http://www.agreatsupervisor.com/articles/lessons.htm

Lessons from Semco on Structure, Growth and Change

Semco is one of the most interesting companies on the planet. There are no job titles and no personal assistants. People set their own salaries. Everybody shares in the profits.

That sounds like a recipe for disaster, or at least chaos, but Semco has grown consistently for the last twenty years despite being located in one of the most volatile economies in the world. The story of Semco and its majority shareholder, Ricardo Semler, is often told something like this.

"... his father handed him control of the family's small Brazilian company, Semco, a maker of industrial machinery. Faced with disastrous performance, Semler (at age 22) responded radically. He fired most of the top managers and got rid of most management layers; there are now three. He eliminated nearly all job titles. There's still a CEO, but a half-dozen senior managers trade the title every six months, in March and September. Executives set their own pay, and everyone in the company knows what everyone else makes. All workers set their own hours. Every employee receives the company's financial statements, and the labor union holds classes on how to read them. Workers choose their managers by vote and evaluate them regularly, with the results posted publicly.    Obviously it's all insane, except that it seems to work." (Fortune, 26 November 2001)

That makes it seem like what Semco did was based on a clear strategy, and that you can follow a similar strategy with good results. But before you throw out your personnel manuals and let folks start setting their own salaries, let's take a look at what actually happened.

Semco was founded in 1953 by Ricardo Semler's father, Antionio Curt Semler, an Austrian-born engineer. The company he founded was a fairly typical South American company for the time. It was rigidly hierarchical and patriarchic and it had a rule and a policy for just about everything.

The company manufactured several products, but was known for its marine pumps. Ninety percent of the sales were to the Brasilian shipbuilding industry.

Ricardo joined the company at age 19. He thought the company got too much business from one industry. So Ricardo recommended diversification. His father refused. Ricardo thought the company was too rigid. His father disagreed. Ricardo thought the company needed better financial practices. His father thought otherwise.

That's where things might have stood for some time, except that recession came to Brasil in the early 80s. It hit Semco especially hard. Ricardo threatened to quit unless he got his way. His father gave in and young Ricardo became Semco's CEO. One of

his first official acts was to fire two-thirds of the top management, many of whom were his father's friends.

Ricardo set to work designing and implementing a diversification strategy and changing the way business and planning were done. In the beginning this was really pretty traditional. Reports and manuals and controls replaced management fiat. He wanted to organize Semco something like the US-based W. L. Gore company's matrix structure. None of this was easy.

Neither was finding cash and business to keep the company afloat. Ricardo was soon working the kind of schedule he'd told his father he didn't want. There was nothing but business, all day, every day. Something had to give and it turned out to be Semler's health.

He began having fainting spells and other problems. A doctor told him that he had the highest level of stress the doctor had ever seen in a twenty-five year old. Semler decided to change. He started by leaving the office at seven PM every evening, no matter what.

In 1985 one of his managers suggested to Semler that he should create self-managed teams of six to eight production workers who would be entirely in charge of all aspects of production. They set their own budgets and production goals. Compensation was then tied to budget and production performance. Costs went down. Productivity and profits went up.

Semler liked that. Many production workers liked that. Others were leery of taking on what they saw as "management" responsibility. It was the middle managers that didn't like the new concepts. They felt they were losing their power and prerogatives. In a little over a year, one third of them quit.

Now Semler added profit sharing, but with a twist. In Semco's system workers received about a quarter of the net profits from their division. The twist involved how the profits were distributed. At Semco a democratically elected committee was responsible for designing the program and for allocating the profit-sharing funds.

Things looked like they were stabilizing, but then Brasil's President Collor instituted regulations that limited access to liquid capital. A severe recession was the result and Semco was in trouble again.

The company cut costs in just about every area until there was no alternative to either layoffs or salary cuts. The problem with layoffs was that Brasil's labor law required that every dismissed worker receive two years worth of severance pay.

Then a worker's committee approached Semler with a proposal. They'd take a pay cut, but with three conditions. First, the profit-sharing percentage would be increased until salaries could be restored. Second, management would take a forty percent cut in salary. And, third, the workers would get the right to approve every expenditure. Semler agreed.

In the plants, workers started handling multiple job duties and using their knowledge of how the factory worked to come up with new procedures that saved time and money. At one factory they divided themselves into three manufacturing units of about 150 people each. Each unit had complete responsibility for manufacturing, sales, and financial management. The new Semco was being born.

The autonomous team idea was adopted throughout the company. As it evolved the teams began hiring and firing both workers and supervisors by democratic vote. Policy manuals disappeared to be replaced by a policy of common sense. There is an actual manual, though. It runs about twenty pages and is filled with cartoons and brief statements of principle.

One more change had to be completed in order to create the Semco we see today. In the late 80s a group of engineers had received permission to become what was called the Nucleus of Technological Innovation. The idea was that they, and a group of workers, would become fully autonomous. In effect they were seeking to extend the autonomous team concept to a larger group.

Effectively the group would operate entirely on its own, though with the same culture as Semco. Their performance would be reviewed every six months. They took a percentage of sales as compensation. That model, essentially extending the autonomous teams, eventually became the model for all of Semco.

Today's Semco doesn't have a traditional management hierarchy or typical organizational chart, or even a matrix or lattice management structure. The company is effectively made up of autonomous, democratically run units. The model of organization is that of concentric circles.

At the center are the Counselors, including Ricardo Semler. There are six of them and a different one takes the CEO job every six months. They deal with general policy and strategy, overall financial results, and work to inspire the Partners who make up the second circle.

Partners are six or seven leaders from each Semco division. Everyone else is an Associate. Some Associates also work as team leaders.

Semco has no receptionists, secretaries or any personal assistants. Associates set their own salaries which are publicly posted and worked into the budgets. All meetings are open to any Associate who wants to attend. Financial information is available to anyone who wants to see it and courses are available to help them understand what they see.

The story of Semco and Ricardo Semler may not be able to teach us about quick, programmatic things we can do to establish an industrial democracy and usher in decades of prosperity and labor peace. But it can tell us a lot about how change happens, how to adapt to changing environments and what a truly living company looks like.

