Wednesday, June 27, 2007

Ricardo Semler proves Simplicity works

If you have 10 minutes to spare I beg you to watch this interview with Ricardo Semler – Chairman of Semco and perhaps the most radically successful business man in the world. Mr Semler turns upside down all traditional management theory and uses common sense and simplicity.


*He believes passionately in front line staff.
*Managers in his company are appointed by the staff and they might have to go through 5 interviews before the staff make up their minds.
*The staff set their own salaries.

And for the cynics about his approach ... just look at the record of his company.

Why can't we have more Semler’s in business?


David Wike said...

Glad you have found Semler at last – now you understand why I’ve been nagging you to read Maverick and The Seven Day Weekend!

What makes Semco’s success even more remarkable is that the economic climate in Brazil has been extremely volatile with unimaginable levels of inflation at times. He is also playing down the success of the company to some extent. They have helped the workforce to float off some sections of the operation and to develop their own businesses. These operate as satellite ventures working for Semco and other companies.

He briefly touched on the openness of the Semco culture. This is an absolute key – everyone in the business has access to all financial information so that they are in a position to make informed decisions – incidentally, they are also invited to turn up at board meetings if there is an agenda item that particularly interests them.

By the way, if this all sounds too idealistic, there is a sound business reason behind it. Semler realised that people are only really interested in what is of benefit to them. Of course, benefit can be measured in different ways, it isn’t necessarily just financial. But the thrust is that each person in the workforce has to feel that he or she is getting what they want in return for their efforts.

Trevor Gay said...

Thanks David

Semler's approach is underpinned entirely by common sense and simplicity. Nothing in what he does or what he says surprises me. My main question - Why can't we all do it?

David Wike said...

From what I can see there is no reason that we can’t all do it. However, Semler has commented that he is constantly met with comments to the effect that it won’t work outside of Brazil, in a particular type of business or whatever. Most people I have mentioned it to look at me as if age has addled my brain!

A fundamental problem is that organisations treat people as school children – they are told what to do and when to do it. It is assumed that they won’t do the right thing unless told to do so – or worse, they won’t do anything unless supervised – I’ve had comments such as ‘you can’t trust people’. Interestingly, on the video clip Semler indicated that even children can be trusted to do the ‘right thing’ given the right environment.

Perhaps one of the reasons that I mostly enjoyed my corporate career was that I worked for people who understood the concepts of trust, flexibility and give and take. Often despite being discouraged from adopting this approach by ‘company policy’.

Trevor Gay said...

I love these two quotes David and I have used them many times in talks.

“Strategies are okayed in boardrooms that even a child would say are bound to fail. The problem is there is never a child in the Boardroom” - Victor Palmieri, Fortune, February 24 1992

“What a distressing contrast there is between the radiant intelligence of the child and the feeble mentality of the average adult” - Sigmund Freud

My summary - Maybe we need to get in touch with our child-like qualities.

Richard said...

Trevor you will not be surprised to hear I am a huge fan of Semco.

Ricardo Semler is an awesome dude. He has done a remarkable thing at Semco. He has done what makes total sense to you and to me.

"Why can't we all do it?" you ask Trevor. The answer is most people do not want it.

Let me explain....

In the early 1970's long before I ever heard of Semco we tried an experiment with the Cabinet Office - we decided to completely democratise it as a workplace.

I was over the moon with pure joy about the whole thing. To get what we were trying to do just think Semco. Because what they did at Semco is essentially what we did.

This was to be a precursor to the whole Commonwealth Public Service becoming what we described as "the school with no walls". This place had no walls and no rules. It had no duty statements, people were paid what they thought they were due, people shared responsibility, people formed into semi-autonomous work groups, etc, etc.

It lasted 6 months before the staff staged a coup.

They wanted the structure back - they won the day.

They wanted it to change back to "normal" because they had become a freak show. No one on the outside of the Cabinet Office trusted any of them when they took a decision so they rang around to get every possible opinion on what their "actionable decision" should be.

Staff felt they were living in a fishbowl and they were the fish.

Nothing outside of work was anything like work so they felt they were also living two lives. And on and on and on...

