Organizing lessons from pirates
Some of you may be aware of the work by Peter T. Leeson, an economist at George Mason University in the U.S. Leeson’s best selling book The Invisible Hook has won numerous awards for casting new light on how pirates organised their crews during the “golden age” of piracy between 1690 and 1730. One reason why the book has become such a success is that he demonstrates how pirates created a harmonious social order aboard their ships: The pirates democratically elected their captain and also the quartermaster, who had to approve the decisions of the captain. Pirates used democratic principles for organizing their crews one hundred years before democracy was adopted by governments.
This finding is important in itself, but even more relevant to organization design is Leeson’s comparison between pirate and merchant ships during this time period.
Pirate ships and merchant ships at the time may have looked somewhat similar – so one may think that their crews were organized in a similar manner. But the ships were used for very different purposes, which in turn led to the use of very different organizing principles. Unlike pirates, the purpose of merchant ships was to maximise the (land based) owner’s profit, something which dictated the use of autocratic and hierarchical leadership aboard the ships.
I have tried to summarize the key differences in the document posted below using so-called design matrices, a useful tool for capturing the key elements of an organizational design (the matrices list the key “functions” in the left column and the “design parameters” along the horizontal axis).
This example reminds us that we cannot judge the effectiveness of a design by looking at the particular organizational form or structure in isolation; it is only meaningful to judge the effectiveness of an organizational form or structure in relation to the purpose /goals / mission that it is intended to fulfil. This is often forgotten by those who use the organization chart as the main organization design tool. Two organizations may have an identical structure yet only one of them may have an effective design!
P.S. Thanks to my colleague Knut Ivar Karevold for making me aware of Leeson’s work.
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