Absolutely revolutionary CEO of a Brazilian company that manufactures various industrial products. The amazing thing about the company is all the innovative ideas they implemented. The one that stood out most to me was how they allowed everyone to choose their own salary, demonstrating the incredible trust Ricardo built within the organization.
I’m deeply interested in language and how it can shape concepts that previously didn’t exist—and how those concepts can, in turn, shape an organization. Before any creation is possible, there is first a linguistic creation, most famously exemplified by God: “Kun” in Arabic, or “Let there be light” in English.
Definitely worth a read if you’re looking for something innovative to try in your organization. Here are some of the crazy, wacky, and inventive ideas from the book:
That's the first clue that we are different. We don't have receptionists. We don't think they are necessary, despite all our visitors. We don't have secretaries either, or personal assistants. We don't believe in cluttering the payroll with ungratifying, dead-end jobs.
I never leave a number where I can be reached when I'm away and I don't call in. I want everyone at Semco to be self-sufficient. The company is organized - well, maybe that's not quite the right word for us - not to depend too much on any individual, especially me. I take it as a point of pride that twice on my return from long trips my office had been moved - and each time it got smaller. My role is that of a catalyst. I try to create an environment in which others make decisions. Success means not making them myself.
During this time I often thought of a business parable I had heard. Three stone cutters were asked about their jobs. The first said he was paid to cut stones. The second replied that he used special techniques to shape stones in an exceptional way, and proceeded to demonstrate his skills. The third stone cutter just smiled and said: 'I build cathedrals.' As I walked around Semco, I sensed that we had far more stone cutters than craftsmen. What I wanted, of course, was a company filled with cathedral-builders, and there were hardly any of them at all.
Early in the century Max Weber recognized that the Protestant ethic of hard work had permeated the business world, It is even more of a factor today. Executives feel pressure from their bosses to outwork colleagues and build their image and career. By this reasoning, having a heart attack because of work leads to true glory and keeling over at the office is even better - a sign, a Calvinist might say, of being among The Elect.
I'li have more thoughts about time sickness and how to cure it later, in Appendix B. For now, let me say that I have recovered so completely that I no longer wear a wristwatch. I gave it up soon after attending a concert by Brazil's most famous pianist, Madalena Tagliaferro. As I listened to her play Sibelius, I realized that she had been born when Brazil was a monarchy, witnessed the invention of the automobile and the aircraft, lived through two World Wars, and was still performing. It struck me that time should be measured in years and decades, not minutes and hours. It is impossible to understand life in all its hugeness and complexity if one is constantly consulting a minute-counter.
*They make us feel unimportant, as if the managers are so busy they can barely fit us into their schedules,' Walter said. 'We become impatient and irritated, and are less attentive when the negotiations begin.' 'Ah,' said Fernando, looking over at me. 'We must learn to do that, Dickie.' I squirmed a bit in my chair. Fernando was half-kidding, of course, but it was that other half that bothered me. I had been thinking about softening our hard line towards the union. Fernando clearly wasn't with me. 'That's just the beginning,' Walter went on. 'They make us sit across from the window, so the light shines in our faces. But they are in shadow, so it's hard to see their reactions. And sometimes the chairs we sit on have one leg shorter than the others, so we don't feel secure,' another union man said. And our chairs are shorter than theirs, so we have to look up at them,' Walter added. looked over at Fernando. He was smiling.
When plants faced hard times, their factory committees would take the initiative and lower wages or increase hours, saving money and protecting jobs. When layoffs were unavoidable, the committees got involved in the sensitive and unfortunate task of deciding who would go. Together we tried to be socially just, taking into consideration such factors as a worker's history with the company, loyalty, ability to find a new job, and family responsibilities. A person with seven children or a spouse in the hospital, for example, would have an edge over someone fresh out of school with no responsibilities.
That didn't end the problems at the cafeteria, though. Semco's policy was to subsidize 70 per cent of the cost of the meals we served. But after consulting with Clovis and some others the factory workers instituted a Robin Hood Meal Plan' under which employees paid on a sliding scale based on income. Managers and engineers were asked to pay 95 per cent of the cost of their food, for example, while floor sweepers paid just 5 per cent.
We all know the usual ways of combating a strike:
1. Take a stand. Show the flag. Don't back down.
2. Guarantee that anyone who wants to work can, even if that means calling in the police.
3. Protect company property, with force if necessary.
4. Make it hard for the workers by closing the plant and suspending benefits.
5. Try to divide and conquer the strikers.
6. After it's over, fire the instigators and anyone else you want to get rid of, intimidating others in the process.
Human nature demands recognition. Without it, people lose their sense of purpose and become dissatisfied, restless, and unproductive. Stalin understood this. Prisoners in his gulags were obliged to dig enormous holes in the snow, then fill them in. It broke their spirits.
