‘Game of Thrones’: A business leader’s guide

March 29, 2013, 9:00 AM UTC
Tyrion Lannister, played by actor Peter Dinklage

FORTUNE – To all of those who are stuck in high-stakes, rival-infested work worlds, take heed. The secrets to success can be found in HBO’s Game of Thrones, where you either win … or end up with your head on a pike.

Let’s consider the rival claimants, power brokers, and schemers in the show based on George R.R. Martin’s A Song of Ice and Fire book series. What can today’s manager learn from these feuding fantasy clans? Quite a lot, actually. Here are five key leadership lessons we can draw from their trials.

Determine which promises you can’t afford to break

In a chaotic world, promises matter. Just ask Jaime “Kingslayer” Lannister, the guy with the worst exit interview in Westeros. After swearing an oath to protect the last Targaryen king, Jaime stabbed his employer in the back. Literally. Granted, that particular CEO was a maniac who set people on fire. But once a reputation for honesty is tainted, there’s no going back.

MORE: How a mega-church founder rediscovered religion

In Game of Thrones, as in life, oath-breaking can create strategic liabilities. Consider Robb Stark, who throughout the second season leans heavily on a web of contractual dependencies, most notably to Lord Walder Frey, an Ebenezer Scrooge lookalike who controls the only land access between Robb’s kingdom in the north and the fighting in the south. Frey can scissor Robb’s supply lines at will. The only guarantee that he won’t is Robb’s commitment to marry Frey’s daughter. Robb violates the contract at the end of the second season when he falls for, and marries, a Red Cross volunteer. Lord Frey will not be pleased. Before breaching a contract, be certain you can bear the cost.

Protect your strongest assets

Every upstart needs capital. While exiled princess Daenarys Targaryen may ultimately emerge as a winner in the game of thrones, she spent season two as a cash-strapped entrepreneur. Given her dragons’ long maturation time — they’re about the size of Easter hams — they are a few seasons away from being the kind of force multipliers that will attract investment. As a result, the khaleesi awkwardly attempts to raise unsecured loans from the merchant kings of Qarth. The wily lot may be excused for not jumping at the Mother of Dragons’ elevator pitch. A scraggly band of followers, a tenuous claim to a distant throne, and no business plan are not exactly music to a venture capitalist’s ears.

Yet in spite of Daenarys’s weak bargaining position, she avoids bad terms. By the end of season two, she has successfully navigated Qarth’s den of vipers — the most venomous, it turns out, being the man who promised her immense wealth in return for her hand in marriage. In Game of Thrones’ dynastic world, marriage is merger. Aside from the dragons, being single is Daenarys’s most valuable asset, one she’s careful not to give away. This caution bears fruit. When it turns out that her disingenuous suitor’s vaults are, in fact, empty, Daenarys learns the importance of scrutinizing a potential partner’s balance sheet.

Cultivate middle management

A CEO can’t be everywhere. In a world without videoconferencing — and where note-carrying ravens are a slow (though bizarrely reliable) precursor to email — it’s tough to keep an eye on your investments. The solution is in delegation.

The best leaders in the Seven Kingdoms have an eye for talent. The most inspired act of executive recruitment? Tywin Lannister naming his son Tyrion as acting King’s Hand.

MORE: The XBA: A better, faster, cheaper MBA?

Tyrion runs King’s Landing like a turnaround expert. He is a master of radical adaptation, particularly in his creative deployment of wildfire. A previously shuttered R&D program, wildfire is a tactical nuke crossed with a Zippo lighter. Tyrion spots an opportunity for a new product launch. The result: a disruptive innovation that largely destroys his enemy’s fleet.

But how do you hold on to top talent, especially when they’re being poached by shifty competitors? Offering competitive compensation is only part of it. In Tyrion’s case, he’s fully vested in Lannister, Inc., and his fortunes will rise and fall with the management.

When a delicate alignment of interests breaks down, leaders face a principal-agent problem: An ambitious hireling may end up pursuing his own interests over his employer’s. In the second season, Robb Stark trusts in his personal relationship with Theon Greyjoy, who ventures off to the Iron Islands to recruit his kin to aid the North. But in a grim pivot, Theon turns his cloak, leading a war party to capture Robb’s capital.

Be wary of external hires

The best executives are promoted from within. They understand their institution and its personalities. Robb Stark is exemplary. He tames recalcitrant board members through a mixture of personal appeal, strong-arming, and ego massage. Intimate knowledge of the Stark organization makes possible Robb’s consultative style of leadership.

By contrast, consider Theon Greyjoy. A job-hopper from the Stark camp hired as a junior executive for Pyke, Theon is derided as an outsider by his men. Consequently, Theon’s policies are designed not for long-term strategic purposes, but to earn his team’s respect. This slide into institutional insularity leads him to brutally execute an old friend, Rodrik Cassel, and to claim (falsely) to have killed his foster brothers, Bran and Rikkon. Theon grabs headlines but can’t secure market share. This does not delight shareholders — and in Westeros, there’s no such thing as a golden parachute.

Being right is not enough

This is the Ned Stark Rule. Honor, mercy, and fairness will not protect you against your rivals. Though one of the most popular characters in season one, Ned was a colossal failure as King’s Hand to Robert Baratheon. He was too focused on institutional legitimacy. He expected others to put aside their interests and respect precedent. As a result, he ended up dead, with his family endangered. As Stannis Baratheon learns, being “right” means nothing when you lack the resources to back it up.

MORE: Boys vs. girls: What’s behind the college grad gender gap?

Yet muscle isn’t enough either. While King Joffrey sits on the Iron Throne and has the manpower to enforce his rule, his legitimacy as a leader is in question. This is partly due to doubts about his parentage, but the proximate cause is that he’s a despotic twit who openly despises his people. When Joffrey & Co. are nearly torn apart by a starving mob, that’s karma knocking on the door.

While a sword may be necessary to force some into line, a leader must be perceived as serving the interests of the majority. That’s why Renly Baratheon appealed, and why a servant-leader, like Daenarys, may come out on top. When used in a conservative, thoughtful manner, power enhances legitimacy; when unconstrained, power undermines. Striking that balance is the real secret to winning the game of thrones, in Westeros and elsewhere.

Read More

Great ResignationDiversity and InclusionCompensationCEO DailyCFO DailyModern Board