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Ricardo Semler, CEO and majority owner, Semco SA

23.08.2007

Ricardo Semler, CEO and majority owner, Semco SAAchievements

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 São 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 Própria Mesa (Turning Your Own Table) became the bestselling non-fiction 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 Ricardo’s 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 couldn’t 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 Clóvis da Silva Bojikian, the former principal of a small, progressive teachers’ school, who had answered Semco’s 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 Semco’s unusual ways. Semler has let his employees set the terms of their employment: hours, salaries, wages, even their office technology. Semco’s transition to a democratic workplace took nearly five years.

In Semler’s 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 Brazil’s tortured politics and twisted economy.

“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,” says Semler. “In return, they must have the self-discipline to perform.” The main Semler’s 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 I’ve never used it because you can only use it once,” he says. “If I veto someone, the next time they’re going to say, ‘Forget it; he’s going to do what he wants.’ They have to go through processes where they know they’re 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 Lilian’s 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. Semler’s 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 São 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 world’s 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 Semler’s 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 Sempler’s book The Seven-Day Weekend, Inc.

Peter Martin, Ricardo Semler - Brazil's Caring Capitalist, News SBS, June 15, 2005

Ricardo Semler’s lecture at MIT (video)

Lawrence M. Fisher, Ricardo Semler Won’t 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

 

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