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Create Quantum Change: Incrementally!!!
Ricardo Semler's Transformation at Semcoby Gareth Morgan and Asaf Zohar
Ricardo Semler's best selling book Maverick, together with his two Harvard Business Review articles, chronicles the development of what's described as "The world's most unusual workplace": a Brazilian company that "has no receptionists, secretaries, standard hierarchies, dress codes, or executive perks...a company that lets you set your work hours and even your salary...where the standard policy is no policy."  Semler is the flamboyant and inspirational CEO in his mid thirties who, in just ten years, transformed the company into what is now being touted as "a model for the 90s and beyond." Semler's work is much admired. He is celebrated as a role model of a CEO who bucks all the rules and succeeds, but one who's behaviour and success seems to defy explanation.
In our opinion, he is a master of highly leveraged "15% change."
A lot of Semler's early changes were classic "catch up" measures. Quantum change was achieved in a quantum way as he wielded the corporate axe to cut a failing organization into shape, and through acquisitions that created a diversified company driven by tight discipline and control. The stress of these changes was enormous, generating hosts of personnel problems and discontent. Semler himself was being physically destroyed by his workaholic life-style, creating a context in which something had to give. And it did! Semler's sickness forced a dramatic reappraisal of his work patterns, and a complete reformulation of his approach to managing the company. His state of personal crisis catalyzed a series of changes that set the organization in a completely new direction.
He began by attacking what he calls "corporate oppression." Time clocks, dress codes, security procedures, privileged office styles and perks, along with other manifestations of the driving culture came under attack. His reduction in hours of work and the desire to make himself dispensable encouraged greater delegation and a drive towards arrangements where factories and offices became more self managing.
As Semler acknowledges, one thing led to another. The attempt to increase worker involvement in decision making through "factory committees" got off to a stumbling start. Many people didn't want to be involved, and those that did focussed on minor issues. People were scared about being on the committees and losing their jobs, particularly if they were outspoken, so Semler guaranteed that they could not be fired while serving on the committees and for at least a year thereafter. His initiative created room for real initiative to develop.
From there the power of locally based management really began to grow, and the committees began to wield a major influence on the business. They began to assume responsibility for their activities, and to push their boundaries into other areas. The drive to increase profitability under new profit-sharing schemes encouraged them to look for savings and efficiencies wherever they could be found. This led them to question the role and utility of various levels of management and to eliminate redundant managers and procedures that didn't add value. The drive towards a flatter organization began to come from below! The revolution in Semco had now really begun, and Semler became more and more committed to this emerging style of organization, even though he didn't know where it would take him.
Semler presents himself as "the questioner," the challenger" and "the catalyst": as the person who asked basic questions and encouraged people to bring things down to the simplest level in making key decisions shaping their work performance. By challenging the status quo at every turn and allowing people to come up with appropriate solutions, the attack on bureaucracy and conventional styles of management became more and more dramatic, leading to many novel innovations such as: the "spinning off" of factories and other business units into separate self regulating units; widespread profit-sharing; the hiring and firing of managers by their employees; and the idea that to keep employed you've got to find a way of adding visible value so that your team will continue to want to include you as part of their six month budget. As a result of these innovations on the part of his employees Semler prides himself on the fact that he is now completely dispensable and spends less and less time working for the company.
Semler has helped to create a quantum change at Semco. But it's patently clear that he has done so incrementally. Although Semco is now touted and celebrated as a model of a new kind of industrial democracy, its distinctive style has not been created by design. It's not a model that any other organization can copy or one that will guarantee success either now or in the future. Semco is an organization that has evolved through a series of 15% initiatives. As in all the other case studies featured in this article, we see in its history a series of high leverage changes that are as likely to be born out of desperation as from high principle or design. The style of industrial democracy we see today began to emerge when Semler collapsed from exhaustion and had no other option than to relinquish control. His particular skill and genius has been to recognize the self-organizing potentials that were unleashed and how he could build a new organization around them, meeting forks in the road as they arose and nudging the organization along an appropriate path. For example, the decision to guarantee that factory committee members couldn't be fired during or immediately after their time in office was absolutely crucial in nurturing the new approach to a critical level where workers could realize that they were truly in control.
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