January 29, 2013

The Arbitrated Division of Herod, Incorporated

A half jewish, half arab, business executive & real estate tycoon was dying. Despite reaching his fifth decade of incredible corporate success, having married ten wives who produced seven legitimate sons, the family resembled a Greek tragedy. Eight of the wives and four of the sons had been banished, disinherited or snuffed out, for offenses real, imagined or rumored. Alleged disloyalty also stained the potential of the man's last three legitimate sons, who were named Andy, Archie and Phil. Because of all this, the old man had great trouble settling on which remaining son should inherit the company and replace him as the next CEO.

It didn't help that he was also suffering through the last stages of an unspeakably horrible disease.

But despite all of this, at his core, the old man naturally envisioned these young kids running the company together, just as he had worked together with his father and brother in the company's earlier days, both before and after the old man first became CEO. As with any large company, theirs had always been subdivided under regional managers, who just as naturally and always had answered to one powerful chief of command. So the three young men would inherit together, but who would take on the CEO position?

In his last and possibly most confused days on earth, the old man changed his formally legalized will by making handwritten modifications, right up to the end.

Remember, the three sons were Andy, Archie and Phil. The legal will had named Andy as sole heir (while rumors had been affecting the other two), but the new handwriting replaced him. Now the will said that Archie was going to be chief heir and CEO, but with Andy and Phil as co-inheritors and junior executives, with all three working together to sustain what their father had built.

Unfortunately, Archie let the new power go straight to his head and almost ruined the family empire within just a few weeks.

Predictably, key family members now rallied around Andy and took their case straight to the supreme court, hoping the chief judge would declare that the first will, the one legally filed in advance, might win out.

The court’s decision was difficult. It was clear the old man’s primary concern hadn’t been for his children, but for his own great legacy, and now even that was in serious jeopardy. Perhaps Andy was more suited for takeover, but Archie had all the reigns of power at the moment. The youngest, Phil was wise not to make waves, but he did greatly impress one key officer of the court, who urged the judge to consider Phil also.

There were a few too many options, but that wasn't the actual problem.

Above all, what became most clear at this point was that joint leadership of the company seemed increasingly unworkable. The old man had left each subordinate son in charge of one major division, but at this point it didn't look like Andy and Phil were going to do very well as middle men always answering to Big Archie, and due to his early and spectacular failures Archie didn't look at all capable of being in charge over both of them, either.

The head judge had a very difficult choice. The legal will could have simply replaced Archie with Andy, and that might have been best for the company, but at this point it was now also likely to lead to a family war. Besides that, the handwritten will had been treated as legal across the whole company for several months to this moment, so undoing all that momentum was also going to cause difficulty. Either decision guaranteed the conflict would continue, but neither decision could ultimately preserve all that the old man had built.

This must have been sad for the judge. The old tycoon had been something of a friend. At least, they had swapped important favors for several decades. Having hoped for those corporate favors to continue, the judge would have been most pleased with a strong CEO as successor, but the company no longer seemed capable of staying in business, with these three brothers in charge.

After much deliberation, the chief judge chose a third option!

Archie would stay in control of the company, but the company was going to be split apart. Only the main line of operations would remain in Archie's company. In a stunning development, the judge decreed that Andy and Phil would now become independent CEOs of the company's former subdivisions.

The old man’s empire was no longer intact, but the brothers now received full incentive to preserve their own portion, instead of undermining or attacking each other.

It wasn't anyone's first choice, but it probably did make the best of a bad situation.


Hopefully by now you've recognized all of this as a true story.

The judge was Caesar Augustus and the deceased executive was of course Herod the Great. His last three legitimate sons, Archelaus, Antipas and Philip were intended to rule the company (Kingdom) together with one another, but each wound up ruling separate territories - Judea, Galilee and the Trachonite region. The biggest loser, Archelaus, had his total revenue cut in HALF!

The revenue splitting was the Emperor's critical innovation, but without that there would have been no political division. Previously, Archelaus would have decided how much of the Galilean and Trachonite income his brothers could keep, and Archelaus would have ruled over all three regions in the Kingdom, supervising his underling brothers. Instead, Archelaus suddenly lost everything from those territories - both income and power - but the revenue was the key bit. Territorial autonomy came automatically, with one remarkable move by Augustus.

The point of this exercise is to illustrate and hopefully begin to remove an anachronism that's unconsciously assumed in many historical studies today.

Herod the Great never intended to break up his kingdom. That was purely Augustus' decision, brought on by the family's embarrassing disunity in Rome.

There will, of course, be more to say on this, in time...

1 comment:

Anonymous said...

Enjoyable tack! I think Herod's main fault was he never intended on dying. All 'decisions' based on that reality were arbitrary and capricious, and deadly to those who dared to intend to outlive him. He was the ultimate "it's all about me" man.


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