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Michael Corleone (Dartmouth 1939), newly elected president of the Corleone Olive Oil Company was reviewing his notes for his first board meeting. He had many things on his mind. First among them was that that he was now running a conglomerate larger than U.S. Steel, but one with a management structure that was a remnant of a family firm. His supply chain was flawed, his management team had become ingrown. He knew that sooner or later he needed to move the firm out of its traditional businesses which were becoming commoditized into newer, faster growing ones.

Corleone was well acquainted with the concept of Disruption and he believed that by moving quickly he could upset the status quo. While he would have liked to go completely legitimate, he realized for some time he would need the cash cow from his historic businesses. He had already convinced his board to move headquarters to Las Vegas, where the state’s Attorney General was no longer an adversary but now his “partner” in gambling. He felt he might be able, with his connections, to accomplish the same in New Jersey, specifically Atlantic City. His insight was to make a move into White Collar Crime because the judges would call his employee-defendants “Sir” and invite them to play golf after their short sentences. He was considering recruiting not from Folsom and Leavenworth but from Wharton, Stanford and HBS. He was also considering a series of acquisitions that would move the firm from a strong regional player to a more powerful national one.

Michael Corleone had ascended to the CEO job reluctantly, as his older brother, Sonny, had been the heir apparent. But Sonny had met an unfortunate end, and Michael had forsaken his planned career as a college mathematics professor to take control of a firm that was without question in a downward spiral. Further, his father had made inadequate provision for management succession. He thought back to the recent past when he had to replace his consigliore, Tom Hagen, who he judged inadequate for the requirements of the future. Hagen, almost a “brother”, and a personal friend, was perhaps too steeped in negotiation when the job requirements had forever changed. Hagen’s legal background was most likely a hindrance and the Corleone Olive Oil Company was no longer preeminent and all-powerful. His brother Sonny, who had been CEO pro tem, was equally flawed; impetuous and biased for massive retaliation. Michael had stepped in and been the realist who understood that delay was necessary until the firm could be strengthened.
Copyright 2014 by absolutely no one, certainly not the President and Fellows of Harvard College

Teaching Note

1.Have your students either read The Godfather or watch the movie Godfather I or Godfather II, both of which won Academy Awards for Best Picture. (Under no circumstances should they view Godfather III, which is an abomination, an unnatural act, an insult to all which is holy).

2.Using Michael Porter’s 5 Forces, have your students put Virgil “the Turk” Solozzo’s quote,
“The Don, rest in peace, was slippin’. Ten years ago could I have gotten to him?” into context.

3.Is this an entrepreneurial venture? Why or why not? What risk capital was employed? Is it difficult to bring in Professional Management to a family run firm?

4.In Godfather II, Michael must figure a way to scale the operation, rationalize the supply chain, and exit some businesses that offer irrational levels of risk. How should Michael set his priorities?

5.Michael’s organization is a vestige of a past time and the various capos are jealous of their positions. How can Michael bring about setting common goals that can allow his team to work towards a common purpose? What demographics are in play? How does the post World War II economy affect the situation?

6.Michael’s experience is primarily military, and as a decorated hero, what lessons does this experience give him?

7.Is West Point the Harvard Business School of American Militarism?

8.How does Michael deal with competition? Is he able to move to a place that his competitors are unable or unwilling to follow?

9.As Michael Corleone channels Sun Tse’s The Art of War, what are his constraints? “When weak, delay; when strong, attack”- what does that mean in terms of building a stronger organization? Are stock options a viable option? Public Offering?

10.Where does Michael see risk and how does he ameliorate it?

November 3, 2014
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