There have been two kinds of change at Semco. The major organizational changes took twenty years to become reality and not one was the result of any sort of master plan.

Instead, the big changes were driven by crisis such as financial hard times or Semler's stress-related illness. With very few exceptions most of the dramatic ideas came from someone other than Ricardo Semler. His genius has been in holding to a general concept of empowerment and allowing and supporting changes that could easily have been viewed as taking away his power.

There are two models for the kind of changes we have seen at Semco. One is the biological model of punctuated equilibrium. Things go along fairly smoothly with minor changes, then there is a sudden burst of change and things settle down again. The other model comes from chaos theory. In chaos theory major change happens when an organism faces a threat that moves it away from equilibrium and stability, and out toward the edge of chaos.

The major changes at Semco over the last two decades have created a company that is a confederation of small, freestanding units. That "structure" is part of why Semco can adapt so quickly today to deal with threats or to seize opportunities.

Semco's units are limited to 150-200 people. That's something of a magic number in sociological, management and anthropological studies. It's the largest group that a human being can feel a part of and that can create a social context that affects behavior.

British anthropologist Robin Dunbar puts it this way, "The figure of 150 seems to represent the maximum number of individuals with whom we can have a genuinely social relationship, the kind of relationship that goes with knowing who they are and

how they relate to us." That number appears again and again in studies of communities, of effective plant sizes and effective military units.

Having a small group makes it easy to spot a threat or opportunity, figure out what to do, and swing into action. Above this size you need formal processes to get this done, below this size it becomes a natural function.

It's those processes that slow down big businesses and make smaller businesses nimble. Semco is really less a single large company with more than a thousand employees than it is a bunch of smaller companies who can see, process and react quickly to changes in the environment. And who all operate with the same values, philosophy and culture.

Semco is clearly one of the most interesting companies on the planet. It's interesting more for the way it evolved to its current structure than because of the structure itself. And it may just be a model of how other successful companies may look in the future.

Top of page

THOUGHT STARTERS

Here are some Thought Starters that are quotes from Ricardo Semler.

"Rather than force our people to expand a business beyond its natural limits, we encourage them to start new businesses."

"Semco's ongoing transformation is a product of a very simple business philosophy: give people the freedom to do what they want, and over the long haul their successes will outnumber their failures."

"It's a system that puts a lot of weight on leaders because then can no longer simply protect themselves with symbols of power like closed offices or special parking places. They have to rely exclusively on their ability to generate respect."

Semler's Rules for Management Without Control"Forget about the top line.Never stop being a start-up.Don't be a nanny.Let talent find its place.Make decisions quickly and openly.Partner promiscuously."

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RESOURCES

The Semco website is at http://semco.locaweb.com.br/     The site is in Portuguese.

Ricardo Semler's book, Maverick, was published in the US in 1995 after being published first in Brasil seven years earlier

Semler has a new book out that's available in the UK. The title is The Seven Day Weekend.

The first place I ever stumbled upon anything about Semler was inSecond to None: The Productive Power of Putting People First by Charles Garfield. That book remains one of the great unknown books. It's currently out of print, but used copies are available on Amazon.

The Living Company by Arie de Geus looks at companies as a life form. Many of the issues discussed in the book are made clearer when you read them with some knowledge of Semco.

The same is true Competing on the Edge : Strategy as Structured Chaos by Shona L. Brown, Kathleen M. Eisenhardt which looks at organizational change from the perspective of chaos theory.

Richard T. Pascale's Managing on the Edge was one of the first books I ever read that dealt with the kind of changes that come from crisis. It wasn't about chaos theory, but it could have been with a few changes in language. The book is currently out of print but used copies are available on Amazon.

Punctuated Equilibrium is a theory first advanced by Stephen Jay Gould and Niles Eldredge in 1971. There is an excellent collection of articles about it on the Unofficial Stephen Jay Gould website.

The Tipping Point: How Little Things Can Make a Big Differenceby Malcolm Gladwell is an excellent book that deals with a variety of issues. Among them is the magic number 150.

Diane Ravitch has a website where you can send her examples of textbook censorship.

Her book, The Language Police is available on Amazon.

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Book pages:

https://books.google.co.th/books?id=2g_xpXm2eJEC&pg=PA45&lpg=PA45&dq=CEO+Ricardo+Semler+and+Maverick+at+Semco&source=bl&ots=C2VxtoZn18&sig=3rkANGjt5aZNsqW3tO-yXh9xy4A&hl=en&sa=X&ei=i80DVZjNEMKPuASc3oD4AQ&ved=0CDAQ6AEwAzgK#v=onepage&q=CEO%20Ricardo%20Semler%20and%20Maverick%20at%20Semco&f=false

Ricardo Semler, CEO and majority owner, Semco SA23.08.2007

 Maria Pikalova

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Achievements

Ricardo Semler became famous mostly because of the innovative management policies that he has applied in his company Semco SA. Under his leadership Semco increased revenue from $4 million in 1982 to $212 million in 2003. It has grown consistently for the last twenty years despite being located in one of the most volatile economies in the world - Brazil.

TIME magazine featured him among its Global 100 young leaders profile series published in 1994. The World Economic Forum named him as a Global Leader of Tomorrow. The Wall Street Journal America Economia, the Wall Street Journal's Latin American magazine, named him Latin American businessman of the year in 1990 and he was awarded as Brazilian businessman of the year in 1990 and 1992.

Career highlights

Semler was born in 1959 in São Paulo, graduated from the law school at age 20. A year before he have joined Semler & Company, which his father, Antonio Curt Semler, an Austrian-born engineer, founded in 1953.

It was a shipbuilding supplier, rigidly hierarchical and patriarchic company that got too much business from one industry. Antonio Semler supported a traditional autocratic style of management while the younger Semler favoured a decentralised, participatory style. Ricardo recommended diversification and reorganization, but his father rejected all his ideas. After heated debates, the son threatened to leave the company. In the early 80s recession came to Brasil. It hit Semco especially hard. Semler Sr. was a pragmatist. "Better make your mistakes," he told his son, "while I'm still alive." Young Ricardo became Semco's CEO at age 21. He began work on putting into practice ideas ignored by his father. He succeeded.

