Business and The Last Great Generalist: The Medici Principle

Business and The Last Great Generalist

The Medici Principle

John King
Senior Partner, CultureSync

“If you truly want a better life than you have now, do what it takes. Otherwise, give yourself and those around you a break and just admit that you don’t want to pay the price, that you’d rather whine and complain than step out of your comfort zone and do what’s necessary to make things better for yourself.”

– John Assaraf

Leonardo da Vinci was the last great generalist. He was the last human being who knew everything there was to be known, and by virtue of living when he did, where he did, Leonardo da Vinci helped precipitate an explosion of knowledge, power, and creativity that ushered in the Italian Renaissance, pulled Europe out of the Dark Ages, and, in that historic moment, birthed the age of the specialist.

It is true; from the beginning of recorded history until the Italian Renaissance, it was possible for one person to know everything. However, that time passed with Leonardo’s death. Leonardo was the towering artistic and engineering genius in what was later recognized as a golden age of genius.

However, contrary to common belief, Leonardo, Michelangelo, Titian, Cellini, and all of the great artists of the Renaissance era were not the ones who forged that age. It was a powerfully aligned group of businessmen, bankers, brokers and financiers who made the Italian Renaissance happen.

The purpose of this paper is to explore the assertion that we are now in a 21st Century neo-renaissance, and that an explosion of creativity and wealth production is going on around us, whether we participate, or not.

What are you doing, right now, to set yourself up for the next upsurge in the business cycle?

You must realize that the market has no inherent interest in whether you succeed or fail.

Your success or failure is 100% your own personal issue. What are you willing to give up in order to be a success?

Fact: The market doesn’t care.

The market only honors those who participate intelligently.

As Frans Johansson points out vividly in The Medici Effect; the Medici family, a group of bankers and financiers in Florence, consciously created the Italian Renaissance. The Medici family aligned on a vision of what could be possible if they brought together, in Florence, the most talented artists, writers, thinkers, and practitioners in every known craft and field of study.

What would happen if the Medici created a living think tank of all the best minds in Europe?

Amazing question.

Back in the day, the Medici’s were challenging the dominant merchant class of Venice, the military and spiritual power of the Pope in Rome, and, the mercenary army of the King of France. Just like America in the 21st century, the Florentines’ in the fifteenth century had a ton of crisis inducing issues on their plate.

As businessmen, the Medici’s were only tangentially interested in art. They were primarily interested in creating wealth through commerce, through market penetration and domination. The times were hard, the prospects dim. The odds were against the House of Medici and the city/state of Florence to even survive.

The tactical and strategic business solutions that the Medici’s invented were some of the most remarkable applications in the history of business, and profoundly relevant today.

The Medici group saw and aligned on a strategic plan to capture power and primacy currently held by other influence centers – in the mid-1400’s, that was [1] the merchant class of Venice, who ruled global trade for the previous 200 years; [2] the Pope, who had God on his side, and; [3] the King of France, who was the Pope’s rival, and, (according to the Pope) had the devil on his side.

No matter how you slice it, either the King of France, or, the Pope, or, the Venetians were going to devour the Medici. Conventional wisdom counseled the supremely gifted Cosimo de Medici to pick his poison and ally with that. It looked like your basic ‘Middle Ages M&A’.

Desperate times call for creative solutions:

The Medici group saw that the Venetians, the Pope and King of France were operating from what amounted to an obsolete strategic business plan. All of the Florentine opponents practiced dog-eat-dog internal and external warfare. Even amongst allies, there was no loyalty, no appreciation of the talent of others, and no willingness to collaborate or share knowledge. It was the era of the “Strong Man”. Ultimately, that was the downfall of all three of the Medici opposition.

Understanding their enemies’ fatal flaw, and having this insight into the marketplace of the future of Europe, the Florentines acted upon every available opportunity to seize market share. They saw that it was absolutely vital that they were they united in their resolve and aligned in their business strategy. They saw that they needed each other to survive, and ultimately, to succeed. It was the first real expression of mutual civic interdependency since several hundred years before the fall of Rome.

In fact, the House of Medici group was so successful, that their revolutionary business methods ultimately united a warring collage of rag-tag city/ states into what is now modern Italy, and furthermore, standardized the Italian language.

He who controls the language, controls all.

The radical insight that the Medici group implemented was to bring together specialized creative experts. Cosimo de Medici, Founder of The House of Medici, intuited that talented people, just being with each other, created a piazza, an intersection in which diverse ideas bumped into counter ideas, and led to completely unpredictable and radically different solutions to age old and newly evolving issues.

