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SEMCO SA PROFILE
ounded: 1953
Headquarters: Sao Paulo, Brazil
Originally a shipbuilding supplier, Semco now produces more than 2,000 products including dishwashers and digital scanners, as well as diversifying into banking and environmental services and managing non-core business of multinationals such as Wal-Mart and Carrefour.
Annual turnover of $160 million, up from $4 million when Semler took charge, often growing at 30-40 percent a year.
Employs more than 3,000 people with an annual employee turnover of just one percent. Workers set their own salaries, share company profits and hire and fire their own managers.
They say: "Our philosophy is built on participation and involvement. Don't settle down. Give opinions, seek opportunities and advancement, always say what you think. Don't be just one more person in the company."
Ricardo Semler, Semco SA
Thursday, October 7, 2004 Posted: 1645 GMT (0045 HKT)
What are you reading?
"I just received a reader on Michel Foucault. I've been reading more of Foucault lately. There's much in common in management with his idea of looking at the essence of things and re-configuring them so that's been an interesting one.
I'm reading a lot of literature. I've been reading Sebald again -- Vertigo. He really defies gravity in literature. It's amazing how you can get caught in his books without really understanding what's going on."
Who's been your biggest influence?
Bill Gore from Goretex was a very strong influence because he was one of the first larger companies to experiment with freedom in the workplace.
What's your biggest mistake?
So many of them. I think probably the mistake of youth in the sense of speed -- "this has to be done right now." In a lot of what we did we put speed was of the essence, but we didn't really understand the concept of time
Is management an art or a science?
More an art. The scientific, technical aspect is basically secondary. The graduate schools have difficulties keeping up with the times because they consider it too much of a science.
What do you reach for on your desk when the fire alarm goes off?
I'd probably take my notebook computer because I think my whole life is there and I wouldn't have a single file left. Ten days ago my hard disk went out completely and it's brought me back to September which was the last time I made a copy of anything. It's interesting that not very much happened. I recommend that people lose their hard disks every couple of months.
Curriculum Vitae
# Graduated from Harvard Business School aged 20 -- one of the school's youngest ever MBA recipients -- before replacing his father, Antonio, as CEO of Semler and Company in 1984 aged 24.
# On first day, renamed company Semco, fired two-thirds of management and eliminated all secretarial positions. Dismantled managerial structure to eliminate "corporate oppression" and encourage core business values of employee participation, profit sharing and a free flow of information.
# Named as a "Global Leader of Tomorrow" by the World Economic Forum , twice as Brazil's 'Business Leader of the Year' and Latin American Businessman of the Year by the Wall Street Journal's America Economia magazine.
# Author of "The Seven-Day Weekend" (2003) and "Maverick" (1993).
# Founded the Lumiar School in Sao Paulo in 2003, where children aged 2-6, including Semler's own son, are taught in an unstructured environment without classrooms, homework or playtime, and learn only about what interests them.
He says: "The purpose of work is not to make money. The purpose of work is to make the workers, whether working stiffs or top executives, feel good about life."
Who's in charge here? No one
But it's not a recipe for failure - just the opposite. Simon Caulkin on Ricardo Semler
Sunday April 27, 2003
The Observer
The almost automatic response to Ricardo Semler's wonderfully subversive new book, The Seven Day Weekend (Century, £16.99), is: 'Well, that's all very well in Sao Paulo, but we couldn't do it here.' Semler is, or was - more of this later - president of Semco, Brazil's most famous company, which has made its name by standing the conventional corporate rulebook on its head.
Semco doesn't have a mission statement, its own rulebook or any written policies. It doesn't have an organisation chart, a human resources department or even, these days, a headquarters.
Management
Who's in charge here? No one
But it's not a recipe for failure - just the opposite. Simon Caulkin on Ricardo Semler
Sunday April 27, 2003
The Observer
The almost automatic response to Ricardo Semler's wonderfully subversive new book, The Seven Day Weekend (Century, £16.99), is: 'Well, that's all very well in Sao Paulo, but we couldn't do it here.' Semler is, or was - more of this later - president of Semco, Brazil's most famous company, which has made its name by standing the conventional corporate rulebook on its head.
Semco doesn't have a mission statement, its own rulebook or any written policies. It doesn't have an organisation chart, a human resources department or even, these days, a headquarters.
