Ricardo Semler
Grand Central Publishing
Reprint Edition
DesignOrganisational DevelopmentWorkStrategy
Maverick! is the story of a developmental journey narrated by Ricardo Semler. He inherited a company in Brasil, called Semco, and from the beginning has made it a goal of his life to transforming the traditional way of working of his father into something new. In a rare endeavour for a corporate heir, his crucial decision has been not to decide alone for most of his journey, except for the first decision, when he sent home most of the old leadership team of the organisation. Published first in 1993, it is the story of the first example of democratic principles applied in an organisation (the so-called “Semco Model“). Above all, this book is the narration of a journey, made up of experiments and failures, of incessant involvement of people across the different businesses in which Semco operated, and about the centrality of work in pursuing the results of the organisation.
A company should trust its destiny to its employees.- Ricardo Semler, Maverick!, page 276
This sentence is probably the best summary of the philosophy expressed in this book. What is however strikingly clear in reading the volume, is that this is not a book about wishy-washy new-age family-friendliness. In essence, it’s a recipe about doing business in a better way, through a new centrality of the concept of work. But let’s see the journey more in detail.
Step One: Killing Rules
The first action that Semler has taken in the company was to kill rules as much as possible. He realised that most people saw their role in the company as merely “executing tasks” directed by others. They viewed company tasks much as parents see homework – disagreeable, perhaps, but mandatory (page 52). This was one of the significant issues in limiting the commitment of employees at work.
The journey started by removing many of the rules, processes and policies across the organisation.
Semco’s standard policy is no policy.- Ricardo Semler, Maverick!, page 4
In his journey, Semler discovered that abolishing rules was not an easy task, but one that had immediate ripe effects., Hi his wordings, Rules and regulations only server to:
- Divert attention from a company’s objectives.
- Provide a false sense of security for executives.
- Create work for bean counters.
- Teach me to stone dinosaurs and start fires with sticks.
But what do you do when you abolish all rules? What is the alternative? Common sense would be the best alternative, by far (page 91). Not an easy element to define.
No, I can’t define what common sense is, but I know it when I hear it.- Ricardo Semler, Maverick!, page 92
But the reward is worth the hassle. People begin to make more decisions on their own, decisions they are usually better qualified to make than their supervisors (page 93). Rules, after all, seem to exist only to hinder reaching objectives.
Step Two: Curing Time Sickness, managers’ worst disease.
Semler talks a lot about Time Management as one of the critical issues for managers. He starts from his personal story when he blacked-out a couple of times due to excessive stress.
In chapter nine he identifies several causes for what he calls “time-sickness”.
- The belief that effort and result are directly proportional. In business, effort is too often confused with result. A notion that is not healthy, but above all, it is not valid.
- The gospel that the quantity of work is more important than the quality of work. A variation of the same concept, often traceable in the storytelling that managers and executives tell.
- ‘Things are a little uncertain at the office right now. I’ll just have to work a little longer until they straighten out.’. Almost any change can be an excuse for poor time management,
- Fear of delegation, and its cousin, fear of replaceability. This is where many nerves blay bare. Fear of delegation is the belief that no one is as competent to solve a problem as you are, which pushes people to be part of every meeting in the organisation and to pile up on vacation days never taken.
This piece touches more the personal discovery of Ricardo Semler and has also been explored in the other book that he authored: The Seven Day Weekend.
It struck me that time should be measured in years and decades, not minutes and hours.- Ricardo Semler, Maverick!, page 59
Step Three: move beyond traditional Budgets.
Another element of the traditional corporate liturgy that Semler addressed firsthand were Budgets. Their process was cumbersome and too complicated; it took too much time to nurture a beast that only gave the illusion of control. Therefore they got rid of the old system and built a new one that only had limited but relevant data. They added a five years view in their budgeting process, as a strategic plan was necessary, the yearly one did not give enough orientation. And, they adopted a new mindset behind the budgeting process: Budgets should always be based on rethinking the company: not a mere administrative process, but a vital component of the strategic direction of the company. A concept we had already seen when we talked about Beyond Budgeting.
Step Four: Build a “Natural Business”.
A natural business, that’s what I wanted.- Ricardo Semler, Maverick!, page 63
This is the cornerstone of Semler’s intention. This concept of Natural Business echoes the philosophy of Rousseau and other past thinkers and goes to the idea that an organisation should be stripped to its bare necessary structure. In this thinking, one of the first things that had to go where status symbols.
