an established crew was more like a fraternity. They would meet the new members and then vote on their addition to the crew. A bad addition was worse than nothing; after all, they were going to split shares further by bringing on a new face.
A business run this way would have a flat management structure that gives teams the ability to hire freely if they need the help. Members are careful to not hire recklessly because they have a direct stake in the profitability of the business. Every new employee you bring on directly impacts how large your share is, so you would only request hires if you need them and know they will directly increase the profitability of the business.
A system like this strips the fat from the bone, destroying bullshit jobs and keeping the target in focus. Moreover, this edict says what all companies should know: if someone needs something to do their job, give it to them. I’ve worked at companies that rationed pens and printer ink like plutonium. They hemmed and hawed about spending money on a birthday cake or a company dinner, bought the cheapest possible keyboards and mice for their employees, left the beer fridge empty and made new employees bring home laptops to work.
If you’re running a company, outfit your employees. Don’t begrudge them their tools. Imagine asking a doctor to bring his own scalpel from home. You can quibble over pennies while the best employees slip out the door and join companies that treat them like experts.
“The lights and candles shall be put out at eight at night, and if any of the crew desire to drink after that hour they shall sit upon the open deck without lights.”
This is a concept that many businesses love to talk about but refuse to put into practice. At this point in history, working twelve to fourteen hours a day was standard. Many pirates were escaped slaves from plantations or former Royal navy sailors who were used to working very long hours and only having an hour or two to themselves a day. Comparatively, pirates worked far less, often waking later and leaving minimal sailors on watch overnight. Their curfew, similarly, was not strictly enforced bedtime but rather an end to labor. At eight pm, the deck lights were snuffed. No more sail mending, ropemaking, patching, or cleaning was to be done. However, this wasn’t a bell for bed. The buccaneers were free to sit on deck under moonlight, drinking and talking.
A business run this way would have a strict working curfew. Lights off at 5, no overtime, no crunch. The doors lock, your work computer stays home. The result? Workers are plugged in, on task, and free to enjoy holidays, weekends, and evenings. Working a mule till it’s swaybacked will get you more poor-quality work in the short term, and less high quality work in the long term. Work life balance is so essential and so neglected that seafaring criminals three centuries ago did a better job protecting it than companies like Apple or Goldman Sachs.
Running your company like a pirate ship is a hard sell for any board of directors, most of whom seem to be bloodless mannequins made of gypsum and wadded paper. And that’s fine, this style will not work for all companies. Pirate ships were small, nimble, fast moving, underfunded and underequipped ventures and they regularly ate the lunch of the richest, most powerful navies that have ever existed, and you can have those results too. It just requires remapping what you’re willing to do to accomplish what they did.