Eye to Eye in Brazil – Manager-Free Semco

Eye to Eye in Brazil – Manager-Free Semco

Bureaucracies are built by and for people who busy themselves proving they are necessary, especially when they suspect they aren’t.Ricardo Semler

 

„Managers worldwide are gaping in astonishment at Brazilian company Semco, a very broad-based service company, which deals in various branches ranging from postal service to industrial equipment. Their 3000 employees elect their supervisors, and determine their own schedules and salaries. There are no business plans, no human resource department, and almost no hierarchy. All profits are divided up according to votes. All salaries and bookkeeping records are open to all, emails are strictly private, and how much money employees spend on business trips or computers is up to them.“[1]

Ricardo Semler is the CEO and majority owner of Semco S.A. Under his leadership, profits rose from four million Dollars in 1982, to 212 million in 2003, and the number of employees rose from 90 to 3000. According to strategy+business, profit was at 240 million Dollars in 2006 and at the double-digit annual growth rates; my guess is that sales will climb to at least 700 million in 2015. Semler’s management methods have aroused great interest worldwide and what goes on there contradicts everything that traditional managers believe to be true. The Wall Street Journal named Ricardo Semler the Latin American businessman of the year in 1990, and Brazilian businessman of the year in 1992. Ricardo Semler has this to say about his revolutionary business model:„We eliminated nothing other than the blind, irrational authoritarian demeanor that leads to counter productive consequences.“[2]

 

>> YouTube #10 – Ricardo Semler, Free Organizations

 

What is unique about this leadership model, the attitude towards humankind, the corporate philosophy, the strategy and the process? What kind of impact does this have on the organization and its culture?

Semco’s strategy

When Ricardo Semler is asked about his company’s strategy, he simply answers: „We don’t have one.“ And that’s not joke, it’s a living reality. This is puzzling at first, and I’m certain that there are some corporate managers out there to whom just the thought of it makes them break out in a sweat. But, what does he mean by this? Semco’s portfolio is as diverse as life is colorful, and the employees are diverse too, and that’s his point. „Once you’ve defined what kind of business you’re in, you create boundaries for your employees, you limit their thinking, and on top of that, you give them a reason to stop thinking. (…) Instead of imposing Semco’s identity on them, I allow them to customize themselves through their own interests, initiative, and aspirations.“ (Semler 2004)

 

If there is any such thing as a strategy, then it’s more of an attitude, namely the attitude towards raising questions. Why is that? Does that even make sense? And if Semler and his colleagues cannot find any meaning in something, then they change it or leave it. That sounds radical, and it is, because Semler believes in his employee’s potential for development and their needs to unfold that potential. He sees his and his management team’s role there to lead less rather than more. It’s best to let the leadership be, and not stand in the way of the unfolding of an employee’s potential, or at least not to hinder it.It would be best to provide a completely selfless support for the unfolding of potential of the individual, whether it benefits the boss or not. Anyway, it’s not all about what benefits the boss, but what will benefit all. Ricardo Semler himself even boasts a little when he says that he now makes little to no decisions in the company, even though he’s the boss and owner. He explains: „My role is to be a catalyst. I’m trying to create an environment in which others can make their own decisions.“ (Semler 1993)

 

Ricardo_SemlerThe following example should illustrate just how practical it works. Just like in any other business, people also have conflicts at Semco and that naturally (as elsewhere) can occur in the highest management positions as well. And just like in any other business, there are also power struggles that can escalate all the way up to the big boss and call for mediation. Semler recalls a situation where two adversaries thought that he should resolve it one way or another, in order to avoid problems within the company, because at the end there could be several million at stake with the decision, Ricardo Semler then gave the same, astonishing and highly intelligent answer. Because he does what he and Semco do best, which is nothing. This must sound like total anarchy to any of the more traditional leadership teams, but the intention is just the opposite. Semler explains that if he were to get himself mixed up into such issues even once, that one action, that one time of taking over authority would destroy the corporate culture of freedom, respect, trust, and self-determination, and thus the entire culture of unfolding potential in one fell swoop. And that is the worst economic loss that a company can have. So even if he possibly has an opinion or belief about what he is asked at one time or another, his answer is always the same: „Trust and don’t control. If you lose trust, you lose the core and the essence of the company.“ (Semler 2004)

 

We’ve already addressed the fact that this isn’t easy for most of us. Because what happens when we are faced with the choice to engage in a power struggle – for option A or B, or for the divisional manager A or B – and I’m not talking about luxury problems, I’m taking about decisions with significant risks. When we’re still not free of the fear of failure, the fear of no longer belonging to top management, fear of not being able to quench our desire for recognition in other ways, because we’re afraid that we could ruin everything. Existential fears arise because we don’t know how we can uphold our standard of living and finance the prestige associated with it, when we’re possibly already over or nearing 50 years old and we can’t see any other alternative, it leaves us feeling vulnerable, and no longer capable of being able to focus on the development of our potential. But when we’re free, we can support our employees to find a way on their own. And when we exercise that trust during critical moments, then our employees can learn which guidelines are most appropriate to follow for themselves, right? Wouldn’t that be the best possible corporate culture available for the unfolding of potential?

 

[1] Rotter, D. (2010): Die Befreiung der Arbeit: Das 7-Tage-Wochenende, Sein online, download on 8/21/2013 at http://www.sein.de/gesellschaft/neue-wirtschaft/2010/die-befreiung-der-arbeit-das-7-tage-wochenende.html
[2] Semler, R. (1993): Maverick: The Success Story Behind the World’s Most Unusual Workplace, Warner Books, New York

 

weekly excerpt from the book THE NEXT WAVE IN BUSINESS
wishing you an inspiring week,
truly yours, Stefan Götz+

 

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