Business Lessons from the American Gangster

“The most important thing in business is honesty, integrity, hard work... family... never forgetting where we came from. “  – Frank Lucas (American Gangster, 2007)

(NOTE: This post contains spoilers. Do not read further if you haven't seen the movie)

I recently watched the real life based movie-American Gangster. The movie stars Russel Crowe and Denzel Washington in lead roles of detective-turned-lawyer Richard Roberts and drug mafia Frank Lucas respectively. The story based in the 70's in Harlem, New York is pretty intriguing and Denzel and Russel have delivered god like performances. (But they are great actors anyway). Do watch this classic movie if you get time.

Now I would not want to inspire anyone to start selling drugs but the movie really impressed me at various levels. I thought why not write down a few good business lessons from the movie. So here they are.

 Business and leadership lessons from the American Gangster –

·         Low cost producer/Cutting the middle man – In the first few minutes of the movie Bumpy Johnson, Frank’s  boss, keeps repeating the lines “What right do they have of cutting out the suppliers? Pushing out all the middlemen. Buying direct from the manufacturer”. Frank just makes one simple but powerful observation that America has many people willing to buy drugs and South Asia has many cheap sellers. When Frank realizes this he takes the next flight to Bangkok to influence his U.S. Army contacts to smuggle drugs back to the U.S. directly from the plantations in the deep jungles of Saigon, North Vietnam.

This is exactly what retail giants like Walmart do. They buy their goods directly from the manufacturer to cut their costs and thereby gaining competitive advantage or economic moat.

·         Keep your employees happy- Selling at a low cost keeps your customers  happy. But the other important thing  is to keep your workers happy.

When Frank’s U.S. army contact tells him 50 grand will be enough to help smuggle the drugs to the U.S. Frank insists on paying them a 100 grand.

·         Brand name – An important part of product differentiation is brand name. Not only does Frank Lucas manage to sell heroin with extraordinarily high purity but is also able to create a brand for it : “Blue  Magic”. (Blue implying the purity of his product. 100% pure heroin turns blue when tested chemically)

·         Leadership- Frank Lucas was a great leader. Bumpy teaches Frank,” A leader, like a shepherd, he sends his fastest nimble sheep, out front: And the others will follow. While the shepherd, he walks quietly behind it. Here, boy! Here we go. Right here. Bring it here. Yeah. Now he's got the stick, and the cane, he'll use it! If he has to. But most times he doesn't have to. He moves the whole herd quietly.” Now Frank had a great mentor in Bumpy but not everyone takes the trouble to go all the way to North Vietnam jungles to forge new  business relationships. Frank not only took the initiative but sets an example for others. He motivated his brothers and cousins to work with him, creating incentives along the way for "the herd" to move in the direction he wanted. And like many other great leaders he was disciplined. You wont see him doing drugs in any scene. He was a man who  followed a routine. A set time for set activities. He understood the risks of his business and the importance of  having a low profile. He knows that “The loudest one in the room is the weakest one in the room.” He is depicted as a confident but humble man. In the film, Frank’s wife convinced him to wear a flashy chinchilla fur coat and a matching hat to a boxing fight. But when he see the negative attention this fur brings, he quickly burns it.
·   Trust- Trust is an important component of business leadership. Frank understood this early on. He built his drug empire on the shoulders of his brothers and cousins. People who were related to him by blood. People he could have faith in. His U.S. army contact was a man who was once married to his sister. Most of Frank's daily business affairs were looked after by his brothers. Clearly he knew the importance of family.

·  Structuring the organization right- Frank Lucas not only had men who he could trust but also structured his organization in such a way that he retained the ownership. He explains " The man I worked for, he had one of the biggest companies in New York City. He ran it for more than 50 years. Fifteen years, eight months and nine days, I was with him every day. I worked for him, I protected him, I looked after him, I learnt from him. Bumpy was rich, but he wasn't white man rich, you see? He wasn't wealthy. He didn't own his own company. He thought he did, but he didn't, he just managed it. The white man owned it, so they owned him. - Nobody owns me, though."

No wonder Frank Lucas became the first Afro- American drug mafia. A business which was run entirely by the Italians before he came into the scene.