Instead of a series of lathes and then a series of welding operations and so on, all in a long line Henry Ford-style, the workers formed small groups of different machines. The idea was to have, at each of these clusters, a team whose members would fashion a product from beginning to end, giving them accountability for the product's quality and the enormous satisfaction that comes with completing a task. What's more, these workers would know how to operate all the machines in their cluster, not just one, and do whatever else was needed, too, even drive forklifts to and from the storeroom. This type of organization, which had first been adopted by the workers on the dishwasher line at the Ipiranga plant, was known as a manufacturing cell. Frederick Winslow Taylor wouldn't have approved. Before there was a Henry Ford, there was a Frederick Winslow Taylor. In fact, there might not have been a Henry Ford without a Frederick Winslow Taylor. He more than anyone was the Godfather of the modern factory, in which thousands of nameless, faceless drones carry out unrelentingly repetitious tasks under ever-vigilant supervision.
In the terms Taylor is familiar with, probably yes. He would never condone a system in which, depending on what needed to be done, a person could be a lathe operator or a grinder, assemble the final product, maintain the machinery, drive a forklift loaded with supplies, help clean the work area or even paint the walls of his corner of the plant. Taylor would be appalled if workers started to make thingamajigs and screw together whatnots entirely on their own. Or if they discovered that making suggestions, innovating and whistling at work are not forbidden
NO ONE CAN EXPECT THE SPIRIT of involvement and partnership to flourish without an abundance of information available even to the most humble employee. I know all the arguments against a policy of full dis-closure. Employees will use the numbers to argue for raises in good times, or be frightened by the numbers in bad time. Even worse, trade secrets will be leaked to the competition. Maybe. But the advantages of openness and truthfulness far outweigh the disadvantages. And a company that doesn't share information when times are good loses the right to request solidarity and concessions when they are not.
We began with Semco's total profits, the revenues minus expenses. Then we agreed that 40 per cent would be deducted for taxes, 25 per cent for dividends to shareholders, and another 12 per cent for reinvestment - the minimum the company needed to continue to prosper. That left 23 per cent.
we would end those neurotic little telephone wars in which the caller seeks to prove how important he is by refusing to come on the line until the callee is already hanging on.) I remember meeting with a group of about 30 secretaries. I told them we wanted to eliminate their jobs in a year or two and asked them to start thinking about what they would like to be doing at Semco in five years. Then we tried to push them in the appropriate direction, matching them with openings and sometimes creating new jobs for them …. But then we created a job sharing program which two people split a single position and we all hoped would have the best of both world's.
Semco now pays all day-care costs in a child's first year, a little less in the second year, still less in the third, and so on until the sixth year, when children are in school full time.
The pyramid, the chief organizational principal of the modern corporation, turns a business into a traffic jam. A company starts out like an eight-lane superhighway - the bottom of the pyramid - drops to six lanes, then four, then two, then becomes a country road and eventually a dirt path, before abruptly coming to a stop. Thousands of drivers start off on the highway, but as it narrows more and more are forced to slow and stop. There are smash-ups and cars are pushed off on to the shoulder. Some drivers give up and take side roads to other destinations. A few - the most aggressive - keep charging ahead, swerving and accelerating and bending fenders all about them. Remember, objects in the mirror are closer than they appear.
Bureaucracies are built by and for people who busy themselves proving they are necessary, especially when they suspect they aren't. All these bosses have to keep themselves occupied, and so they constantly complicate everything.
We had long ago let our office employees decide when they would start and end their working day, becoming one of perhaps half a dozen companies in Brazil offering this freedom.
It's all about persistence, isn't it? But where does persistence end and obsession begin? How high is too high? How big is too big? Of course, some growth is necessary for any business to keep up with competitors and provide new opportunities for its people. But so often it is power and greed and just plain stubbornness that makes bigger automatically seem better.
Any alley cat can stay lean when food is scarce; the trick is to stay lean during the good times.
Pedro had heard the phrase horizontalization. We were constantly discussing and debating what functions Semco should continue to perform and what activities it should farm out to others. As we thought more about it, we became convinced we no longer wanted to do anything that could be done just as well elsewhere. But at Semco there is always a wrinkle, isn't there? Instead of contracting out business to strangers, we decided we wanted to contract it out to the people we knew best: our workers. We would help them to start their own companies, transforming themselves from employees to partners. And so the Satellite Programme was born.
Henry Ford was so fond of verticalization he raised trees to make the sideboards of his Model T's, bought iron mines and cargo ships, even searched the Amazon for a site for a rubber plant for tyres. The company's official history doesn't play it up, but Ford had to fire 60,000 workers because of rampant do-it-yourselfism.
Persistence is a virtue only when it is pointed in the right direction.
If only minds were as easy to change as machines. I'll wager that it's easier to invent a new generation of microchips than to get a generation of middle managers to alter the routes they drive to work every day. Technology is transformed overnight; mentality takes generations to alter.