A high profile committee appointed by CIO Magazine featuring Tom Peters, Jim Champy and Michael Hammer selected Semco as one of the most successfully re-engineered companies in the world. The BBC included Semco in its series on Re-Engineering the Business for creating one of the most successful management structures in business.

Semler has reduced his involvement in Semco in the past decade to pursue other activities. His first book Virando a Própria Mesa (Turning Your Own Table) became the bestselling non-fiction book in the history of Brazil. He has since written two books in English on the transformation of Semco and workplace re-engineering: Maverick, an English version of Turning Your Own Table published in 1993, and The Seven Day Weekend in 2003.

He speaks regularly to business schools, businesses and groups to promote his philosophy of industrial democracy. In 2003, he founded the Lumiar School in Sao Paulo, a democratic school where children aged 2-10, including his own son, are taught in an unstructured environment without classrooms, homework or playtime, and learn only about things that interest them.

Semler has been Vice President of the Federation of Industries of Brazil and a member of SOS Atlantic Forest, Brazil's leading environmental defence organisation.

Leadership experience

As a new CEO of Semler & Company Ricardo’s first official acts were to rename the company Semco and fire two-thirds of the top management, many of whom were his father's friends. He set out to work designing and implementing a diversification strategy and changing the way business was done. In the beginning he wanted to organize Semco to be something like the US-based W. L. Gore company's matrix structure. Ricardo Semler says that the founder of this company, Bill Gore, was a very strong influence because he was one of the first larger companies to experiment with freedom in the workplace.

Semler was also trying to find cash and business to keep the company afloat. Very soon he had nothing but business, all day, every day. He was just 25 when he began having fainting spells and other problems. While touring a pump factory in Baldwinsville, N.Y., Semler collapsed on the shop floor. The reason was the highest level of stress. He succeeded in diversifying the company, but it had become an unhappy place to work. Semler checked into the Lahey Clinic for some exams. "After amortizing all of their machinery, they told me I had nothing," Semler recalls. "But the doctor told me that if I kept going like I was, I would soon be using their brand-new cardiac wing. He walked me through it and showed me how good the hotel structure of that wing was, how much I was going to like it. I got the message."

Ricardo started by leaving the office at seven PM every evening, no matter what. But he

wanted a greater work-life balance not only for himself but also for his employees. “Semco appeared highly organized and well disciplined, and we still could not get our people to perform as we wanted, or be happy with their jobs,” he remembers. “If only I could break the structure apart a bit, I thought to myself, I might see what was alienating so many of our people. I couldn’t help thinking that Semco could be run differently, without counting everything, without regulating everyone, without keeping track of whether people were late, without all those numbers and all those rules. What if we could strip away all the artificial nonsense, all the managerial mumbo jumbo? What if we could run the business in a simpler way, a more natural way?”

Semler discovered that work-life balance for his employees and improving his family fortune are not alternative goals. The more freedom he gave his staff to set their own schedules, the more versatile, productive and loyal they became, and the better Semco performed.

Semler devoured the works of Peter Drucker, Michael Porter, and Henry Mintzberg, searching for a solution. At that time he met Clóvis da Silva Bojikian, the former principal of a small, progressive teachers’ school, who had answered Semco’s want ad for a director of human resources. Together they started transformation of Semco with small steps and now there are no organization charts, no five-year plans, no corporate values statement, no dress code, and no written rules or policy statements beyond a brief “Survival Manual,” in comic-book form, that introduces new hires to Semco’s unusual ways. Semler has let his employees set the terms of their employment: hours, salaries, wages, even their office technology. Semco’s transition to a democratic workplace took nearly five years.

In Semler’s mind, such self-governance is not some softhearted form of altruism, but rather the best way to build an organization that is flexible and resilient enough to flourish in turbulent times. He argues that this model enabled Semco to survive not only his own near-death experience, but also the gyrations of Brazil’s tortured politics and twisted economy.

“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,” says Semler. “In return, they must have the self-discipline to perform.” The main Semler’s idea is to treat employees as adults, not as children. “We are saying everyone is a responsible adult. Currently, staff already make decisions about their kids. They elect governors and mayors. They know what they want to buy and what they do not. It is absolutely crazy, the idea that people are still concerned about how things are done. The bosses here do not say -- you are five minutes late or how come this worker in the plant is going to the bathroom?”

At Semco workers choose their managers by vote and evaluate them regularly, with the results posted publicly. Of course, Ricardo Semler as an owner has a right for veto. “By having so much stock, I have a loaded gun, but in 25 years I’ve never used it because you can only use it once,” he says. “If I veto someone, the next time they’re going to say, ‘Forget it; he’s going to do what he wants.’ They have to go through processes where they know they’re going to prevail.” For example, the director at Lumiars School is a lively young woman named Lilian Kelian, with no background in education. Semler voted against her. “The parents wanted Lilian, so Lilian’s the new director,” he says. “The person we were backing had 20 years’ experience as a school director. But the parents were more interested in the mind-set, the drive, and the belief system. And Lilian has a lot of qualities. She knows we lobbied against her, but now we work together and off we go.”

Now Semler has poured his energies into a philanthropic foundation, a think tank, a grade school, and an eco-resort. All are laboratories for further exploring what is possible when leaders relinquish control and allow rational people to pursue their goals unfettered by

established rules and procedures. In each case, Semler plays the catalyst, while surrounding himself with people who have often given up more exalted positions elsewhere to work with him. Their job is to implement the impractical. Semler’s latest brainstorm is Hotel Botanique and Habitat dos Mellos, an upscale eco-resort and botanical garden, which is being built about 125 miles northwest of São Paulo in Bairro dos Mellos, a destitute village where unemployment had hit 38 percent. The project is a study in contradictions, with all the luxuries essential to an international destination resort, but rigorously natural, with no televisions, no air conditioning, and exclusively locally grown, organic produce in its resolutely French restaurant. Guests will be among the world’s wealthiest, and most jaded, clientele, but Semler is committed to staffing the hotel with indigenous people drawn from the neighboring village. What makes this enterprise pure Ricardo Semler is the democracy of its management structure. The trickiest part is his insistence that each guest feel that he or she is staying at a small inn and being served by the owner. Semler intends to empower every hotel staffer to answer any wish at any time.

