The Yakuza's Business Agility
The Yakuza - a 4-centuries-old crime organization based in Japan - has survived sociopolitical, economic, and cultural upheavals that have obliterated other organizations with impunity. The Yakuza can shrink, rebrand, and relocate in one moment and pop up larger or more profitable seemingly overnight.
When I first started researching the Yakuza, I mistakenly thought their inherent flexibility contributed the most to their survival over the years.
Bad things happen. The Yakuza adapt. Others don’t.
But other organizations flex yet don’t survive. What’s the difference?
In this context, flexibility represents a reaction to a threat. The Yakuza's true advantage lies in its proactive flexibility … or agility. In this article, I will unpack the topic of organizational agility and illustrate how you may adapt the Yakuza agile style to your modern (and more morally sound) business.
But what about Agile Methodology?
Before I dive in, I would be remiss if I didn’t address Agile, the software development methodology that sits under some of the most profitable businesses in recorded history.
Created as a method for accelerating software development, the Agile Methodology contains flexible processes for collaboration, communication, and continual improvement. When markets shift, Agile enables product developers to change with it. When legislation upends an entire vertical, Agile empowers businesses to transcend feature tweaks and transform entire organizations. When industries become flooded with competition, an Agile organization can (literally) adjust overnight to create a new category entirely.
Agile Methodology is worthy of deeper study. Years ago, I hired an Agile consultant to shore up some process issues in one of my agencies. However, Agile has only been pressure-tested for a paltry 23 years. The Yakuza’s form of agility endowed its organization with a seemingly unkillable model. It’s proactive agility that will help you exploit industry shifts.
Pre-dating Agile, the late CEO of Intel, Andy Grove, wrote at length about ‘strategic inflection points’ and how businesses could exploit them. Grove’s book, “Only the Paranoid Survive,” outlines ways of identifying these inflection points. The concept of a strategic inflection point is a moment when a business's fundamentals are about to change. This change can be a result of internal dynamics or external forces.? I leaned heavily on his work to guide my thinking on this article.
The Yakuza’s Strategic Inflection Points
The agility the Yakuza displayed during three major inflection points in their history is chock-full of lessons on business longevity and success.
Combine and Conquer
First, the original formation of the Yakuza in the 1600s illustrates the merchant class’ proactive shift from independent entrepreneurs to more of a union framework. The peddlers of the day were constantly attacked and robbed. So they pooled their money to hire Ronin (disgraced samurai) to act as market security. This collective began to adapt their growing influence to exert control over entire categories of illegal trade like gambling and loan-sharking.
Layering of Legitimacy
As the Yakuza gangs' size and power grew in the late 1700s, they began to add layers of legitimacy to their organizations. These efforts included adopting Samaria-like codes of conduct and implementing a deliberate hierarchy of bosses and underbosses. This proactive move worked so well that local governments formally recognized the gang bosses, granting them titles and allowing them to carry a sword publicly. This blending of the criminal and the legitimate lasted into the 20th century. The Japanese government hired Yakuza as security for President Eisenhower’s visit in the 1950’s. Until 1992, the Yakuza maintained a level of legal insulation in Japan. It wasn’t until 2008 that the Japanese government began aggressively enforcing the new laws.
Geographic & Industry Agility
When Yakuza leaders noticed a particular criminal channel, e.g., drugs, may be at risk due to incoming legislation in Japan, they would proactively expand - or in some cases relocate - their operations to different countries. Conversely, when legal industries become more profitable, e.g., real estate development and nightclubs, the Yakuza would leverage their power, influence, and resources to rapidly dominate the space, buying up skyscrapers. Most of these activities occurred in the 1960s and70s. Scholars estimate that the Yakuza peaked in power in 1963, reaching 184,000+ members. Their economic power, however, peaked in the 1980s as they combined geographic moves and industry moves to massive effect. Ultimately, the Yakuza’s ability to assimilate into new locales and penetrate foreign markets has cemented their global influence.
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Modern Yakuza Agility … or lack thereof?
After the Japanese government formally criminalized the Yakuza, the organization ran a series of layoffs (seriously). The natural evolution of legitimizing the Yakuza involved putting their members on payroll, so their government could collect taxes. Downscaling for survival is a complex business strategy. The Yakuza may finally be in a rare reactive posture. Or, they proactively moved out of the public eye decades ago and are larger and stronger than ever. The Yakuza population still sits at over 10,000. However, I don’t think the modern bosses will continue trying to legitimize so publicly or even allow themselves to be accurately counted. Only time will tell.
Upsides of Agility
Downsides of Agility
CONCLUSION
Baking agility into your plans will also force you to ask harder questions about your organization’s position and direction.
In part, the Yakuza's ongoing proactive, agile posture enabled their centuries-long legacy. Though your business may not possess the resources or power to capitalize on strategic inflection points, you should practice spotting them and quietly preparing your organization for future shifts.