They're violent, they're ruthless, they have caused misery to many, but you can't fault their business sense: mafia bosses know how to make a profit. Its practices may be largely illegal, but Cosa Nostra is not as retrograde, or conservative, as it has often been portrayed. Its raison d'etre is profit. Like any business, it is pragmatic and constantly changing to exploit new opportunities.

Big business has learned how to sell itself to the public, with television shows such as The Apprentice and Dragons' Den granting us a view of harsh but compellingly competitive environments. Businessmen such as Sir Alan Sugar, Duncan Bannatyne and Peter Jones have become unlikely media personalities. But the mafia has been using these methods for years.

When Bernardo Provenzano took over the organisation in the mid-90s, he inherited a depleted and demoralised workforce, who had scuppered their own access to politics and industry. The bombs that killed anti-mafia judges Giovanni Falcone and Paolo Borsellino had created a PR disaster and a law enforcement backlash. Hundreds of mafiosi were in prison, and many of them were so disillusioned with the organisation that they were telling the authorities everything they knew.

Magistrates and mafiosi agree: Provenzano was the charismatic force who revived the fortunes of Cosa Nostra. It has been said of Provenzano, as of so many mafia entrepreneurs, that had he turned his talents and resources to legitimate business, he would have been extremely successful. Fortunately, the mafia's particular modus operandi - the use or threat of violence to create monopolies and price-fixing cartels - is not part of general business practice. But his "System" turned around a failing organisation with far-sighted tactics worthy of any business impresario. The fact that he wrote his reforms by letter means that we have what amounts to seven rules for running a successful business.

Rule 1: Submersion

When a company is failing, the first step is to take it below the radar. You want to lose that cursed epithet "troubled" as quickly as possible, even if it means disappearing from the business pages."It's the sensible thing to do - you bury your mistakes and get on with it," says Peter Wallis (known as Peter York in his other guise, as a social commentator), management consultant at SRU Ltd. You also want to buy shareholders' patience and convince them to hold their nerve and trust you.

"Our aim was to make Cosa Nostra invisible, giving us time to regroup," recalled Provenzano's lieutenant, Nino Giuffrè, who collaborated shortly after his arrest in 2002. After a series of power struggles that had left many dead, businessmen were understandably reluctant to return calls. Mafiosi were instructed to avoid any activity that would attract publicity. If a factory owner refused to pay protection, no one was to set fire to the machinery or blow up the trucks. Peaceful persuasion was the only way.

By contrast with the old-style system of shoot first and ask questions later, any hostile action would have to be thoroughly assessed for potential PR damage. "It was essential to weigh up whether a person could do more damage dead or alive," revealed Giuffrè.

Announcing his system, Provenzano warned that recovery would take time: members might have to wait between five and seven years before they were making profits again. Rebuilding links with business and politicians could only be done out of the glare of publicity. In relative obscurity, Cosa Nostra would be repositioned to shake off its parasitic image and become part of the industrial and political institutions.

Rule 2: Mediation

"Be calm, clear, correct and consistent, turn any negative experiences to account, don't dismiss everything people tell you, or believe everything you're told. Always try to discover the truth before you speak, and remember that, to make your judgment, it's never enough to have just one source of information."

This letter has been described as "a manifesto of Cosa Nostra under Bernardo Provenzano". After a decade of unspeakable violence under the previous leader, Totò Riina, Provenzano changed the culture of Cosa Nostra by instructing his men in the art of negotiation and the importance of dialogue.

Provenzano was decisive, and on occasion demanded swift and direct answers to his questions, but he could be a ditherer when it suited him. Playing for time, he encouraged his men to negotiate agreements between them. If that failed, Provenzano was at his typewriter night and day, offering his wisdom and experience (and just occasionally, a little double-dealing) to resolve disputes.

Like any company director, who carefully crafts his or her media persona, Provenzano didn't want to come across as a tyrant, he wanted to be a "kindly dictator". He coordinated the activities of different and competing groups, without imposing his will. He was the uncontested boss, but he gave the impression that his decisions were reached after long consultation.

Rule 3: Consensus

Provenzano answered letters from every level of society about job vacancies, exam results, local health and hospital administration. Like the charity work carried out by major corporations today, Provenzano was clear: the mafia must present itself as a positive element of society. The boss had to appear as a beneficent figure, an uncle whose advice and consent was sought on all matters - business and personal. He understood that persuading the people they need you is a far more effective way of promoting your business than imposition and violence.

"Let me know whatever [the people] need," he wrote to his adviser, "they must expect nothing but good from us."

One key step in the organisation's recovery was recapturing the popular consensus. The mafia has always relied on the obedience (goodwill might be putting it too strongly) of the community. In the business of selling protection, social control is essential: if your "clients" unite and rebel, you're in trouble.