At Semco we have 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.- Ricardo Semler, Maverick!, page 2
An area that is for sure truly important and that has been highlighted by Corporate Rebels in their eight trends as a key in transitioning to a new reality for organisations. For sure, a step that raises much resistance, specifically from the people that have to give up their perks. But as rules where implemented, people started understanding that respect is not a function of the distance from car door to plant door.
Step Five: Treat People as Adults
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 as 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.- Ricardo Semler, Maverick!, page 56
Seems weird that this concept of treating people as adults should be part of any book about management. Yet Semler is focused on this critical concept. He saw traditional business practices as a way to treat employees only as machinery. At worst, as kids that a benevolent father allows inside the home. Which is why he is also unequivocal in rejecting any paternalistic idea. A company must treat everybody as an adult. This includes not taking them by hand in managing their finance, their health, their private lives. A concept I very much subscribe to.
This element means especially creating a culture of full transparency, also along with one of the areas that are often more critical: compensation. In the book, there are many steps in how Semler and Semco addressed rewards, from basic salary to profit sharing. All models, however, have been deeply rooted in this assumption, of people being an adult. And with a big lesson: Fairness for employees is like quality for customers – it takes years to build up but collapses over a single incident.
Step Six: Create a True Democracy.
This is probably the most revolutionary idea that Semler applied at Semco. In the book, he confirms he is proud not to have taken most business decisions in the company, and part of the origins of this alternative way of thinking is precisely related to the fact that he did not want to make decisions alone.
In his search for a different way of doing things, he tried several new business practices. However, he very soon understood that what people call participative management is usually just consultative management (page 80). Semco’s approach is not about asking for opinions, then taking the decision alone. It’s about genuine participation and ownership of the decision-making process. Semler sees this as the necessary step to create genuinely “Industrial Citizens” (page 81).
Democracy as Semco evolved in different directions. From the development of Self-Governing Teams to the implementation of a sort of election system for new bosses (including an interview process by collaborators when external recruiting was necessary).
Step Seven: Redefine role and mentality of Managers.
All of the steps above did not come easy on the traditional hierarchical structure, and especially on middle managers. No wonder that the most often heard reaction was ‘You’ve taken away my power’ (page 87). Although ultimately the journey was that of drastically reducing the number of management layers, one of the most important lessons that Semler learnt from the beginning was that he needed to bring the managers along in the journey. Which is why he instituted weekly meetings with middle-managers to examine the progress they made. These meetings were called Growing Bees In The Sky.
What he wanted to confront was not the coordinating role that managers had. But the standardised mindset that many had. To be a boss is what counts to most bosses. As if the title itself of being a boss is enough to reach self-sufficiency. So many of them are better prepared to find errors and to criticize that to add to the effort. Wich becomes detrimental to achieving business objectives.
We’re proving that worker involvement doesn’t mean that bosses lose power. What we strip away is the blind, irrational authoritarianism that diminishes productivity.- Ricardo Semler, Maverick!, page 5
The associated mentality change is not easy. 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 (page 270).
Step Eight: Make the Organisation “Human-sized”.
In its journey to improve productivity through participation, Semco’s management tried to understand what others were doing. They did a trip across different continents, looking at what other companies had achieved. A search that distilled an essential element of wisdom.
There is no way to treat employees as responsible and honest adults unless you let them know and influence what is going on around them (…) and there is no way to let them become involved in the decision that affects them if the plant they work in has too many people (page 112). If you empower employee, you give them the tools to influence their output; you need to provide them with the ability to understand their impact genuinely.
A concept that led to the recognition that The only way to change is to make each business unit small enough so that people can understand what is going on and contribute accordingly (page 112).
This realisation led to three crucial progressive experiments. The first was that of the manufacturing cell. I’ll, come back on it later, but this was also an essential element in making sure that every employee was in direct connection with the output of her/his job.
The second experiment was to scale down the organisation in much smaller business units to foster a model where actual ownership of people would prevail.
In a small factory, it is possible to know everyone by their first name, to debate plans and strategies, to feel involved, to belong.- Ricardo Semler, Maverick!, page 112
A network of small companies was born, what he later labelled the amoeba approach. The corporate centre would provide services as needed, such as HR, Legal, and so on. But the principle was that of an Open Market. The business units would cooperate but could also compete. It took much time to fine-tune this concept. With a key challenge in identifying what the correct criteria for the division were.
The Third Experiment has seen an even more drastic review of this principle. Following a period of severe economic issues in Brazil, the company decided to start outsourcing parts of their work to groups of employees that would create their own small enterprise. Sometimes this happened by giving a piece of technology, or the supply of a specific part. This projects was called Satellite Programme and has adequately anticipated some of the new trends of investing in Networking Organisation.
