Maverick by Ricardo Semler


RATING: 8/10…READ: May 20, 2012

The Amazing story of Semco, a Brazilian machines company that completely restructured their workplace by ditching the Henry Ford style of management for giving great autonomy to workers. Through constantly adapting to change, Semler shows how to give power to employees and have management get out of the way.

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In the lobby of our headquarters, a standard issue office building with four floors of steel and glass, there is a reception desk but no receptionist. 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. Everyone at Semco, even top managers, fetches guests, stands over photocopiers, sends faces, types letters, and dials the phone. We don’t have executive dining rooms, and parking is strictly first-come, first-served. It’s all part of running a “natural business.” At Semco we stripped away the unnecessary perks and privileges that feed the ego but hurt the balance sheet and distract everyone from the crucial corporate tasks of making, selling, billing, and collecting.

Most mornings I work at home—I encourage other Semco managers to work at home to. I also take a least two months off each year to travel, and I like to roam far.

My role is that of a catalyst. I try to create an environment in which others make decisions. Success means not making them myself.

All that the new employees at Semco get today is a twenty page booklet we call The Survival Manual. It has lots of cartoons but few words. The basic message: use your common sense. If you haven’t guessed it by now, Semco’s standard policy is no policy.

In restructuring Semco, we’ve picked the best from many systems. From capitalism we take the ideals of personal freedom, individualism, and competition. From the theory, not the practice, of socialism we have learned to control greed and share information and power. The Japanese taught us the value of flexibility, although we shrink from their familylike ties to the company and their automatic veneration of elders. We want people to advance because of competence, not longevity of conformity.

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.”

We simply do not believe our employees have an interest in coming in late, leaving early, and doing as little as possible for as much money as their union can wheedle out of us. After all, these same people raise children, join the PTA, elect mayors, governors, senators, and presidents. They are adults. At Semco, we treat them like adults. We trust them. We don’t make our employees ask permission to go to the bathroom, or have security guards search them as they leave for the day. We get out of their way and let them do their jobs.


The belief that effort and results are directly proportional

The gospel that the quantity of work is more important than the quality of work.

Things are a little uncertain in the office right now. I’ll just have to work a little longer until they straighten out.

Fear of delegation, and its cousin, fear of replacability—Fear of delegation is the belief that no one is competent to solve a problem as you are. This kind of thinking (which at times may be justified) usually results from the belief that tasks will inevitably be done poorly if not done by capable hands—yours, of course. But how often is this really masking the fear that others can perform jobs you once though only you could accomplish?

I’ll bet on average 2 percent of 3 percent of any work force will take advantage of an employer’s trust. But is this a valid reason to subject 97 percent to a daily ritual of humiliation? Yes, there will be theft her and embezzlement there, but that’s the case in companies with huge auditing and monitoring departments. It’s a cost of doing business. I would rather have a few thefts once in a while than condemn everyone to a system based on mistrust.

Dress codes are all about conformity. People want to feel secure, and dressing like everyone else is one way to accomplish it. If everyone at IBM wears blue suits and white shirts, then even a trainee will feel he is part of the company if he is so attired. But the flip side is that these people will come to depend on other forms of artificially imposed unity, such as a uniform language, uniform behavior, maybe even uniform thinking. At its worst, a company turns Orwellian and creativity and freedom are smothered by discipline and the weight of shared expectations.

Once everything was handmade and expensive. Then Henry Ford set up his assemble line. Industry began to cater to an emerging middle class, increasing volume, diminishing costs, and providing goods for the multitudes. But if the artisans of the eighteenth and nineteenth centuries could perform highly skilled tasks with little or no supervision, Ford’s factory workers, who had virtually no skills, required foremen to watch over them. And who were these foremen but polished versions of the same workers who needed supervision. And their supervisors needed department heads. And the department heads needed vice presidents. So mass production spawned a huge bureaucracy.