Just as Isaac Newton ‘discovered’ the Law of Gravity, two hundred years later, Cosimo de Medici, and later, his son Lorenzo, discovered in the mid-1400’s, a powerful and simple business principle. Unfortunately for most people, the power of the idea is largely lost on most people to this day.

The Medici Principle:

The Medici Principle of bringing together specialists and creating an, ‘intersection’ of collaboration is one that is often taken for granted.

When principles are taken for granted, they are often overlooked, and/or, ignored.

There is a cost to ignoring proven principles.

When the Medici bank provided this rich intersection of ideas and skills, it caused an unprecedented explosion of creativity for those who participated. Think of it as the Medici ‘stimulus plan’.

The only other known period of history in which this intellectual and artistic explosion of activity had previously occurred was in Ancient Greece and Rome, which is why the art, architecture, and institutions of the Middle Ages look Greco-Roman. The word renaissance (re-birth) refers to the re-discovery of lost principles.

As far as we know, only about 450 people actively involved themselves in this great social experiment, the Italian Renaissance, over the course of about 200 years.  And yet, what those 450 did with the re-discovery of this basic human success principle altered history and brought Europe out of the Dark Ages.

450 people prospered and contributed to their culture, while tens of thousands slept through the opportunity – largely because they failed to adapt, specialize and collaborate.

Great art came along with the deal. Leonardo da Vinci was a result of, not the cause of, the Italian Renaissance.

Everything Old is New Again:

Today, business is at a crisis point. The old is giving way to the new in front of our eyes. The truth is; we have before us a great opportunity to create wealth and influence.

The senior question on the table is Darwinian in nature, and is a clear personal choice: Am I going to adapt, specialize, and collaborate, or, am I going to sleep through the business neo-renaissance that we are experiencing and wake up in five or ten years to find that the world has passed me by?

Regret is a bitch. (Just sayin’)

Flash forward to 1776. There was a lot going on, not only in Philadelphia, with the birthing of a nation, dedicated to the principles of life, liberty and the pursuit of happiness, but also, in Scotland, a little known moral philosopher, Adam Smith, was inventing the field of economics.

Smith was the first to codify the law of supply and demand, and spoke of the ‘invisible hand’ that guided the marketplace. He also offered a case study on the natural advantage of specialization. Smith showed how one man could make a small number of pins a day from scratch if he did all the work, but, if he broke the job down into several components, he could produce, with his team of specialists, thousands of pins daily. Smith showed the power of leveraging time, effort, and effectiveness.

Adam Smith was the original, ‘work smart, not hard’, kind of guy. Though his insights, Smith taught the average person how to become a millionaire.

Note: This principle of collaborative specialization is only important if time, efficiency, transactional volume, and profit are important. Otherwise, not.

Basically, if you did what Smith recommended, you prospered and the market smiled on you. If you did your own thing, you struggled. It was each person’s choice to flourish or to struggle. And, the market place, which didn’t care what you chose, sorted you out.

Poverty is also a bitch, so, people paid attention, and modern business theory took hold.
“The law of cause and effect precludes ever having anything for nothing. You must always pay a price for everything that comes your way. The key is to determine what it is that you want and what price you have to pay to get it. Then resolve to pay that price, or even more, for this will bring you even more of what you want. You can only reap what you sow.”

Dr. Walter Doyle Staples

The recommendation:

Without throwing out the baby with the bathwater, there are times when being a generalist is useful.

The trick is to recognize when it is good to generalize and good to specialize. Business, particularly, commercial real estate is never one size fits all. The broker makes a living based on his ability to provide the most effective solution for the client.

You must understand your role and be a special-ist as a practicion-er, a general-ist as a solutions provider. That means that when you are practicing, you are ‘special’. When you are referring and directing, you are a ‘general’.

So, the ultimate name of the game is ‘collaborative specialization’, a simple principle that was adopted long ago by those who are universally recognized as being the best, brightest, and most highly professional members of the culture. That would (still) be the lawyers, doctors, and leading businessmen.

The Collaborative Specialist Service Model:

Law – The client approaches their family lawyer with an issue that is not the attorney’s specialty. The lawyer brings in specialists to provide the appropriate solution and often oversees or directs the case. Often the lawyer keeps his hand in to manage the client relationship, which is to say, the client’s mind. Business deals often represent something far beyond profit for the client, and that has to be taken into account.

