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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."
Top of page
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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+at+Semco&source=bl&ots=C2VxtoZn18&sig=3rkANGjt5aZNsqW3tOyXh9xy4A&hl=en&sa=X&ei=i80DVZjNEMKPuASc3oD4AQ&ved=0CDAQ6AEwAzgK#v
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Ricardo Semler, CEO and majority owner, Semco SA

23.08.2007
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 So 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 Prpria Mesa (Turning Your Own Table) became the bestselling nonfiction 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 Ricardos 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 couldnt 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 Clvis da Silva Bojikian, the former principal of a small,
progressive teachers school, who had answered Semcos 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 Semcos unusual ways. Semler has let his employees set the
terms of their employment: hours, salaries, wages, even their office technology. Semcos
transition to a democratic workplace took nearly five years.
In Semlers 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 neardeath experience, but also the gyrations of Brazils tortured politics and twisted economy.
It's as free market as we can make it. People bring their talents and we rely on their selfinterest 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 Semlers 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 Ive never used it because you can only
use it once, he says. If I veto someone, the next time theyre going to say, Forget it; hes
going to do what he wants. They have to go through processes where they know theyre
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 Lilians 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. Semlers 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 So 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 worlds 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 Semlers 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 Semplers book The Seven-Day Weekend, Inc.
Peter Martin, Ricardo Semler - Brazil's Caring Capitalist, News SBS, June 15, 2005
Ricardo Semlers lecture at MIT (video)

Lawrence M. Fisher, Ricardo Semler Wont 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 Wont Take Control

The 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 So 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 companys headquarters
Photographs by Rogrio 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 dont 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 theyre committed to the organizations 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 MITs 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. Semlers 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. Semlers Planet

To see Semcos approach in action, just visit the companys pump plant on the outskirts of So 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. Joo
Vendramin Neto, who oversees Semcos manufacturing, explains that the workers know the organizations objectives
and they use common sense to decide for themselves what they should do to hit those goals. Theres no covering your
ass, says Mr. Neto. The intent is to get straight to specific targets.
Semcos 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 Semcos unusual ways. The employees elect the
corporate leadership and initiate most of Semcos moves into new businesses and out of old ones. Of the 3,000 votes
at the company, Ricardo Semler has just one.
In Mr. Semlers 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 Brazils tortured politics and
twisted economy. During his 23-year tenure, the countrys 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 Semcos numbers, weve grown 27.5 percent a year for 14 years, says Mr. Semler over a cappuccino at
one of So Paulos sidewalk cafs on a lovely fall day. He conducts many work-related conversations here; the
ultimate hands-off leader, Mr. Semler doesnt even keep an office at Semco. Heres 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 theres only one way to do things around here and tried to indoctrinate people, would we be
growing this steadily? I dont think so.
Those four words, I dont think so, delivered with a Brazilian Portuguese lilt, represent Mr. Semlers 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 MITs 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
Brazils 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 Brazils 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 isnt going to go away, Semco is the stronger for engaging them rather than fighting.
Even in academic circles, usually more accepting of radical innovation, hes 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 protg 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. Theres 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, were 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 Semcos offices in the Jardim Marajoara district of So 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, Semcos 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 Ricardos 5-year-old
son, Felipe. Curt Semler always intended to turn the company over to Ricardo, but the transition was not easy.
Ricardo hadnt wanted to join the family business, preferring to ply his Gibson Les Paul in a series of striving So
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, Semcos operating earnings had evaporated as the Brazilian shipping
industry, then its primary customer base, weathered a deep decline. Yet the companys 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 Semcos senior executives insisted on waiting out the moribund

