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January 18, 2009

Winners Can Quit

This is the last in a series of posts sharing business lessons learned from the movie, AMERICAN GANGSTER.


6_WinnersCanQuit

Setting the Scene:
Thanks to a misstep by Frank Lucas, who wore a “clown suit” Chinchilla Mink coat to the Ali/Fraizer III fight, the police became aware of Lucas’ success. The “Blue Magic” distribution arrangement with drug lords and mafia families resulted in an assassination attempt on Frank’s wife. And, the unique supply chain operations deal between the Vietnam-based heroin supplier and United States Army personnel was crumbling due to the American pullout from the Vietnam War.

Despite these major setbacks, Frank was recklessly determined to continue growing his “Blue Magic” business.


Winners Can Quit
No business is destined to live forever. Sustained success is difficult to achieve. Decades-long success is attainable. However, century-long success is nearly impossible to realize.

The average life span of a Fortune 500 company is less than 50 years. 33% of companies listed in the Fortune 500 in 1970 were gone by 1983. These businesses either died, merged, or were sold off as smaller business units. [SOURCE]

What goes up, will go down. We know this to be true from a basic understanding of both physics and business.

Lucchesse family Mob boss, Dominic Cattano, once warned Frank Lucas that, “Success has enemies.” It doesn’t matter if we’re talking mob/drug business or legitimate business, the more successful a business becomes, the more competition (or enemies) it will attract. And the more competition (or enemies) a business faces, the more difficult it is for that business to find sustained success.

A business is a means to an end. Nothing more, nothing less. The business owner(s) defines what the end is. This end could be about money, security, accomplishment, legacy, nearly whatever.

Frank Lucas defined his end as never-ending power and wealth.

By the time his supply-chain operations were crumbling due to the impending American pullout from Vietnam, Frank was a powerful and wealthy man. He was winning at the business game he defined. But winning wasn’t enough for him, he wanted to continue growing his “Blue Heroin” business by any means necessary.

Frank made a final visit to his heroin supplier in Vietnam. A rogue General in the Chinese Kuomintang army presided over the poppy farm where Frank purchased his heroin. Like Frank, this General was a wealthy and powerful man. Unlike Frank, this General understood business is a means to an end … and an end is inevitable.

During their last visit together, the General gave Frank Lucas brilliant business advice…

QuttingWhenAhead

Now that’s a line worthy of contemplation … “Quitting while you are ahead is not the same as quitting.”

In the must-read business book, “THE KNACK,” Norm Brodsky spends a chapter talking about the decisions entrepreneurs face when growing their business. He says, “Growing a business is a matter of choice, before deciding to grow, make sure you know why you are doing it.”

Norm continues, “Business is just a means to an end. The question is, what’s the end? Where do you want to go in your life? Where do you want to be in five years from a family standpoint? What do you want to earn? How much time do you want to take off?”

When you know why you’re growing a business, then it’s easier to know when to quit and totally reasonable to quit.

However, if you, like Frank Lucas, are growing a business for never-ending power and wealth, then you’ll never know when to quit. And thus, you will eventually lose in the game of business.

Frank didn’t know when to quit and he was eventually arrested. He was convicted of conspiracy to distribute narcotics and sentenced to 70 years in prison. Because Frank cooperated with government authorities leading to the arrest and indictment of crooked police and drug dealers, he served 15 years in prison.

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Comments

I was watching this movie last night with my wife due to your 5 earlier posts. As soon as I heard that line "Quitting while you're ahead..." I told my wife "That needs to be on Brand Autopsy; that's the most important line of the movie."

Along somewhat similar lines, read Seth Godin's "The Dip". Sometimes quitting (even if you're not ahead) is the right thing to do.

Right on Ron ... "Quitting while you are ahead" is a killer line. Glad you saw the movie and resonated with that line.

Quitting is tough. Even tougher when you have moved long past The Dip and into the blue ocean waters of success. Successful boxers can't quit. Successful gambler can't quit. Successful businesspeople can't quit.

john -- do you think the structure and dynamics of the market make it difficult (or even perhaps impossible) for public companies to quit -- or to be satisfied with the business they have and not continue to pursue growth despite having achieved the desired end? while some businesspeople are indeed motivated by their own greed and lust for power, it seems like leaders of public companies are also under the pressure of shareholders, many of whom want them to deliver "never ending wealth" -- ??? denise

Denise, I agree with you. Private businesses are able to operate without the intense scrutiny and growth expectations from Wall Street. That’s the main benefit of going private — a company only has to answer to itself, to its internal shareholders. And hopefully those internal shareholders aren't focused on getting the biggest fastest.

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