In conversation, in teaching, and in his books Ricardo Semler puts forth participative management as not just a pragmatic path to business success, but also a healthy and enjoyable way of life. These are his rules for management without control:

Forget about the top line. Never stop being a start-up.

Don't be a nanny.

Let talent find its place.

Make decisions quickly and openly.

Partner promiscuously."

Of course, a lot of leaders are skeptical about Semler’s approaches. But these are some facts. Semco has in reserve 2,000 resumes and hundreds of people want to work there at any position. When Semco prints a want ad, there are 1,400 responces. "Semco's ongoing transformation is a product of a very simple business philosophy”, says Semler. “Give people the freedom to do what they want, and over the long haul their successes will outnumber their failures."

Background materials:

Ricardo Semler, Maverick!, 1993

Ricardo Semler, The Seven Day Weekend, 2003

Nick Easen, Interview with Ricardo Semler, CNN, June 14, 2004

Chapter One from Sempler’s book The Seven-Day Weekend, Inc.

Peter Martin, Ricardo Semler - Brazil's Caring Capitalist, News SBS, June 15, 2005

Ricardo Semler’s lecture at MIT (video)

Lawrence M. Fisher, Ricardo Semler Won’t Take Control, Strategy+business, Winter 2005

Geoffrey Colvin, The Anti-Control Freak, Fortune, November 26, 2001

Lessons from Semco on Structure, Growth and Change, Monday Memo

Brad Wieners, Ricardo Semler: Set Them Free, CIO Insight.com, April 1, 2004

Simon Caulkin, Who's in charge here? No one, The Observer, April 27, 2003

 http://www.good2work.com/article/5636

vedio:

http://video.mit.edu/watch/leading-by-omission-9965/

http://www.strategy-business.com/article/05408?pg=all

Ricardo Semler Won’t Take ControlThe Brazilian CEO and best-selling author transformed his pump plant into a model of participative management, and launched his company on 14 straight years of double-digit growth.

by Lawrence M. Fisher

Like many chief executives, Ricardo Semler used to wonder what would happen to his company if he

were hit by a truck. One night in February 2005, he found out — while driving 85 miles per hour on a

highway in Brazil.

Miraculously, he was still alive within the 20-inch pancake of crushed steel and shattered glass that remained of his car. Also miraculously, his company, Semco Group, of São Paulo, Brazil, carried on seamlessly during the months he spent lying in intensive care and recuperating from the multiple surgeries he needed to repair his broken neck and battered face. Numbers were met, deals were closed, and business continued pretty much as usual.

Semco Group Chief Executive Ricardo Semler at his impromptu office — a coffee shop near his company’s headquarters

Photographs by Rogério Reis / Blackstar

Mr. Semler, 46, is the leading proponent and most tireless evangelist of what has variously been

called participative management, corporate democracy, and “the company as village.” As proposed

45 years ago in a book called The Human Side of Enterprise, by Douglas McGregor, one of the

founders of the field of organizational development, participative management says that

organizations thrive best by trusting employees to apply their creativity and ingenuity in service of

the whole enterprise, and to make important decisions close to the flow of work, conceivably

including the selection and election of their bosses. Underneath this is a view of human nature that

Professor McGregor called “Theory Y,” which holds that ordinary people don’t have to be managed

with the “carrots and sticks” of incentives and controls. Instead, people are naturally capable of self-

direction and self-control, even in a corporate or bureaucratic setting, if they’re committed to the

organization’s goal and if they are treated as mature adults who can learn from their actions and

errors. Participative management has inspired a fiercely dedicated following, and many managers

find it appealing and compelling in principle, but it is often dismissed as utopian and naive in the real

world of conventional workplaces.

Even among the true believers, though, Mr. Semler is in a class by himself. His credentials as a

thinker are impressive: He has gained a worldwide following as both a guest lecturer at Harvard

Business School and MIT’s Sloan School of Management, and an author with a long list of bestsellers

to his name. But what makes Ricardo Semler all the more notable is the way he has put theory into

practice. Many people have talked the talk of corporate democracy; his company walks the walk.

In the last two decades, Semco, a maker of industrial machinery like giant oil pumps and restaurant

dishwashers, has operated as a real-world laboratory for Mr. Semler’s radical approach to leadership.

For the most part, the Semco experiment has been a huge success. An investment of $100,000 made

in Semco 20 years ago would be worth $5.4 million today — a rare record of profitability that by all

accounts stems directly from the participative management approach that Mr. Semler champions.

“I just wish that more people believed him,” laments Charles Handy, the British management guru

and social philosopher. “Admiring though many are, few have tried to copy him. The way he works —

letting his employees choose what they do, where and when they do it, and even how they get paid —

is too upside-down for most managers. But it certainly seems to work for Ricardo.”

Mr. Semler’s Planet 

To see Semco’s approach in action, just visit the company’s pump plant on the outskirts of São Paulo.

This operation bears about as much resemblance to a traditional factory as the rainbow hues of its

walls — the choice of the employees — do to industrial gray. Forget about foremen barking out orders

to passive proles. On any given day, a lathe operator may himself decide to run a grinder or drive a

forklift, depending on what needs to be done. João Vendramin Neto, who oversees Semco’s

manufacturing, explains that the workers know the organization’s objectives and they use common

sense to decide for themselves what they should do to hit those goals. “There’s no covering your ass,”

says Mr. Neto. “The intent is to get straight to specific targets.”

Semco’s 3,000 employees set their own work hours and pay levels. Subordinates hire and review

their supervisors. Hammocks are scattered about the grounds for afternoon naps, and employees are

encouraged to spend Monday morning at the beach if they spent Saturday afternoon at the office.

There are no organization charts, no five-year plans, no corporate values statement, no dress code,

and no written rules or policy statements beyond a brief “Survival Manual,” in comic-book form, that

introduces new hires to Semco’s unusual ways. The employees elect the corporate leadership and

initiate most of Semco’s moves into new businesses and out of old ones. Of the 3,000 votes at the

company, Ricardo Semler has just one.

In Mr. Semler’s mind, such self-governance is not some softhearted form of altruism, but rather the

best way to build an organization that is flexible and resilient enough to flourish in turbulent times.

