How an Organisation Grows

In October 1957, in the Palermo restaurant Spanò, over that same five-hour lunch we talked about, Joe Bonanno suggested to the three or four Sicilian mafiosi sitting around him that they set up a Commission. Buscetta was there and later told how it all went. Before that, ever since the fall of Fascism, Sicilian Cosa Nostra had exchanged information intensively, but with no centre. Small groups of influential men from different clans would meet and discuss the business of the day in their terse, roundabout way. Decisions, according to Buscetta, were made slowly, only after repeated consultations.

The idea was taken up, and Buscetta was given the job of carrying it out. Two younger men helped him: Tano Badalamenti and Salvatore Greco, known as “Ciaschiteddu”, the Little Bird. This three-man constitutional working party, as Dickie calls it, wrote the rules. There were about fifty clans in the province of Palermo, and giving each one a seat on the Commission was impossible. So they brought in an intermediate level: three neighbouring clans made up a district and elected one representative. To keep power from collecting in a few hands, they banned anyone from being head of a clan and a representative on the Commission at the same time.

Now for the most interesting part. Dickie stresses that there was nothing substantially new about the Commission. From the report of the Palermo police chief Sangiorgi we know that as far back as the late nineteenth century the Mafia groups of Palermo held series of formal consultations and had a system of uniform tribunals. Nobody invented the Commission from a blank sheet. It was built on top of something that had long been working.

The Complex Grows from the Simple

This is the first law of any organisation, and it’s worth remembering for the rest of your life. A complex system that works almost always grows out of a simple system that works. A complex system built all at once on paper can almost never be made to work. Scholars call this Gall’s law, after the man who noticed it. We put it more simply: don’t build a palace until you’ve built a shed you can live in.

You remember the legend of Luciano supposedly rebuilding the American Mafia in a single night and inventing the Commission. Historians have debunked it: there was a council of bosses before, and Luciano only patched up the old rules. And in Palermo the Commission of 1957 was built on top of consultations that had been going on for more than half a century. In both cases the complex grew out of the simple, tested over years.

The American Commission, by the way, was set up even more modestly. Critchley writes that it was never conceived as a means of extending Cosa Nostra’s power over the whole criminal world. Bonanno called it an American device whose task was to keep order through mediation. The Commission stepped in only if asked, and only if both sides agreed to accept its decision. Cases involving outsiders, people who weren’t mafiosi, it had no right to handle at all. A simple system with a narrow job. That’s exactly why it lasted for decades.

For your company there’s one rule in this. Don’t build a big system all at once. Start with a small one that works: one department, one process, one product. When it’s working, add the next piece. Check it. Add another. In a few years you’ll have a complex organisation that works. And the man who started with a big twenty-page scheme will, a few years on, still be explaining why it’s just about to start working.

Flow and Stock

The second thing to understand about any organisation is the difference between flow and stock. Flow is what moves: money comes in and goes out, goods arrive and are sold, people join and leave. Stock is what has built up at a given moment: money in the till, goods in the warehouse, people on the payroll.

Stock changes only through flows. Want more money in the till? Either more has to come in or less has to go out. Want more people? Either hire more or lose fewer. It sounds obvious, but look how many people try to change the stock without looking at the flows.

The American Commission managed its stock of people very strictly. Critchley writes that it froze the size of the families at their 1931 level, partly so that ambitious bosses couldn’t swell their own families at the expense of others. Admission of new members was closed for more than ten years. You remember that later, in 1957, the doors were closed again, for nineteen years. The stock of members was held steady by shutting off the incoming flow. It strengthened the power of a conservative leadership, but it also aged the organisation: for years there were no new people.

Stock Is a Cushion

Third: stock isn’t the enemy. It’s a cushion that lets you ride out breaks in the flow. Goods in the warehouse save you when a supplier is late. Money in the till saves you when a client pays late. A spare man saves you when someone falls ill.

You remember the Morello cooperative, which ran three or four building sites at once with no cash reserve and collapsed at the first crisis. That was flow without stock. And you remember Don Vincenzo’s “new press” box. That was stock, and it let us get through the death of the old press without stopping.

The Don kept exactly three weeks’ worth of oil in the warehouse. Not one week: then any strike at the port would have left the restaurants without oil. And not three months: then the money would have lain there like dead weight while the oil grew old. Three weeks was, in his experience, the longest delay he had ever seen. You size the stock to the longest break you’re prepared to ride out, not to your mood.

Thrifty people love throwing out stock: why keep what just sits there? As long as everything runs smoothly, they’re right, and they save. When a break comes, they have nothing, and they lose more than they saved in all those years. Keep a cushion. A small one, but keep it.

The Bottleneck

One last thing. Every system has one place that limits everything else. The neck of the bottle. However much you widen everything else, no more will pass through the system than that place lets through.

In our laundry the bottleneck for a long time was the press. We could take in as much linen as we liked, wash as much as we liked, but we could press only as much as the press could manage. Until the Don bought a second one, all talk of new clients was empty: we’d have taken their linen and not pressed it. Find your bottleneck. Until you’ve widened it, building up everything else is useless: an extra washing machine will only give you an extra mountain of wet linen by the press. That doesn’t mean nothing else matters. Fewer spoiled pieces before the press means more useful work on the same press. A press that’s repaired before it breaks doesn’t stand idle. Count improvements like these by how much linen goes out to the client, not by how much more of it piles up in the workshop. And once you’ve widened it, look for the next one: it will always turn up somewhere else.

The Bottom Line

Keep a cushion for the longest break you’re prepared to ride out, and widen the bottleneck first. And don’t believe anyone who promises to build a big system from scratch in a single night. Even with Luciano, that turned out to be a legend.