This was devastating to me... I felt strongly that this was our chance to make history because we could make the theory work in practice.... But it turned out to be a nightmare - it was about as far away from commonsense and from simplicity as you could get.

I admire Semler and Semco for what they have achieved simply because this is not easy to do.

I have done it with small groups and later with a whole department for a short time but when I moved on things went back to embrace even more structure than before.

For example after my great success with a whole Department a guy rang me to ask me if I would do some consulting work with my former colleagues... He said he was new over there but he had heard about me...

I asked him what would it involve.

First you have to submit a proposal with 13 copies and appear before this committee, he says in a matter of fact kind of way...

Well you can imagine what I said as I terminated that phone call...

What Semler did is right up there with what George Best did on a football field... There was no commonsense nor simplicity about any of what Best did and neither is there at Semco...

Semco is either simply a act of God or a miracle.

Trevor Gay said...

Thanks Richard and no I am not surprised at all that you support Semler’s view of the world. I actually think the key thing is having someone like him at the top of any organisation who has the power to set the culture and lead by example. I would love to work for him!

Your story reminds me of the one I have told many times when I suggested in our open plan office in the NHS of about 30 people that we should all change seats every six months to save people becoming stale and to enable us all to learn by being adjacent to or opposite someone new.

Unsurprisingly I was the only one who moved …..Most people thought I was mad for suggesting it in the first place.

tomjam said...

Hi Trevor

I'm a long-term Semler fan. Maverick blew me away, and, maybe I'm naive, but I don't see how running an organisation by treating people like adults should be such a difficult thing-but judging by most organisations clearly it is! I work in an organisation that is very Un-Semco like, and this discussion has spurred me on to send the man at the top a copy of Maverick in the vain hope that he will see the light.

P.S Trevor, further to my last posting, I was scheduled to speak with Arch bishop Tutu earlier this week, but due to him needing to rest things were rescheduled. Disappointing , but I did get to hear him lecture and also got to stand in a line and shake his hand. What an inspirational guy!

Trevor Gay said...

Hi tomjam

Maybe you and I are the only one’s who think this stuff is easy my friend – obviously we are not smart enough – let me know if the boss makes any comment 

I am reminded of William Pitt on becoming the youngest Prime Minister in history at 24 years of age as he said ‘We are too young to know certain things are not possible.’

He also said ‘Yes I know I am young and inexperienced but it is a fault I am remedying every day.’

I have been reading recently about Pitt and William Wilberforce and their great friendship. They both believed anything was possible if the mindset is right and with Semler it seems to me he has a wonderful mindset about trusting people who do the work – treat them as adults and HEY PRESTO!! – they act like adults!

I am delighted you got to shake the hands of Archbishop Tutu – what a hero. You must be so proud – treasure that, remember it forever and tell your grandchildren you shook the hands of a man who changed the path of history for the better.

David Wike said...

Trevor, despite the fact that it is your birthday today (30th), I am going to disagree with your view that everything in life is simple. I don’t think it is that simple to change a couple of centuries of working practice – Richard’s story gives an insight into why.

A friend of mine is CEO of a small company. He is enlightened and since his arrival has tried to get his team to take responsibility for themselves. He has found it quite difficult in some cases. While we all say that we don’t like rules and being told what to do, life is a bit harder if we are given freedom. We have to start thinking for ourselves, taking responsibility for our actions and accepting the consequences.

I have seen this being likened to a bird that has been kept in a cage for many years. When someone finally opens the door, the bird doesn’t know what to do as it has no experience of the outside world, so it stays in the cage. Perhaps it expecting too much for people to fly straightaway, perhaps they need to be encouraged bit by bit until finally they discover how nice it can be up in the trees.

It will be fascinating to hear if Tomjam’s boss becomes a Semler convert. My guess? Not until after Henman has won Wimbledon!

Trevor Gay said...

Thanks David – I think everything about work is simple – it is we human beings, our attitudes and our institutional thinking that makes work and business complicated.

I see no reason at all why ALL companies cannot be run like Semler runs his company – what stops us is largely to do with mindset.

If we BELIEVE things are complex and ‘too difficult’ to change because of history than the chances are we won't change them.