He argues that this model enabled Semco to survive not only his own near-death experience, but also

the gyrations of Brazil’s tortured politics and twisted economy. During his 23-year tenure, the

country’s leadership has swung from right-wing dictators to the current left-wing populists, and its

economy has spun from rapid growth to deep recession. Brazilian banks have failed and countless

companies have collapsed, but Semco lives on.

“If you look at Semco’s numbers, we’ve grown 27.5 percent a year for 14 years,” says Mr. Semler

over a cappuccino at one of São Paulo’s sidewalk cafés on a lovely fall day. He conducts many work-

related conversations here; the ultimate hands-off leader, Mr. Semler doesn’t even keep an office at

Semco. “Here’s why: Our people have a lot of instruments at their disposal to change directions very

quickly, to close things and open new things.” Flexibility is the key, he says. “If we said there’s only

one way to do things around here and tried to indoctrinate people, would we be growing this

steadily? I don’t think so.”

Those four words, “I don’t think so,” delivered with a Brazilian Portuguese lilt, represent Mr.

Semler’s standard answer to corporate dogma, assertions that something he wants to do cannot be

done, and even overly doctrinaire interpretations of the participative management concept. Mr.

Semler is not a particularly self-effacing or humble advocate of human potential; his assurance in

argument is legendary. In conversation, in teaching, and in his books Maverick (Warner Books, 1993)

and The Seven-Day Weekend (Penguin/Portfolio, 2004), he puts forth participative management as

not just a pragmatic path to business success, but also a healthy and enjoyable way of life. Mr.

Semler has a law degree he has never used and no advanced business degree, but the success of his

books and the entertainment value of his message have helped him become a frequent guest lecturer

at Harvard Business School and MIT’s Sloan School. To executives and graduate students alike, Mr.

Semler insists that his is not some quirky South American survival story, but a real-life lesson in

making the work world work better.

To be sure, his message is not always well received, at home or abroad. “What planet are you from?”

is one of the more polite questions Mr. Semler has fielded from Brazilian politicians. The Federation

of Industries, representing Brazil’s corporate leaders, has publicly accused him of undermining

managerial authority. The local business press has both lauded him with awards for progressive

leadership and blasted him for letting Brazil’s powerful unions gain the upper hand. In response, he

says that managerial authority is an illusion, and that since the influence of unions is a fact of life that

isn’t going to go away, Semco is the stronger for engaging them rather than fighting.

Even in academic circles, usually more accepting of radical innovation, he’s met with some

skepticism. “He has reified all these precepts from the early days of participative management, the

’40s,” says Warren Bennis, one of the most prominent scholars in the field of leadership and

management, and an early protégé of Douglas McGregor. “Letting the employees elect officers to the

company with periodic votes, almost like a true democracy — this is the most advanced, progressive,

and, to my view, problematic way to practice participative management. There’s nobody else I can

recall at the head of a company who has subjected himself so thoroughly to the most radical elements

of that term.”

And while Mr. Semler is accustomed to commanding attention, he has no illusions about easily

winning minds. “Semco is bucking not only the traditional business model, we’re resisting a code of

behavior at the very core of Western culture,” he writes in The Seven-Day Weekend. “No wonder our

ideals are hard for outsiders and other companies to embrace.”

The Family Maverick 

In the reception area of Semco’s offices in the Jardim Marajoara district of São Paulo, visitors are

greeted by a bronze bust of Antonio Curt Semler. The Austrian-born immigrant founded the company

50 years ago, initially to produce his patented vegetable oil centrifuge. By 1980, the company had

evolved into a supplier of major equipment for shipbuilders, and today Semco offers a diverse range

of products and services, from air conditioning components for office towers, to inventory

management and environmental planning. The company also has joint ventures in such areas as

building maintenance and mail processing with several multinational corporations, including Coldwell

Banker, Pitney Bowes, and Johnson Controls.

At a casual glance, Semco’s headquarters look uncommonly tidy. The rooms are bright and airy, the

walls decorated with contemporary Brazilian art. But noticeable by their absence are offices,

administrative assistants, and even cubicles. Instead, there are workstation pods — round tables with

four low dividers and network plug-ins for laptop computers. At any given moment, a gray-haired

senior executive may share a pod with a couple of 20-something recruits fresh from school. Small

conference rooms are set aside for private conversations, but most meetings are open to anyone, of

any rank, who wishes to attend.

The bust of Curt Semler, as he is known, looks remarkably like his son Ricardo, and in turn like

Ricardo’s 5-year-old son, Felipe. Curt Semler always intended to turn the company over to Ricardo,

but the transition was not easy.

Ricardo hadn’t wanted to join the family business, preferring to ply his Gibson Les Paul in a series of

striving São Paulo rock bands during the mid-1970s. But he tired of earning next to nothing playing

one dank club after another. So in his late teens, Ricardo went to work at Semco. By age 20, in 1979,

he had a lofty title as assistant to the board of directors, but he was frustrated that his

responsibilities remained minimal, and his ideas for diversifying Semco were mostly ignored.

Between 1975 and 1980, Semco’s operating earnings had evaporated as the Brazilian shipping

industry, then its primary customer base, weathered a deep decline. Yet the company’s senior

management refused to consider entering other businesses. The company limped along, its only

earnings from investment income. Tired of fighting with his father and being condescended to by the

old guard, Ricardo threatened to leave the company, and even initiated the acquisition of a business

of his own.

Rather than watch his son walk away from his legacy, the elder Semler made a surprise move. In

1980, while Ricardo was in law school, Curt named 21-year-old Ricardo president and shortly

afterward left on a long European vacation, saying only, “Do what you need to do.” When Semco’s

senior executives insisted on waiting out the moribund shipping industry, Ricardo’s response was to

fire 60 percent of top management in a single afternoon. The departing executives took a lot of

company know-how with them, and frightened customers demanded their return, but Ricardo stood

firm.

At the outset, the younger Semler’s change agenda had nothing to do with lofty ideals like

participative management, and everything to do with jump-starting Semco’s stalled growth and

returning the company to profitability. Toward that end, he hired a succession of get-tough managers

and launched a series of strategic acquisitions, in areas like food-processing equipment, aimed at

reducing the company’s dependence on the shipping business. Semco did grow, and rapidly. But the

new emphasis on productivity and meeting ever more ambitious growth projections was a strain on

the organization, steadily worsening employee relations and bringing Ricardo to the brink of physical

collapse.