Rule 4: Keep God on your side

Part of Provenzano's bid to reclaim the people's trust and rehabilitate Cosa Nostra with its traditional followers was to assume a mantle of piety. He presented himself in pastoral role - trustworthy and authoritative. His letters read like the parish priest's homily, and he would send his men tracts copied from the Bible.

Investigators tried hard to discover a hidden code beneath all the underlined passages in his Bible. In fact, it seems, he found them genuinely useful as leadership tools.

Provenzano's choice of tracts revealed, according to investigators, "a certain attention to rules, to punishments, guilt and vengeance, as though he were searching for some inspiration and authority to support him in his responsibilities and the decisions that were a necessary part of being the head of an organisation".

In an approach adopted by politicians including Tony Blair, Provenzano's letters contain the strong implication that God is exercising his will through him ("May the Lord bless you and keep you ... know that where I can be of use to you, with the will of God, I am completely at your disposal ... ").

The status as homespun churchgoer also worked for George Bush in his pursuit of popular consensus. "Bush's religion is very variable," comments Wallis. "He courts rightwing evangelicals but he doesn't buy the whole package; he merely wants to relate to them."

Rule 5: Be politically flexible

Businessmen from all walks of life and political persuasion usually find themselves co-opted on to a government advisory board eventually. The East End boy made good is not your traditional Labour supporter, but Sir Alan Sugar has reportedly been advising Gordon Brown on enterprise. "This government's not Labour, it's old-fashioned Tory," he says. "I prefer Gordon to Tony. Blair was refreshing but Brown is more like me. He has a strong work ethic."

Provenzano took this further, changing his political allegiance whenever it suited him. He looked for politicians who were prepared to pursue his self-serving demands for lighter sentences against convicted mafiosi, as well as the end of protection for collaborators. "Links were to be forged behind the scenes with politicians who had no trace of connection to scandal or sleaze," recalled Giuffrè. "If a politician was seen to be supported by men of honour of a certain rank, within 24 hours he'd be destroyed by the opposition."

Rule 6: Reinvention

In case of a political scandal, or a business failure, it is vital for the new boss to be able to distance himself from the whole affair. Indeed, he may find it useful to take on a new persona altogether. When Stuart Rose returned to Arcadia after three years to rescue it, he said: "What is interesting is that people here think I haven't changed, but I have been gone three years. I am not the same Stuart Rose, I have changed a lot."

With Provenzano's new directives, not only did the negative headlines cease, but he managed to dissociate himself from the scandals that had gone before. Like everyone else, he had emerged from Cosa Nostra's most violent decade with his reputation in tatters; his advisers helped him to "get his virginity back", in Giuffrè's interesting phrase. With the help of his PR-savvy advisers, he made sure no one associated him with the violent years, and created his image as the peacemaker.

"When I got out of prison," Giuffrè recalled, "I found Provenzano a changed man; from the hitman he once was, now he showed signs of saintliness."

Rule 7: Modesty

During his career, Provenzano transformed himself from a hired thug, to business investor, political mastermind and, ultimately, strategist and leader. Part of his mystique was that no one really knew whether he was a genius or an illiterate chancer. To emphasise his humble character and present himself as a simple man of the people he would write letters full of spelling and grammatical mistakes, and always signed off with the same humble apology: "I beg your forgiveness for the errors in my writing ..."

Every letter ends with the same saintly and affectionate benediction and an apology for grammatical errors. The bad spelling and schoolboy mistakes detracted nothing from the authority of its writer. For a man who moved easily in the worlds of business and politics, it was apparently part of a carefully constructed image. Investigators maintain his semi-literacy was a deliberate ruse.

It's a strategy that political and business leaders have used to good effect. "George Bush's family is as upper-class as you're going to get in the United States," says Wallis. "He is not a real Texan. To what extent he talks like that out of incompetence, to what extent it is crowd- pleasing, we don't know - but we know it works."

Similarly, Justin King, multimillionaire saviour of Sainsbury's, says: "I'm not a book reader ... I'm just a normal bloke." Sugar has never disavowed his East End roots, his upbringing in a Hackney council house. He doesn't give himself airs, but the point is still made: he grew up with no privileges, but he is the one with the power.

Provenzano took false modesty a step further, suggesting (almost entirely untruthfully) that he would rather have someone else in charge. "They want me to tell them what to do," he wrote, "but who am I to tell them how to conduct themselves? I can't give orders to anyone, indeed I look for someone who can give orders to me."

Unfortunately for him, since his arrest in 2006, his wishes have been fulfilled.

· Boss of Bosses: How Bernardo Provenzano Saved the Mafia is published by John Murray (rrp £20). To order a copy for £18 with free UK p&p go to theguardian.com/bookshop or call 0870 836 0875.