All good firms have a broad platform of specialists, that’s the power of ‘inside’ relationships. The specialists themselves do lots of internal marketing, looking for more connections to ‘go to’, and to whom they can provide theirspecialty.
Medicine – Your family doctor refers you to specialists. Your doctor completes his early diagnosis and refers you to the ‘best in class’ in his group – (really, the ones he knows) If your doctor is in the Kaiser Permanente Group, you can be sure that the specialist will be in the KP group as well. The relationship comes full circle when the specialist refers people back to the family doctor. The patient is referred as is appropriate to the treatment.

Imagine that you want Lasik or Radial Keratotomy. You want to see without glasses. You go to an Ophthalmologist who examines you and recommends you ‘as a candidate’ to an eye surgeon.

(Imagine if someone in need of a real estate solution was recommended to you as a ‘candidate’ for your services. It happens. Just not to you.)

The first thing that happens in eye surgery is that you sign your eyes away, and give up right of legal redress if something goes wrong – which it does in a small percentage of cases. Even though the probability is that you will have successful operation, it gives one pause.

In a case like eye surgery, you want the person who has done the same operation 8000 times, not the generalist. The surgeon better be good.

What’s the difference in expectation of client in the matter of leasing, buying, or selling a parcel of property? The client wants the specialist. This deal is like his eyes, to him.

It’s Specialization + Consistency, Stupid:

In addition to the expectation of ‘best in class’, the client also demands ‘consistency’. In today’s market, they want ‘the Starbuck’s experience’. That means not only the same cup of venti, decaffeinated, skinny soy latte, they ALSO want the ambiance and experience of every Starbuck’s whether in Seattle, or, Omaha.

The entire service experience is a touchstone that gives confidence to the client. Consider that when you are doing the deal on behalf of the client, they feel somewhat powerless and fear that something will go awry.

It is your job to plug the client into the consistency of the experience whether in Seattle, or Omaha. You not only need a network of specialists in your local market, but also, regionally and nationally, as well. After all, that’s how you represent yourself and your firm, and unless you can effectively deliver a team that is plugged in on many levels, you will never get to the important deals.

If the deal has any level of magnitude, you better have specialists on board. It is pure hubris, not to mention delusional, to think that you can personally cover all of the bases. And even if you don’t get it, your client does, and you have irrevocably damaged your credibility.

Here’s the thing:

They won’t tell you, they just won’t hire you. That’s a signal.

If you have lost more than one engagement to a team that looked better equipped to manage the clients’ mind, this communication is directed at you. You need to adapt.

The name of the game for client is risk management, especially in today’s business climate. No one will take a ‘lonesome cowboy’ seriously in this day and age. Not since the Renaissance, really, as the Medici’s taught us.

We live in a world that demands collaborative specialization. The thing is; you gotta’ be good, and you gotta’ get along. Unconscious and unprofessional behavior is ruthlessly dealt with.

Again, the market doesn’t care.

So, it behooves the ambitious broker to get with the program.
Looked at from a professional point of view, Real Estate, Law, Medicine, and Starbuck’s are all dealing with the same issue; the client relationship. The obvious solution is organizing oneself to provide ‘consistent’ and ‘best in class’ service across the board.

The Business Opportunity:

The business opportunity is in seeing that some do it, and by far, most do not. Some companies are famous for this kind of collaboration – Lexus, Harvard MBA, Starbuck’s, Kaiser Permanente, Pixar, Apple iPod, Disney, Coca-Cola. But most don’t – GM, Chrysler, the majority of those with an ordinary point of view who think ‘good enough is good enough’.

Likewise; some brokers are famous for offering a collaborative specialty business model that promises consistency, most are not.  The latter sounds dumb, and it is, but, oh well… it’s only your career.

Leadership guru, Warren Bennis, once famously wrote, “You don’t know who the best butcher is, but, your butcher does.”  By that token, your client doesn’t know whom the best specialist is, but you are expected to. That’s why they came to you.

What to do:

[1] Build reciprocal professional relationships with people who are ‘best in class’ and whose strongest game differs from yours.

[2] Work out the broad strokes of your deal before you need their services. Do the specific background deal on a case-by-case basis.

[3] Find out from your new ‘partners’ who is the very best at do what they do in areas outside of your region.

[4] Build a collaborative specialist relationship with that person, introduce him to someone he should know and have him reciprocate.

[5] Lather, Rinse, Repeat.

Create a new intersection of energy and influence for yourself and your client. Study collaborative specialization. Be a modern day Medici. Start a modern day Medici group.

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