He was just 25 years old when he passed out during a visit to a pump factory in New York. A battery

of tests identified the problem as acute stress and prompted Mr. Semler to think hard about his life

and Semco. That’s when he had his epiphany: He had succeeded in diversifying the company, and

stanching the flow of red ink, but it had become an unhappy place to work, and he had exhausted

himself in the process.

“Semco appeared highly organized and well disciplined, and we still could not get our people to

perform as we wanted, or be happy with their jobs,” he wrote later inMaverick. “If only I could break

the structure apart a bit, I thought to myself, I might see what was alienating so many of our people. I

couldn’t help thinking that Semco could be run differently, without counting everything, without

regulating everyone, without keeping track of whether people were late, without all those numbers

and all those rules. What if we could strip away all the artificial nonsense, all the managerial mumbo

jumbo? What if we could run the business in a simpler way, a more natural way?”

During his convalescence, Mr. Semler devoured the works of Peter Drucker, Michael Porter, and

Henry Mintzberg, searching for a solution. But his inspiration ultimately came from a more unlikely

guru, the former principal of a small, progressive teachers’ school whom Brazil’s dictators had forced

out for urging his faculty and students to question authority. After he was fired, Clóvis da Silva

Bojikian had worked unhappily in executive training at Ford Motor Company’s Brazilian subsidiary

and at KSB, one of Semco’s competitors in the industrial pump business, where his notions of self-

governance, patterned after the “Summerhill” model of student-directed education, were not well

received. When Mr. Bojikian answered Mr. Semler’s want ad for a director of human resources, the

two talked late into the night, and Mr. Semler began to see how Semco could become a more humane

organization without sacrificing growth and profits. At the heart of their conversation was the

conviction that employees who participated in important decisions would naturally be more highly

motivated and make better choices than those who simply followed orders from above.

“I could see the opportunity to do more innovative work here, inside an organization,” says Mr.

Bojikian, 72, who is, under Semco’s policy of rotating leadership, currently chief executive. “We

wanted to demonstrate that the workplace could be a place of satisfaction, not of suffering. Work

should be a pleasure, not an obligation. But this wasn’t just some humanitarian thesis. We believed

that people working with pleasure could be much more productive.”

Road to Participation 

Resisting their impulse to transform Semco overnight, Mr. Semler and Mr. Bojikian started with small

steps. Noting that the company cafeteria was the subject of endless complaints, they asked

employees for help in improving it, and wound up turning over food service management to a group

of the workers themselves. The complaints stopped. From this beginning, it was easy to move on to

letting workers choose the color of their uniforms and the paint on the factory walls.

The next step was to address working hours. A city of 15 million people, São Paulo is prone to

paralyzing traffic jams; the wealthy cope by commuting by helicopter. For Semco’s factory workers,

an eight-to-five workday meant a long, unpredictable commute. The solution seemed obvious to Mr.

Bojikian and Mr. Semler: Let the employees set their own hours, so they could all travel at nonpeak

times. Skeptics within Semco’s management ranks said it would never work, that an assembly line

could not function with flexible scheduling.

But the anticipated hiccups never happened. “People had many meetings to figure out the logistics of

the new process, and when the day came, they had arranged that certain groups would be sure to be

at the factory at the same time,” says Mr. Semler. “And they ended up having a core group arriving at

approximately the same time, but it was the time that they wanted, not the time that we had

scheduled. It is pointless and futile to spend your life doing something that is obviously incoherent or

stupid based solely on the needs of the guy organizing it.”

Next, they let employees set their own compensation. This was a more complex process, which

involved hiring an analyst to benchmark pay levels across multiple positions at 35 different

companies. Average pay scales were established for comparable companies, to which Semco added

10 percent to help reduce employee turnover. And everyone’s salaries, from that of the security

guard at the factory entrance to Mr. Semler’s own, were published for all to see. Peer pressure

provided an efficient leveling mechanism.

Summarizing Semco’s transition to a democratic workplace — a process that took nearly five years —

makes it sound smooth and seamless, but there were plenty of bumps and false starts.

“We experienced a very turbulent period,” recalls Mr. Neto, the manufacturing director who joined

Semco in 1984 with the acquisition of Hobart Brazil. “We call it the watermelon truck. Imagine a

truck full of watermelons, and you open the tailgate and all of them roll out. That’s what it was like

when we started asking people what they wanted, what they liked and didn’t like. The company

decided there were no taboos, they could ask anything, and the company books were open,” he says.

“But it’s much easier to say than to do.”

Mr. Neto notes you can’t implement corporate democracy by half measures. “These practices cannot

be adopted piecemeal, because they only work when everyone in the organization knows exactly how

everything works,” he says. “Some companies here in Brazil tried doing bits and pieces of what we

do, but it never goes anywhere.”

Semco’s top-to-bottom commitment to participative management has yielded a remarkable degree of

unity that has carried the company through perilous times. In 1990, the kleptocratic government of

Fernando Collor de Mello froze citizens’ bank accounts and seized their assets, plunging the country

into a deep depression and forcing Semco to consider layoffs for the first time. “If you open up

everything, including the company’s books and board meetings, you’ll find that the employees are

honest, responsible people. Our employees understood the situation, and they knew we could not

keep everybody. They themselves came up with the names” to cut, says Mr. Neto. “Most of our

competitors in capital goods disappeared, and I’m sure that our culture was the bonding factor that

kept us alive during that time and keeps us going now.”

Habits of Thought 

How Semco built that culture became the subject of Mr. Semler’s first book, Turning the Tables,

published in 1988, which spent four years on the Brazilian bestseller lists. Expanded and rewritten in

Mr. Semler’s own English as Maverick, the book was translated into 29 languages and sold more than

1 million copies worldwide. Although Ricardo Semler the bon vivant had long been a boldfaced name

in Brazilian newspaper gossip columns, by 1995 he commanded an international audience as an

improbable business guru. His obvious warmth and humor still draw listeners in, even when his

message contradicts everything they believe they know.