If we BELIEVE anything can be challenged and anything can change then we might just introduce change to those business practices that have been around for centuries.

My view it is ALL in the head.

Tomjam's boss might be influenced if he just takes the most important step - to open the book and scan read a page or two with an open mind.

Marilyn said...

Why can't we all do it?

Case in point. I was once a member of a self directed team of eight professionals. We actually functioned well for about a year. This was in the late 1990's. After I left the company things gradually reverted back to the command and control of the manager style of work.

It takes more work and effort to steer your own ship and take real responsibility for yourself. The ship (AKA you)lands closer to where you want to go, and you need to work harder to build consensus. That is where many employees part comapny with the ideal.

Bravo, Semco, for expecting more of people, not less.

Trevor Gay said...

Well said Marilyn - I think it is about treating people with respect. Semler succeeds because he sets the boundaries very wide and allows people to push those boundaries. I always imagine it is like some people being thrown together on a desert island as survivors in a ship wreck. Status may emerge eventually but in ht meantime there would be no rules other than those set by consensus. Long live Semler's approach.

The main reason we think it is difficulty to change existing culture is because that is what we have got used to and we therefore wrongly believe it is the only way. We need to see every day as our first on a desert island maybe :-)

tomjam said...

Hi Trevor

I can't remember who said 'the way to find out if someone can be trusted is to trust them' but it is a simple but profound thought, and one that exemplifies what Semco seems to be about ie as Marilyn says 'expecting more of people' I think parenting works in much the same way-you often get what you expect to get from kids, colleagues, employees and so on.

David, I like your style. I'm really looking forward to a year or so from now. Henman wins Wimbledon, my boss buys every member of staff a copy of Semler's 'Maverick'...oh, and Elvis announces the opening number of his '08 Comeback Special with the words ' Hi Folks. I just needed a break!'

Oh, and now I've woken up!!

Trevor Gay said...

Great stuff tomjam

When my rock icons The Eagles did their first re-union concert in 1994, Glen Fry said ‘We never broke up … we just had a 14 year vacation’

Your quote is from a military leader in the US whose name escapes me – Tom Peters mentions it in his talks quite often – it is a terrific and needless to say simple quote.

Trevor Gay said...

Hi again tomjam - it was Henry Stimson American Secretary of War, during World War Two who said;

"The chief lesson I have learned in a long life is that the only way to make a man trustworthy is to trust him."

Gabe said...

Amen, amen, AAAAmen, my brother. I wish I had read this post earlier. As you probably know, I'm a huge Ricardo fan! I think his ideas on running business are the answer. I just wish I could convince everybody else. Have you seen this link from a speech he gave at MIT's Sloan School of Business:

Trevor Gay said...

Thanks Gabe - I will look at the video - thanks for the link.

How do we change people's view to accord with the Semler approach? - To keep saying it is the only way Gabe - we have to constantly challenge managers who promote complexity. We have to tell them business, management and leadership are all simple not complex.

Sue Manocha said...

I recently read Maverick and it blew me away. I am doing research for a project that involves comparing Semco to the Athenians ancient methods of participatory government. It is fascinating how closely Semco matches what was done in that time period. One of my goals is to see how it could be repeated in today's culture. I read some of the above comments on how difficult it is to maintain the same culture, that people feel they are living a double life and revert back. I agree that it might be due to the effort it takes to be an active participant. Most people have been trained to stay in the mold and be worker bees. Does anyone have any other interesting links to Semco.

Trevor Gay said...

Sue - Thanks for your comment and good luck with your research - Let me now know how it goes. It seems to me Semler bases everything on simplicity, common sense and faith in people doing the work.

Anonymous said...

Wow - a Brazilian talking about Gallipoli and calling football "soccer"...? This guy knows his audience. That must be one of the ingredients of his success.

novan restu said...

"Ricardo Semler turns upside down all traditional management theory and uses common sense and simplicity".

Yes, i agree with your opinion. Common sense and simplicity (with right attitude and actions) will give alternatives to solve problems in organization.

But sometimes the ego of leader hampers organization to grow in simplicity.

novan restu