Essential Innovation Lessons from Pirates, Gangs, & Smugglers

Samsung, Apple, Google and Nike – the powerhouses of innovation, are often mentioned in the same breath because of their ability to consistently dream up products we can’t live without. We constantly praise their leaders and obsess over the innovation lessons they teach us. At the other end of the spectrum however, exists noteworthy innovation from organizations of a different type. Often unnamed and operating in secrecy, these companies wield guns instead of patents. Yet just like the way we study the Samsungs and Apples of the world, studying how pirates, gangs, and smugglers innovate themselves out of tough situations can offer lessons we can all leverage to become better innovators, if we allow ourselves to observe from a new, unorthodox perspective.

Whether it’s through eye-opening one-day workshops or year-long engagements, some of the most exciting moments at Fahrenheit 212 are when we help our clients reveal hidden opportunities within their organization. As we partner with our clients to tackle their most challenging innovation problems, it’s useful to keep everyone’s minds ripe with fresh ideas by drawing inspiration from even the least likely of sources. While we don’t condone the illegal activities of these groups, they all have the scrappy ability to innovate with limited resources. After assessing some thought provoking anecdotes from articles by Alexa Clay & Kara Maya Phillips of the Misfit Economy , and features in Makeshift Magazine, we’ve compiled three essential innovation lessons that pirates, gangs, and smugglers can teach all of us about inspiring innovation.

Lesson 1: Your biggest pain points and weaknesses can be sources of inspiration.

The practice of inverting your most glaring flaws into new innovation opportunities is a strategy Fahrenheit has explored in our whitepaper, 6 Lessons on Flipping Innovation. We’ve seen “flipping innovation” in action at the most successful companies of today. Surprisingly, it’s a strategy that was already in use hundreds of years ago by the least likely of groups.

In a 17th and 18th Century world where monarchs ruled with a heavy fist, pirate ships on the other hand, operated under an innovative system of equality, bound by written constitutions. The fact that a group of old-age criminals, who stole for profit, followed a system of equality is shocking at first. Until we learn that in their prior jobs as merchant sailors, pirates suffered from poor treatment and extremely low wages. With the intent of never re-living those sub-standard conditions, the pirates used those pain points from their past as inspiration. They invented a democracy that gave each crewmember a vote toward electing their captains and deciding how their ships were run. Their wages were high and any booty was fairly distributed. They were even supported by social insurance plans, which promised compensation for those injured on the job. Without trying to solve for the flaws they experienced in the past and using them as inspiration, those pirates wouldn’t have been able to create such an innovative organization that was flooded with new recruits and kept crewmen happy.

Fast-forward to modern day Somali pirates and we witness a similar type of ingenuity. Crewmen, negotiators, boats, and weapons require significant capital, making it extremely difficult to assemble a crew. Born out of this problem was the world’s first pirate stock exchange, which consists of approximately 70 “companies,” offering high-risk shares in pirate gangs to investors who receive big returns if hijacking mission are pulled off successfully. In fact, similar in size to a Silicon Valley start-up seeking venture capital, some pirate missions have received up to $250K USD in funding upfront. It was identifying capital as a point of weakness and solving for it that inspired this new system of funding for the Somali pirates.

The pirates of yesterday and today teach us that your worst weaknesses can inspire innovative solutions. And its not just for pirates, at F212 we’ve been pleased to help some of our largest clients retool a weakness or existing asset into new opportunities. A strong understanding of your consumer pain points and company truths will help uncover those weaknesses. But often times, transforming them into opportunity also requires new ideas and action from people at all levels of an organization.

Lesson 2: Empower your rule breakers.

Strong leaders know and abide by the belief that “your people are your best asset.” They know it’s important to gather input from team members at different levels of the organization for unique and fresh perspectives. But what happens when those team members disregard your rules and act on their own? Do they need to be removed?

JT, head of a Chicago drug gang The Black Kings knows this situation well. Managing a network of 200+ cocaine dealing gang members, loyalty is essential to keeping his business afloat. Breaking the wrong rules could cause JT’s entire empire to come crashing down. His reaction to a rule breaker however, is one you might not expect. In an excerpt from Sudhir Venkatesh’s book Gang Leader for a Day, Venkatesh spends time in JT’s shoes and faces a bothersome situation.