I have come to believe that economies of scale is one of the most overrated concepts in business. It exists, of course, but it is overtaken by the diseconomies of scale much sooner than most people realize.- Ricardo Semler, Maverick!, page 119
Step Nine: Invest in Multi-competencies.
Another vital lesson learned by the experience of Semco is the focus on developing a broader set of competencies vs focusing on over-specialisation. Against the principle of Taylorism, Semler found strength in seeing people do more things in the productions process, and thus fostered the implementation of the Manufacturing Cell. We want workers to understand that they are part of a whole.
I believe Taylor’s precise job descriptions limit workers’ potential and constrain the possibility of job enrichment, which dampens their motivation.- Ricardo Semler, Maverick!, page 122
But this applies not only to blue-collars. Semco states that Man is by nature restless (page 148): when left to long in one place, he will grow bored, which is why he devised a program of rotations where also executives and managers had to move across different company areas and functions. And he describes several examples of how this approach profited the company as a whole, anticipating the ideas that we have seen in the Book Review of Range.
There’s one other aspect that is interesting in the approach to Talent that Semler illustrates. We don’t believe in stockpiling talent. If there is not a place for critical talent, let him go (page 166). I find this concept really intriguing, despite being simple in essence. It descends from the anti-paternalistic approach that Semler takes in his entire view, and is very consistent.
Step Ten: Destroy the Pyramid.
The pyramid, the chief organizational principle 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.Ricardo Semler, Maverick!, page 176
As a last discovery step, Semco introduced a new organisational model that was also visually different than that of traditional organisations.
A pyramid is rigid and constraining. A circle is filled with possibilities. (page 180)
At the core, there would be a layer of “counsellors”, effectively a small number of senior executives that are the core of the company. In my scheme, the smaller circle would serve as a corporate catalyst, stimulating decisions and actions by those in the second circle, the people who actually would run the company (page 180). The third circle would be constituted of the majority of the employees. A minimum of hierarchy could be necessary for this area, so some teams are formed with a “co-ordinator” managing a maximum number of 20 employees.
The final set-up of Semco came to life in a simple, almost minimal fashion.
Just three circles, four job categories and two meetings. That’s it (page 182).
Conclusion
This book is a real pleasure to read. Entirely based on the first-hand experience, and written from a person that its best to not become a manager in his first part of his career (this reminds me of Ed Catmull’s own story), it’s full of learnings and insights. One big lesson, however, above all: it is impossible to extract a model to be applied “copy and paste” to another reality.
Another exciting aspect of this book is that it comes from a company that did not operate in a sexy industry, it was deeply rooted in production, at it was active in a developing country (Brasil), with all the related problems. A reality that is as far away as possible from the shiny experiments of Silicon Valley.
I want to distil a few essential ideas of this book that I have not yet mentioned. The first is the concept of Tribes. A noun that is used and abused in many contexts has a specific connotation in Semler’s final chapter. Semler sees this as a natural inclination of humans, to build tribes. Companies and organizations must be redesigned to let tribes be. They must develop systems based on co-existence, not on some unattainable ideal of harmony (page 274). Again, moving away from any paternalistic approach, Semler sees Tribes as value-adding, not detrimental in a business context, primarily as they produce diversity.
A second one I want to mention is the idea of Growth. As Semco started practising its Satellite Programme, one of the questions that came to mind is isn’t growth a vital objective of any organisation. Semler is essential in debunking this as one of the myths of companies (the other is around profit). Much about growth is really about ego and greed, not a business strategy (page 249)
To survive in modern times, a company must have an organizational structure that accepts change as its basic premise, lets tribal customs thrive, and fosters a power that is derived from respect, not rules.- Ricardo Semler, Maverick!, page 275
The third and last one is Quality of Life. Semler sees in his idea of the Natural Company an ideal state that is linked to adult-to-adult relationships between individuals and the organisation. Therefore a company that is built on change thinks of tribes as an added value and bases itself on respect, automatically becomes an organisation that fosters quality of life. Successful companies will be the ones that put quality of life first (page 275).
To conclude: Maverick! tells a story of discovery and opportunity with many learnings. It also shows that moving toward a more human-centric organisation is a long process that takes time. However, it is a journey worth starting. A truly rebellious approach that invests all components of organisation design, capable of establishing success in flexibility and agility.
The era of using people as production tools is coming to an end. Participation is infinitely more complex to practise than conventional corporate unilateralism, just as democracy is much more cumbersome than dictatorship, But there will be few companies that can afford to ignore either of them.- Ricardo Semler, Maverick!, page 102
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