Article continues
Subordinates choose their managers, decide how much they are paid and when they work. Meetings are voluntary, and two seats at board meetings are open to the first employees who turn up. Salaries are made public, and so is all the company's financial information.
Six months is the farthest ahead the group ever looks. Its units each half-year decide how many people they require for the next period. Naturally it doesn't plan which businesses to enter. Instead it 'rambles' into new areas by trial, error and argument. Its current portfolio is an odd mixture of machinery, property, professional services and fledgling hi-tech spin-offs. That's right, Semco is the epitome of managerial incorrectness, a conglomerate.
Sounds like a recipe for chaos, eh? Yet Semco has surfed Brazil's rough economic and political currents with panache, often growing at between 30 and 40 per cent a year. It turns over $160 million, up from $4m when Semler joined the family business two decades ago, and it employs 3,000. $100,000 invested in this barmy firm 20 years ago would now be worth $5m.
Semler argues, with figures to support him, that the model has nothing more to prove. He'd rather have his savings in Semco, he says flatly, than in conventional blue chip giants with all their apparatus of planning and control.
Paradoxically, the reason for Semco's sustainability is the same one that makes conventional managers reject it: no one is in control, including Semler. The original catalyst and still the major shareholder, he doesn't have a current title. The company recently held a party to commemorate the tenth anniversary of the last time he made any decision at all.
The company at present does have a permanent chief executive, and Semler hasn't always approved of what he does. Yet this is a cause for satisfaction, since the greater the independence and the less attention paid to any one individual, the more vigorous the system. It's Catch-22 in reverse: the decision is wrong but that proves the company's independence and sustainability, so it's right.
Semler is more worried that the company's uniqueness will be diluted if it grows too fast or makes too much money. Preserving the culture is paramount, so the company puts much effort into putting off the New Agers who want to join Semco because they imagine it's a workers' paradise. Even though there are hammocks in the garden for an afternoon nap and employees can be as flexible as they like (hence the book's title), Semler insists: 'It's absolutely not about letting it all hang out.'
In fact, the underlying message of this infectious and brave book is the system's rigour. Semco is the test case of what happens when a company actually puts the annual report-speak of 'trust' and 'delegation' into practice. The corollary of democracy and treating people as adults - the only real rules at Semco - is huge peer pressure and self-discipline.
'It's as free market as we can make it. People bring their talents and we rely on their self-interest to use the company to develop themselves in any way they see fit,' declares Semler. 'In return, they must have the self-discipline to perform.'
There's no hiding place for those that don't, even if performance is judged in non-standard ways. 'To survive here you have to get on someone's list of people they need for the next six months, and you can't do that by playing political games.' In some respects - perhaps this is Semler's history as a Sixties rock 'n' roller showing through? - he frets that the emphasis on self-discipline has gone too far: 'I have an added 30 per cent faith in human nature,' he says ruefully. (The other way of putting it, of course, is that the workers are harder-headed than he is.) The model only works, he argues with passion, if dissent, argument and diversity remain real, rather than just being paid lip-service.
It's by letting the process play itself out that the result becomes robust, even if, as in many cases, the result is to do nothing, or is mistaken. That, too, is an essential part of the process.
But conventional control attitudes are deeply programmed, and resistance to pursuing democratic logic, particularly at the bottom, is vicious. Even now, laments Semler, 'we're only 50 or 60 per cent where we'd like to be'. Hence the constant attempts to unsettle even Semco's unusual order - the latest of which is the disbandment of the firm's headquarters in favour of satellite 'airport lounge' offices dotted around Sao Paulo. Not only do people not have fixed desks, they don't even have fixed offices.
'They thought it was about location. In fact, it's about eliminating control,' says Semler happily. 'If you don't even know where people are, you can't possibly keep an eye on them. All that's left to judge on is performance.'
This illustrates just how hard it is to abandon the technological tools of control and why Semler accepts with resignation that the Semco model is unlikely to catch on: 'It does nothing for the 90-day fix.' Besides, it's Semco's competitive advantage.
But concern with undoing the brainwashing that makes workplace democracy such hard work has pushed him to turn his attention to education. He has set up a school for children aged four and five, which starts from the same democratic principles as the company's. Early exposure to the school's methods caused uproar among parents - but now results are beginning to show through and they are, in their way, as remarkable as Semco's.
Semler offered Semco the chance to be associated with the school. But people declined, a decision he regrets but accepts with good grace. Trust the process, he says. Every decision reinforces it. There's no turning back now.
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