In speeches at management conferences, he often suggests that he can write the five-year plan for

any company in that many minutes. “It says we will grow 5 percent this year, 10 percent the next,

and 15 the year after that. Have you ever seen one that says we’ll grow 5 percent this year, then we’ll

have a big loss, then we’ll be merged?” he asks. “I don’t think so.”

Or he may ask the assembled CEOs to write their corporate values down on a small piece of paper, in

simple block capitals. During a break, he gathers the papers, shuffles them, and redistributes them at

random. When the executives return, they find that the lists are nearly all identical, but for minor

differences in order. That’s when Mr. Semler goes in for the kill: “Did anyone write that we’re going

to make products that last only until the warranty expires, or that we’re going to discriminate against

women and minorities, but only when we won’t get caught? I don’t think so.”

Then Mr. Semler segues into his perennial theme: the habits of thought that can change rigid,

dehumanizing workplaces into engaging, productive ones. As he writes in The Seven-Day Weekend,

“Our ‘architecture’ is really the sum of all the conventional business practices we avoid.” Consider,

for example, typical employee recruitment.

“It is like Internet dating,” says Mr. Semler. “I’m always six foot, four inches, and I look like Brad Pitt;

you are always Cindy Crawford or Angelina Jolie. In the recruitment process, we put out fraudulent

stuff about the company, like we’re going to double our earnings, leaving out that we’re also

transferring all production to Vietnam in a year. You forget to tell us that you have fits of rage, that

you worked six months here, six months there, and it’s not on your resume. Then we meet at a bar

and decide to marry. What are the chances that is going to work?” he asks.

At Semco, by contrast, “We put out ads that are realistic,” says Mr. Semler. “We don’t have an HR

department, so the person who has the opening will take the stack [of applications] and distribute it

for review. We wind up with a group of 35 people in a room, 15 of whom are candidates. When that

conversation ends, our people will pick three for further interviews. They’ll come back several times.

By the time we decide to marry, we know a lot about these people. That leaves us with 2 percent

turnover in an industry with 18.”

The CEOs and Sloan fellows who attend Mr. Semler’s classes listen attentively, chuckle at the right

moments, and take careful notes. But it’s not clear what they take away from these encounters.

“When he talks, it’s a bit of smoke and mirrors,” says Bruce McKern, director of the Sloan master’s

program at Stanford University’s Graduate School of Business. “He challenges just about every

shibboleth of corporate management, but it happens so quickly you’re not quite sure what he has in

place to replace them.”

Mr. Semler has heard this before. “Bruce saw a 30-minute presentation, meant indeed to provoke —

not much more can be done in such a short time. Of course the full Semco story has dozens of cases

and examples that back the theories up.” In addition, if you ask Mr. Semler about the sources of his

ideas, you will hear about such stalwarts of management innovation as Joseph Scanlon (whose

“Scanlon plan,” developed in the 1950s, involved labor unions in the governance of factories and

made them accountable for results) and Wilbert L. Gore (whose company, Gore-Tex, has operated on

participative principles since its founding, in 1958). The reading list in Mr. Semler’s MIT courses

includes work by Franz Kafka and Gabriel García Márquez. The most appealing aspect of the Semler

theory and practice is the part that once seemed most threatening to conventional management: the

embodied view of managers and workers as whole human beings, seeing life and work entwined in

mutual commitment.

Ricardo Semler and his associates at Semco have gone even further than Mr. Gore in throwing away

titles, rules, and institutional control, and what has emerged is a company that truly lives by its

leader’s precepts. With remarkable consistency, people describe Mr. Semler as a hands-off leader,

fascinated by bold strategic moves but uninterested in implementation. It is a good thing, they say,

that Semco’s participative management — and the presence of a half dozen veteran leaders — allows

it to be largely self-governing, because Mr. Semler is hardly ever there. “He doesn’t like the day-to-

day thing,” says Mr. Neto, the operations manager. “He gets bored easily.”

Still, Mr. Semler worries that he remains too influential. Although it’s been a dozen years since he’s

had a desk at Semco and there are plenty of other people at the company who have check-signing

authority, major decisions are often deferred until he returns from one of his many trips, and few big

deals are closed without his presence.

That’s the price, he concedes, of his personal magnetism. “At the company, no matter what you do,

people will naturally create and nurture a charismatic figure,” Mr. Semler says. “The charismatic

figure, on the other hand, feeds this; it doesn’t just happen, and it is very difficult to check your ego

at the door. The people at Semco don’t look and act like me. They are not yes-men by any means.

What is left, however, is a certain feeling that has to do with the cult of personality. They credit me

with successes that are not my own, and they don’t debit me my mistakes. They give undue

importance to what I say, and I think that doesn’t go away.”

That doesn’t mean he always gets his way. Recently he and Mr. Bojikian lobbied for a potential

recruit with many years of relevant experience, only to be outvoted by younger members of Semco’s

board who preferred a less seasoned candidate closer to their own age. Mr. Semler doubts the young

man will succeed, but he went along with the decision for the good of the Semco system of

participative management.

“By having so much stock, I have a loaded gun, but in 25 years I’ve never used it because you can

only use it once,” Mr. Semler says. “If I veto someone, the next time they’re going to say, ‘Forget it;

he’s going to do what he wants.’ They have to go through processes where they know they’re going to

prevail.”

Of course, Mr. Semler’s ownership stake is a big reason that he is able to implement his managerial

principles at all, and maintaining those principles is the primary reason Semco has never had a public

stock offering. Also, with $240 million in revenues and 3,000 employees, Semco is a relatively small

company. But much of Semco’s growth and diversification in recent years has come through joint

ventures with multinational corporations, most of which are publicly traded. Despite Mr. Semler’s

best intentions, these entities tend to practice a diluted version of the democratic workplace.

“I don’t know that any American company could operate under his beliefs,” says Dan Sheffield,

executive vice president of RGIS Inventory Specialists of Auburn Hills, Mich., which has a joint

venture with Semco to service clients in South America, including Wal-Mart. Even in Brazil, “I’m not

sure the supervisors walk the walk as thoroughly as Ricardo thinks they do. I’m sure Ricardo wants it

that way, and probably has everything in place, but the people under him are maybe not as trusting

as he is. Everyone would love to work in an organization like that, but how do you get there? The only

way is for the company to have complete trust in you. We make them earn it first; we don’t assume

the trust,” he says. “Ricardo takes pretty big leaps of faith.”