There's no doubt in my mind: technology has gone through the roof since 1633, but quality of life has gone down the drain. All we have done is accelerate our malfunctions and increase the intensity of our mis-communication. Let me propose a new definition: the truly modern company avoids an obsession with technology and puts quality of life first.
IF MONEY ISN'T ALL it's made out to be, information is, I believe, a most under-valued commodity. There is power in knowing something someone else doesn't, which explains why executives are so often loath to share information with employees.
IN THE 19205, AN ENGINEER named DeForest went to see Harry Warner, of Hollywood's famous Warner Brothers. DeForest had managed to synchronize sound and image and could, he said, transform silent movies into talking pictures. Warner listened to him, then replied: Are you crazy? Who wants to hear an actor talk?'
Items you think would be good to look at, but never quite get around to. These include newspapers and magazines, lengthy reports, copies of memos - you get the idea. We've all grown accustomed to receiving vast quantities of information. As a defence, we tend to read a little of everything. This is among the most serious causes of time illness.
CIRCULAR ORGANIZATION: We slashed Semco's bureaucracy from twelve layers of management to three and devised a new organization structure based on fluid concentric circles instead of a rigidly hierarchical pyramid. All employees have one of only four titles: Counsellors, who are like vice presidents and higher in conventional companies and co-ordinate our general policies and strategies; Partners, who run our business units; Coordinators, who comprise that first, crucial level of management, such as marketing, sales, and production supervisors or engineering and assembly-area foremen; and Associates, which is what we call everyone else.
Semco is more than novel programmes or procedures. What is important is our open-mindedness, our trust in our employees and distrust of dogma. We are neither socialist nor purely capitalist, but we take the best of these failed systems and others to re-organize work so that collective thinking does not overpower individualistic flights of grandeur; that leadership does not get lost in an endless search for consensus; that people are free to work as they like, when they like; that bosses don't have to be parents and workers don't act like children. At the heart of our bold experiment is a truth so simple it would be silly if it wasn't so rarely recognized: A company should trust its destiny to its employees. No, Semco isn't a model, with programmes to be followed with precision, so many recipes for participation, productivity, and profits. Semco is an invitation. I hope our story will cause other companies to reconsider themselves, and their employees. To forget socialism, capital-ism, just-in-time deliveries, salary surveys, and the rest of it, and to concentrate on building organizations that accomplish that most difficult of all challenges: to make people look forward to coming to work in the morning.
We tried all the cost-slashing measures we could think of - coffee breaks were cut to once a day, copying machines were locked away, electricity consumption was monitored, new uniform purchases were suspended, and all expenses were looked at by many sets of eagle eyes. But I didn't hold out much hope. I'm not a big proponent of cost-cutting programmes. I like to think we don't spend money unnecessarily even in good times. And how do you measure how many sales were lost because the reps had their gasoline allowance cut, or what the cash flow might have been if the clerks in billing had not been saddled with a cut in telephone expenses, or even how many little mistakes and miscalculations could have been avoided if engineers hadn't cut back on photocopies of blueprints? When the foolish penny-pinching is over, everyone goes back to business as usual - until someone thinks expenses are excessive again and begins a new round of cuts, starting with the expenditure needed to make up for the short-sightedness of the previous cost-cutting campaign.
While Paulo and the Counsellors were stewing about this, I called in Irene Tubertini, the last of my three secretaries. 'How much money do you need to earn to live comfortably,' I asked her, watching her face flush and her brown eyes cloud over with bewilderment. 'How much money do you need so that you will leave for work in the morning with the feeling that you are fairly paid; so that you won't be tempted to look for another job? She sat there, not quite believing what she was hearing, wondering what I could possibly be up to. I told her to think about it for a day or two, then give me a number. That would be her salary for the next year. Yes, I was serious, I told her. We intended to ask others the same question, and hold them to their answers.
NOW THAT OUR LEADERS WERE HAPPY with their salaries - or at least responsible for them - Paulo had another, even more daring proposal. He called it (risk salary' 'Each of you now has the correct salary, according to your own estimate of your worth,' he told managers at a meeting of company leaders in 1989. I propose to pay you a little less, but in return will give you the possibility of earning more.' Then he explained his new wrinkle. If Semco did well, an employee who agreed to risk a 25 per cent salary cut - the limit - would receive up to 50 per cent more. Then again, if Semco did poorly, he would suffer the 25 per cent cut. Employees who didn't have high fixed expenses have taken Paulo up on his offer and risked more; those with non-working spouses and children have risked less. The results, so far, have been rewarding to the players and the company, since with this programme part of our labour costs fluctuates with profits or losses. When business is good, people in the programme make a lot more money. When it isn't, they are helping us cut expenses and lowering their profile in case cost-cutters are called out.