shipping industry, Ricardos 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 Semlers change agenda had nothing to do with lofty ideals like participative management,
and everything to do with jump-starting Semcos 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 companys 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. Thats 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 couldnt 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 Brazils dictators had forced out for urging his faculty and students to
question authority. After he was fired, Clvis da Silva Bojikian had worked unhappily in executive training at Ford
Motor Companys Brazilian subsidiary and at KSB, one of Semcos 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. Semlers 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 Semcos 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 wasnt 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, So Paulo is prone to paralyzing traffic jams;
the wealthy cope by commuting by helicopter. For Semcos 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 Semcos 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
everyones salaries, from that of the security guard at the factory entrance to Mr. Semlers own, were published for all
to see. Peer pressure provided an efficient leveling mechanism.
Summarizing Semcos 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. Thats what it was like when we started asking people what they wanted,
what they liked and didnt like. The company decided there were no taboos, they could ask anything, and the company
books were open, he says. But its much easier to say than to do.
Mr. Neto notes you cant 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.
Semcos 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 companys books and board meetings,
youll 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 Im 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. Semlers first book, Turning the Tables, published in 1988,
which spent four years on the Brazilian bestseller lists. Expanded and rewritten in Mr. Semlers 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 well grow 5 percent this year, then well have a big loss, then well be merged? he asks. I
dont 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. Thats when Mr. Semler goes
in for the kill: Did anyone write that were going to make products that last only until the warranty expires, or that
were going to discriminate against women and minorities, but only when we wont get caught? I dont 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. Im 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
were going to double our earnings, leaving out that were 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 its 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 dont 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. Theyll 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. Semlers classes listen attentively, chuckle at the right moments, and take
careful notes. But its not clear what they take away from these encounters. When he talks, its a bit of smoke and
mirrors, says Bruce McKern, director of the Sloan masters program at Stanford Universitys Graduate School of
Business. He challenges just about every shibboleth of corporate management, but it happens so quickly youre 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. Semlers MIT courses
includes work by Franz Kafka and Gabriel Garca Mrquez. 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 leaders 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 Semcos 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 doesnt
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 its been a dozen years since hes 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.
Thats 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 doesnt just happen, and it is very difficult to check your ego at the door. The people at Semco dont 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 dont debit me my mistakes. They give
undue importance to what I say, and I think that doesnt go away.
That doesnt 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 Semcos 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 Ive never used it because you can only use it once,
Mr. Semler says. If I veto someone, the next time theyre going to say, Forget it; hes going to do what he wants.
They have to go through processes where they know theyre going to prevail.
Of course, Mr. Semlers 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 Semcos growth and
diversification in recent years has come through joint ventures with multinational corporations, most of which are
publicly traded. Despite Mr. Semlers best intentions, these entities tend to practice a diluted version of the
democratic workplace.
I dont 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, Im not sure the supervisors walk the walk as thoroughly as
Ricardo thinks they do. Im 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 dont 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 hes 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. Semlers 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 So 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 worlds 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 youre a guest and you want to go mountain biking, you wont 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 Universitys School of Hotel Administration and the
Ecole Htelire 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 its 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 Im being transformed, he says. Ricardo is not only charismatic, but very coherent in his ideas. Hes
against all common sense, but amazingly hes right and we are all wrong.
Mr. Semlers approach to dealing with So Paulos 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 dont control at all.
And they all function on the same democratic model that Semco uses. Thus the director at Lumiars pilot school in
So Paulo is a lively young woman named Lilian Kelian, with no background in education. Mr. Semler voted against
her. The parents wanted Lilian, so Lilians 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=tedandroidapp&awesm=on.ted.com_t0SmX&utm_campaign=&utm_source=directon.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+gro
wth&source=bl&ots=v6tur1bVYO&sig=xpJnda0OzdorwtMDoCTsLvEUx5M&hl=en&sa
=X&ei=bdgDVceCIdGgugSF_YKYDA&ved=0CDAQ6AEwBDgU#v=onepage&q=Ricard
o%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 harderheaded 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 Caulkin
Sunday 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+se
mler&source=bl&ots=63OJ_Gnbtx&sig=vbW7URMxGUAdLeXaTuamy9trnWg&hl=en
&sa=X&ei=S9sDVd7GB4youQSH5YGIAQ&ved=0CD8Q6AEwBzgK#v=onepage&q=le
ading%20by%20omission%20ricardo%20semler&f=false