Participative Philanthropy 

Because there are limits to the leaps of faith that any for-profit enterprise can undertake and because

he’s only involved with Semco to a limited extent these days, Mr. Semler has poured his energies into

a philanthropic foundation, a think tank, a grade school, and an eco-resort. All are laboratories for

further exploring what is possible when leaders relinquish control and allow rational people to pursue

their goals unfettered by established rules and procedures.

In each case, Mr. Semler plays the catalyst, while surrounding himself with people who have often

given up more exalted positions elsewhere to work with him. Their job is to implement the

impractical.

Mr. Semler’s latest brainstorm is Hotel Botanique and Habitat dos Mellos, an upscale eco-resort and

botanical garden, which is being built about 125 miles northwest of São Paulo in Bairro dos Mellos, a

destitute village where unemployment had hit 38 percent. Scheduled to open in late 2006, the project

is a study in contradictions, with all the luxuries essential to an international destination resort, but

rigorously natural, with no televisions, no air conditioning, and exclusively locally grown, organic

produce in its resolutely French restaurant. Guests will be among the world’s wealthiest, and most

jaded, clientele, but Mr. Semler is committed to staffing the hotel with indigenous people drawn from

the neighboring village.

What makes this enterprise pure Ricardo Semler is the democracy of its management structure. The

trickiest part is his insistence that each guest feel that he or she is staying at a small inn and being

served by the owner. An avid traveler, Mr. Semler believes even the best hotels make guests work too

hard. He intends to empower every hotel staffer to answer any wish at any time. If you’re a guest and

you want to go mountain biking, you won’t have to call the activities desk to arrange it; you can just

ask the nearest employee.

At a meeting of his leadership team, consultants from Cornell University’s School of Hotel

Administration and the Ecole Hôtelière de Lausanne do their best to explain why a traditional

structure is still essential. Mr. Semler listens attentively and then poses a question: “Why does

anything have to be done the way it’s always been done?”

Later, Basilio Jafet, the hard-nosed real-estate developer brought in by other dos Mellos investors to

keep Mr. Semler from losing all their money, confesses that he too finds the Semler ideas

unexpectedly persuasive. “I was very skeptical, but I’m being transformed,” he says. “Ricardo is not

only charismatic, but very coherent in his ideas. He’s against all common sense, but amazingly he’s

right and we are all wrong.”

Mr. Semler’s approach to dealing with São Paulo’s enormous number of homeless children is just as

iconoclastic. He quietly pays the tuition of several needy youngsters at the Lumiar School, an

experimental institution founded and funded by the Semco Foundation. “Whatever I do in terms of

philanthropy, I do anonymously,” says Mr. Semler. “I give to projects I don’t control at all.”

And they all function on the same democratic model that Semco uses. Thus the director at Lumiar’s

pilot school in São Paulo is a lively young woman named Lilian Kelian, with no background in

education. Mr. Semler voted against her. “The parents wanted Lilian, so Lilian’s the new director,” he

says. “The person we were backing had 20 years’ experience as a school director. But the parents

were more interested in the mind-set, the drive, and the belief system. And Lilian has a lot of

qualities. She knows we lobbied against her, but now we work together and off we go.”

Asked why true participative management is still such a rarity, Mr. Semler cites two elements that he

says are in sadly short supply: “One, the people in charge wanting to give up control. This tends to

eliminate some 80 percent of businesspeople. Two, a profound belief that humankind will work

toward its best version, given freedom; that would eliminate the other 20 percent,” he says.

Meanwhile, Semco has made Mr. Semler and some of its other senior employees wealthy, and has

given a few thousand more families a solid middle-class income in a country where the norm is

masses living in desperate poverty and a tiny elite living with extraordinary wealth. Mr. Semler says

he no longer worries about Semco surviving without him, and, unlike his own father, he has no

intention of passing the company on to his son. And although he wants his ideas to be heard, he

knows they are still an affront to most corporate leaders. “Semco is on the fringe of business

thinking, which tends to be very conservative, by nature and design,” he says. “Rethinking ways of

doing business will rarely be popular or easily adopted. But we like it our way, and hope that we will

sow some seeds out there.”

Vedio:

http://www.ted.com/talks/ricardo_semler_radical_wisdom_for_a_company_a_school_a_life?utm_medium=on.ted.com-android-share&utm_content=ted-androidapp&awesm=on.ted.com_t0SmX&utm_campaign=&utm_source=direct-on.ted.com

Ricardo Semler, Maverick!

Lessons from Semco on Structure, Growth and Change, Monday Memo,

Who's in charge here? No one, The Observer

http://www.good2work.com/article/5487

Minicase:

https://books.google.co.th/books?id=INy2SHeqMhwC&pg=PA221&lpg=PA221&dq=Ricardo+Semler+and+semco+growth&source=bl&ots=v6tur1bVYO&sig=xpJnda0OzdorwtMDoCTsLvEUx5M&hl=en&sa=X&ei=bdgDVceCIdGgugSF_YKYDA&ved=0CDAQ6AEwBDgU#v=onepage&q=Ricardo%20Semler%20and%20semco%20growth&f=false

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.

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.

Simon.caulkin@observer.co.uk

http://www.theguardian.com/business/2003/apr/27/theobserver.observerbusiness7

Simon CaulkinSunday 27 April 2003 00.35 BST

MIT video

http://video.mit.edu/watch/leading-by-omission-9965/

https://books.google.co.th/books?id=NO6j2E7LCToC&pg=PA155&lpg=PA155&dq=leading+by+omission+ricardo+semler&source=bl&ots=6

3OJ_Gnbtx&sig=vbW7URMxGUAdLeXaTuamy9trnWg&hl=en&sa=X&ei=S9sDVd7GB4youQSH5YGIAQ&ved=0CD8Q6AEwBzgK#v=onepage&q=leading%20by%20omission%20ricardo%20semler&f=false