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 drones carry out unrelentingly repetitious tasks under ever vigilant supervision. It consisted of a small number of distinct movements, all scientifically choreographed to fit their anatomy. Taylor broke down complicated manufacturing processes into numerous such tasks, each of which was to be assigned to a set of workers. This segmentation and specialization of labor, all carefully codified through rigid job descriptions, was, Taylor maintained, the indisputable key to maximum productivity. And so one worker would shovel coal out of a bin into a pile, and another would shovel it out of the pile, carry it a few feet and dump it into another pile, and still another would shovel it from that second pile onto a conveyor belt. And all three labored under the watchful eyes of a foreman. Multiply this grim little tableau by hundreds or even thousands of workers and you have today’s gigantic temples of mass production.

If you really want someone to evaluate a project’s chances, give them abut a single page to do it—and make them write a headline that gets to the point, as in a newspaper. There’s no mistaking the conclusion of a memo that begins: “New Toaster will sell 20,000 units for $2 million profit.

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.

Public salaries are a strong disincentive to be conspicuously greedy.

As a matter of corporate philosophy, we try to keep our top salaries within ten times our entry level pay, which is in stark contrast to the rest of the country, where a top managers salary can be eighty times more than a worker’s.

Flexible working hours demonstrated our belief that we wanted to pay workers for results, not merely their time—and we didn’t care how those results were obtained. Our idea was to agree on our common goal, then let our employees loose to achieve it.

Any alley cat can stay lean when food is scarce; the trick is to stay lean during the good times.

“If you want something done well and cheaply, do it yourself.” That was the mantra of the bigger-is-better companies. But how many businesses have lost their way as they grew? Henry Ford was so fond of verticalization he raised trees to make the sideboards of this Model Ts, bought iron mines and cargo ships, even searched the Amazon for a site for rubber plants for tires. The company’s official history doesn’t play it up, but Ford had to fire 60,000 workers because of this rampant do-it-yourselfism.

Freed from the distractions of manufacturing, we can concentrate on designing, engineering, and assembling better products. We no longer have all those expensive machines sitting around that we feel compelled to use, so we’re not locked into procedures and processes.

Growth through acquisition is exciting, glamorous, and ulcer inducing. The company you buy is not very similar to the one you thought you were buying, and never like what they told you. Buying small, family firms is a certain way to skip the ulcers and go straight to bypass surgery.

Henry Ford may be known as the man who pioneered the manufacture of automobiles (even though other companies were making them, on a smaller scale), but he was also a hardheaded dictator who had to dismiss thousands of workers because he mistakenly insisted on continuing the Model T well after its market evaporated. Alfred Sloan of General Motors may be regarded as one of industry’s most able organizers, but he was also a shortsighted structuralist who created a company so inflexible it failed to react to the threat of economy cars from Japan.

Besides the money and perks, I’m sure most CEOs enjoy the sport of running a company—devising strategies and products, crunching numbers, taking risks, screwing around with other people’s lives. It’s like being a five star general. If I wanted to go to work every day at 7:00 and leave at midnight, I’m sure I could keep busy. But while most CEOs insist that they enjoy 70 percent of 80 percent of their jobs, I suspect a more accurate percentage is about 30 percent. There are so many meetings, phone calls, boring luncheons, administrative headaches.

There’s no doubt 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 miscommunications. Let me propose a new definition: the truly modern company avoids an obsession with technology and puts quality of life first.

A few did cash in, trading their companies for a chance to realize dreams of an island, a sailboat, and maybe even golf every day. But by the time the second session at Harvard came along a few of these liberated souls were already a bit bored. And by the third session nearly all those who had sold their businesses had started or acquired new one ones and were happily back on the job. They were never in business for the money.

If money isn’t all it’s made out to be, information is, I believe, a most undervalued commodity. There is power in knowing something someone else doesn’t, which explains why executives are so often loath to share information with employees.

By all means establish and promote a common goal, but recognize divergence and let people determine their own ways of achieving it.