A still from the film Pirates of the Caribbean

Piracy on the high-tech seas

Can piracy really have played a major role in defining business models that bring technology to the people? Nick Smith talks to an author whose new book claims that Jack Sparrow could teach us a thing or two about competitive strategy.

We've become so used to the fictional stereotype of the one-legged, parrot-carrying, double-crossing pirates of the Spanish Main, that we hardly ever give them the benefit of any doubt. They're collectively a nasty piece of work with scant regard for the law and even less for other people's buried treasure.

Piracy is a word we reserve for the doings of the lowest of the low, which is why in the digital world it has become synonymous with counterfeiting, cybercrime and copyright infringement. We've all been victims of this kind of nefarious activity, and there isn't a good word to be said for those involved in it.

Rodolphe Durand wouldn't argue with any of the above. After all, he's a highly respected business strategist, academic and now author, whose research has led him to write an extended explanation of what real piracy is. In his new book, 'The Pirate Organization', he contends that, when thought of in a less sensational and more technically accurate way, the phenomenon of piracy can be seen as the seedbed of entrepreneurialism and groundbreaking business strategy.

"Piracy doesn't set out to undermine capitalism," says Durand. "It operates on the fringes, and from the fringes comes innovation." He is quite clear about this. And he's also crystal clear that he doesn't condone organised crime or any other illegal activity that sometimes – and in his view, wrongly – gets called piracy.

But it does help to think of Jack Sparrow in the movie 'Pirates of the Caribbean'. Or perhaps even the surge in pirate music radio stations in the 1960s, such as Radio Caroline. More recently, as the Internet has become part of the global economy, there are advocates such as the Free Software Foundation that are more intent on breaking state-sponsored monopolies than breaking the law. "What we're saying is that pirates are a function of society. When the state draws the line we are told this is our territory, this is how resources can be exploited. It distinguishes some organisations from others."

Those within the territory, effectively operating under license from the state, are free to pursue exploration and exploitation of the new technology, while others are pushed to the fringes.

According to Durand, it is this latter group that develops pirate organisations. And from whatever era they emerge they tend to be egalitarian and are less centralised than the organisation they set out to challenge. Unlike outlaws such as Robin Hood, who stole in order to redistribute wealth, their main aim is to "propose openly from outside society other means of using and valuing the newly discovered territories".

It may not be immediately obvious, given the popular understanding of sea piracy in the 18th century, but the underlying political point behind the bloodshed and theft was to challenge the state monopoly on routes to the West and East Indies. The eventual outcome was that international waters gained legal status.

Radio pirates fought the monopoly on airwaves and opened the door to music that had been previously unheard.

Meanwhile, on the Internet, despite its ubiquitous scammers and fraudsters there are public-spirited individuals and organisations that operate solely to defend a cause that might allow the illegal to become legal. In other words, these digital buccaneers challenge the control of resources in an attempt to maintain trade with like-minded individuals. An obvious example is the campaign for the right to share mp3 files within a community. This for Durand is a boundary-changing issue, while counterfeiting and cybercrime are "illegitimate and illegal acts that need to be condemned".

Hacking the hacker

To understand this definition of modern piracy, Durand argues that we need to question the new motivations in society along with why widespread norms should be readdressed periodically. There's no point bosses in the music, video or games business getting upset when their customers share the assets they've paid for.

What we need to do, says Durand, is what governments did in Jack Sparrow's time, which is to admit that if you can't beat them, join them. Just as states entered into contracts with pirates and changed the illegal process into the privateering industry, today we need to "reflect on the opportunity to hack the hacker". These are the smart guys and we can learn from them.

The most important lesson is that instead of wasting time and resources on stamping out a phenomenon that is here to stay, we should adapt. A quarter of a century ago we were being told that "home taping is killing music", while today artists routinely allow free downloads of their music, certain in the knowledge that a growing fan base will buy more gig tickets. This ability to adapt and evolve keeps entrepreneurs in business, while those with inflexibility sit on their hands unable even to wave goodbye to the gravy train as it steams away. This is the legitimate countermeasure to piracy, says Durand, and why we must "keep a sharp eye on the pirate space to stay successful as the game changes".

'The Pirate Organization' is nothing if not a stimulating work of original thought. The first reaction of most will almost certainly be that there is nothing that a legitimate business can learn from an illegitimate one. But this is the exciting bit, because capitalism and piracy form a symbiotic relationship. As Durand says: "Piracy is not random. It's predictable. It can not be separated from capitalism, and it is likely to be the source of capitalism's evolution." It's a matter of historical record that governments negotiate with pirates when redefining the borders trade monopolies. We know that the right pressure can change the way we think about the control of resources. And we know that when strategies involving speed and surprise are required, it is the light of foot rather than the monolithic that provides the answers.

Durand's conclusion is that pirates "are the ones who forge the path". They may lurk in the shadowy hinterlands, but as the book's subtitle makes explicit, we can learn "lessons from the fringes of capitalism". To come face-to-face with a management strategy book that is genuinely daring is something of a rarity. Conventional management manuals tell us to 'think outside the box' with such frequency that the words have ceased to perform the function of a verbal signal. With 'The Pirate Organization' we are presented with an extended example of what happens when you really do that.

'The Pirate Organization' by Rodolphe Durand and Jean-Philippe Vergne is published by Harvard Business Review Press, £14.99

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