This book will explain the straightforward philosophies and practices that make Semco one of the world's most unusual workplaces. Be warned--many of our basic tenets fly in the face of even the most progressive business owners or managers. Our "architecture" is really the sum of all the conventional business practices we avoid.
It's our lack of formal structure, our willingness to let workers follow their interests and their instincts when choosing jobs or projects.
It's our insistence that workers seek personal challenges and satisfaction before trying to meet the company's goals.
It's our commitment to encouraging employees to ramble through their day or week so that they will meander into new ideas and new business opportunities.
It's our philosophy of embracing democracy and open communication, and inciting questions and dissent in the workplace.
On-the-job democracy isn't just a lofty concept but a better, more profitable way to do things. We all demand democracy in every other aspect of our lives and culture. People are considered adults in their private lives, at the bank, at their children's schools, with family and among friends--so why are they suddenly treated like adolescents at work? Why can't workers be involved in choosing their own leaders? Why shouldn't they manage themselves? Why can't they speak up--challenge, question, share information openly?
RELINQUISHING CONTROL
Semco's glass and steel high-rise headquarters is a far cry from the gritty industrial shop floor that my father, Antonio Curt Semler, founded in 1954. It started not long after he moved to Brazil from Argentina, having emigrated before that from his native Vienna. He patented a centrifuge for separating oils, and with that started his own small machine shop, choosing its name from a contraction of Semler & Company. Soon Semco was a $2 million a year business. Then, in the late 1960s, my father formed a partnership with two British marine pump manufacturers, and Semco quickly became a major supplier to the Brazilian shipbuilding industry.
For the next twenty-five years, Semco built marine pumps, and its name became synonymous with the shipping industry. It could also have been synonymous with rigidity and tradition. When I was still quite young, my father assumed that I would take over Semco. I wasn't anywhere near as certain as he was. I spent many youthful years in a rock band and one miserable summer as an intern in Semco's purchasing department. After that, I wondered, "How can I spend the rest of my life doing this? How can I stomach years of babysitting people to make sure they clock in on time? Why is this worth doing?"
When I told my father about my qualms, he reassured me with "that'll pass, young man," or "I, too, was once like you." Of course that only made matters worse. Instead, I began to wonder if it was possible to foster change by creating an entirely new kind of organization.
The answer was yes, but it involved a deceptively simple principle--relinquishing control in order to institute true democracy at Semco. And that is very complicated indeed. Convinced that my family wouldn't let me have free rein at Semco, I spent a year investigating a faltering ladder manufacturer. I was then twenty-one and preferred the prospect of a small, dangerous venture before I made a commitment to family interests. On the day I was to sign the final papers to acquire the ladder company, my father called me and proposed a deal.
After much debate and negotiation, we agreed that I'd take over Semco, and he would step back and allow me to remake the company as I saw fit. I was so young that no one at Semco took the news seriously. Clovis Bojikian, today one of five senior Semco managers and our venerable human resources guru, remembers coming to Semco for an interview shortly after I took over.
"They put me in a room, and a boy arrived," Clovis says now. "I thought he was a messenger. He was about my son's age. He sat down and started to ask me questions, and it was Ricardo Semler."
Within days of taking over, I fired two-thirds of my father's most senior managers outright. A risky move that I felt was necessary to quickly implement reforms without foot dragging from the entrenched executives. I then spent the next two decades questioning, challenging, and dismantling the traditional business practices at Semco.
Even though our workers can veto a deal or close a factory with a show of hands, Semco grows an average of 40 percent a year and has annual revenue of more than $212 million.
Today, I can honestly say that our growth, profit, and the number of people we employ are secondary concerns. Outsiders clamor to know these things because they want to quantify our business. These are the yardsticks they turn to first. That's one reason we're still privately held. I don't want Semco to be burdened with the ninety-day mind-set of most stock market analysts. It would undermine our solidity and force us to dance to a tune we don't really want to hear--a Wall Street waltz that starts each day with an opening bell and ends with the thump of the closing gavel.
Thanks, but no thanks. We generate enough of our own cash, and we're growing nearly 40 percent a year without public investment. Yes, we're successful by market standards--we've grown, we've made more money, and we've added employees. But that success means little to me if it's measured only in those terms. Sure, it's wonderful to have money. Yet it doesn't change how we feel about getting out of bed in the morning, going to work, and performing a job day after day.
The principles we now practice have resulted in tremendous growth: Semco has gone from my father's peak of $4 million a year to $212 million in annual revenue in 2003. My father's ninety employees have increased to nearly three thousand. We've moved from industrial manufacturing to services to high technology without giving up any earlier businesses.