News reaches JT that one of his dealers has been cutting his cocaine and diluting the product so he could take a bigger cut of profit. If their customers got sick, it could tarnish their credibility and attract unwanted attention. Venkatesh’s gut reaction was to kick the dealer out. JT however, explained why this would have been the wrong move, “most guys wouldn’t even think of these ways to make money. I have hundreds of people working for me but only a few who think like that. You don’t want to lose people like that.” JT had to put a stop to the dealer’s diluting but he understood the dealer’s entrepreneurial spirit could be an asset if it was channeled in the right way.

Shifting our attention to a lawful example, consider 3M, highly respected for its strong culture of innovation and empowering its entire organization to break rules. Before Google popularized the practice of personal employee project time, 3M empowered employees with 15% time starting in 1948. Employees are encouraged to build teams and pursue their own ideas that aren’t given official resources. Twice a year, the best ideas are awarded with Genesis Grants, $30,000 to $75,000 of seed money for 12 months of research to further explore their ideas.

Empower your team to go after their new ideas and break the rules. Like JT and 3M, establish processes, rewards, and an attitude that encourages rule breaking. Our clients have unexpectedly but happily found that some of their cross-functional teams are brimming with excitement to challenge the status quo. Give your rule breakers permission and put them in positions that allow them to break rules in a way that creates new assets for the company.

Lesson 3: There’s no wrong place to seek inspiration.

It’s impossible to predict what will spark an idea; a random tidbit in the back of your mind can trigger meaningful thoughts at any moment. So it’s important to keep your eyes wide open and even look into the least likely of places. Even deep in rural Southeast Asia, among dusty roadside stands at the Vietnam-Cambodia border, you’ll find ingenuity at its best. Given Cambodia’s lack of domestic oil production, the country’s gas prices are the highest in Southeast Asia. Right across the border in Vietnam however, prices are much cheaper thanks to state-subsidies and domestic oil production.

In a simple engagement of arbitrage, smugglers outrun local law enforcement with speedboats and bribe border guards to get a more affordable product into the hands of consumers. During March of 2011 alone, Vietnamese officials seized 520,000 tons of gasoline. Smugglers take illegal Vietnamese gasoline, mix them with water or cooking oil, and store them in old glass soda bottles along the roadside. The quality is always questionable but mixing allows the smugglers to combat fluctuating prices and provide consistency for their customers. They simply adjust the water content to make their profit. Placing them in soda bottles allows smugglers to supply their customers anywhere, solving for the lack of gasoline infrastructure in the country. These smugglers manage to find opportunity even among the most limited resources.

Netflix, a leader of video streaming services, gains insight from a source you might not initially suspect. In an effort to battle movie piracy, Netflix seeks guidance from movie pirates themselves. Netflix stays on top of consumers’ tastes by monitoring downloading activity and search popularity on illegal websites like PirateBay. Procuring the most popular titles for their selection, Netflix ensures that it delivers what consumers are looking for, legally, and at an affordable price. It’s able to leverage the activities of movie pirates to beat them at their own game. In our innovation work, we often look to industry analogs to help our clients dissect and overcome major barriers in their categories. We pick apart case studies from completely different industries that are experiencing their own paradigm shifts or challenging situations. Through this work, we help our clients see the obvious for the first time and unlock new opportunities where only roadblocks were once found.

Adopting These Lessons Into Your Workplace

Knowing where to look may help inspire innovation, but you can increase your chances by allowing yourself to be inspired at anytime. Like the pirates, self-reflect, whether you’re sitting in a restaurant, relaxing by the beach, or exploring on vacation. Like the Black Kings and Netflix, empower your employees and encourage them to seek inspiration from the unexpected. For some thought starters, here are just a few of the unique ways we empower each other at work to get inspired, with programs initiated by some of our own rule breakers:

Genius Lunches
We regularly invites thought leaders from across disciplines into our offices for an informal lecture series. What results is an inspiring exchange of experiences and insights between the Fahrenheit team and experts in their field. You can check some of them out here.

Personal Enrichment Budgets
Each person on our team receives a personal enrichment budget for the year, which allows us to pursue any outside interests and bring back any inspiration to the business problems we tackle at work. Budgets have been used for cooking classes, guitar lessons, design courses, tech conferences and many other interests.

Fahrenheit Fellows
The Fahrenheit Fellowship invites industry change makers from the worlds of design, academia, social innovation, science, entrepreneurship, and the arts to set up shop in our office. All fellows are seeking to drive change for the better within their industries. Sharing a working space allows fellows and the Fahrenheit team to inspire each other through the convergence of different disciplines, points of view, and areas of expertise.

We can all benefit from shaking up the way our teams view our businesses. What are things you can start doing at your company to inspire innovation?