Anti-control freak

Anti-control freak

Maverick Ricardo Semler has been called the anti-control freak and the Mahatma Gandhi of the business world among others. The President of Semco S/A, Brazil, which is better known as the world’s most unusual workplace, was in Mumbai for an exclusive seminar last month, which was attended by eminent individuals from the Indian industry. Manoj Khatri captures the Maverick’s revolutionary thoughts:

On official meetings
At Semco, attending meetings are voluntary. The employees are informed about agenda of the meeting in advance. It’s common to see people walking in and out of the meeting rooms even as the meeting is proceeding. If no one turns up, whatever is supposed to be under discussion must be a terrible idea.

Once I called for a meeting to discuss what I thought was a terrific idea. We were manufacturing heavy duty dishwashers, for restaurants and hotels. I thought there was a market for a miniature version of the dishwashers for domestic use. Absolutely no one turned up at the meeting. I sent another mail, assuming that somehow my earlier intimation did not reach the people. This time, one person came to tell me that no one thought my idea had any potential and that nothing would come of it. I could do nothing to convince my own workers about my idea. A few months later, another company launched a domestic dishwasher and I went around telling people, “See, I told you.” A couple of years later, that company went bankrupt and my workers and managers responded with, “See, we told you.”

On Growth
I don’t believe there is any correlation between growth and ultimate success. The biggest myth in the corporate world is that every business needs to keep growing to be successful. There’s no indication that companies that grow do any better than companies that don’t. The ultimate measure of a business success, I believe, is not how big it gets, but how long it survives.

On Planning
Business plans are wishful thinking. Whichever part of the world you go, a manager will always submit a plan which shows a two per cent to five per cent, and in rare circumstances, a ten per cent growth. Nobody ever says we are going to make a loss or we are going to be bought out or merged or closed! Yet, a quick comparison of companies listed at the NYSE shows that there is a survival rate of a mere nine per cent every fifty years. Did the other 91 per cent not plan for the future? The problem is that no one can ever plan too far into the future. If someone asks me, “where will you be in five years’ time?” I’ll say, “I haven’t the slightest idea.” At Semco we plan only for six months at a time. That’s because we have seen that in a 12-month budget, the first six months are usually predicted as bleak and people paint the last 6 months flowery!

On Intuition
IBM developed Deep Blue – a supercomputer that lost to Chess Grand Master Gary Kasparov. Remember that Kasparov can evaluate two or three positions per second, while Deep Blue can handle 200 million. So if their chess-playing strategies were equally efficient, Kasparov would need 66 million seconds – more than two years – to examine those 200 million moves. So what does Kasparov have that Deep Blue does not? To me, the answer is intuition.

In the 90’s the Germans decided that they will monitor Soccer player performances, match venues and weather reports to close in on predictability of match reports. For one full year they researched every possible parameter of the game in order to predict the results of 13 top games of the season. Not one of their predictions came right. Meanwhile, a punter in UK got 12 out of the 13 match results right. The punter used intuition.

Let me give another example. Shell has a price prediction centre in The Hague. It employs dozens of researchers and millions worth of computers to do this. In conversation with the chief of this unit I found out that as per the research the present price per barrel of crude oil should be US$31. However the actual price prevailing was US$19 – a huge difference indeed. Incidentally, the chief maintains his own personal log book in which he had predicted the price to be US$21, which is fairly close to the actual value. When I asked him why he did not share this intuition with the Shell Board, he replied: “In a Corporation, I have the right to be wrong, but I have to be precisely wrong”

On innovation
In the year 1908 Henry Ford put up the first car production line. This car had a steel chassis, internal combustion engine, four tyres, seated four, travelled at 18 miles an hour and moved forward and backward. Ninety years and billions of dollars of research later, cars are still the same – they have a steel chassis, internal combustion engine, four tyres, seat four, in peak hour traffic, they travel less than at 18 miles an hour and move forward and backward.

Each time I attempt to remove my car from the parking spot, I wonder why automobile engineers have not invented something as simple as a sideways parking solution, in spite of having spent billions of dollars in research. Is it that difficult to implement? Imagine the time and effort it will save.

Let me give you another example. When in 1960, Gillette introduced the first twin-blade safety razor it was indeed an innovative product. However, in the 1990s, after spending US$ 608 million, six years of research by a team headed by two Nasa scientists, they come up with the next big innovation – they put a third blade between the other two!

Cars manufactured by the German giant Audi have five nuts per wheel. Four of these nuts can be opened and closed with the same wrench but the fifth nut is different for every car manufactured. God help you if you have a flat tyre and have misplaced your special wrench. Even if another Audi of the same model passes by, you cannot seek its help, as both wrenches are dissimilar. And they say, it’s personalisation.

On Recruitment
At Semco, employees make all decisions – they choose their leaders, set objectives and decide who they need and what they should be paid. When there’s a position, we post information about interviews on notice boards. All those who are interested show up and interview the prospect. The questions asked are usually not very normal.

Once we were looking to hire a CFO. The candidate who was finally selected was interviewed by as many as 37 different workers/colleagues on six or seven different occasions. So by the time the candidate was appointed, he was already familiar with most of his subordinates/ colleagues and vice versa and they’re already comfortable with each other. Now compare this with the traditional interview process where the only the top bosses and HR personnel meet the candidate one, two or a maximum of three times.

On trust and dishonesty
We cannot expect employees to be honest and sincere while we openly use corrupt practises to get large contracts and business accounts. Why would an employee adhere to the rules of honesty in which the company doesn’t believe?

Today, what generates effective power is information. And therefore when you share all information with your workers, corruption gently disappears. Transparency works wonders.

At Semco, there is little bureaucratic control beyond financial accountability; almost everything depends on peer pressure. We have a higher trust in human nature but we’re also convinced that peer control is fabulous as long as there is a common interest. If someone’s interested, the sort of corporate corruption you see elsewhere can never happen. It can only happen in places where people really don’t care, where they’re working nine-to-five and the chief executive knows he’s under the sword of Damocles so might as well make as much as he can. If he has that attitude, a lot of other people think the same way, so that system is doomed.

On giving up control
The reason why very few companies have emulated Semco is because it involves giving up the control by the people at the top. Typically, the attitude of the owners towards employees is, “You work harder so that I can buy my new Mercedes.”

I have been away from Semco for a month now – I am not carrying a notebook or mobile phone. I haven’t received one single email related to the business from Brazil. I have absolutely no control over the company. When I took over, we were pre-dominantly a manufacturing company. Today we are mostly into services. We’re into businesses that I don’t even begin to understand. There are people in the company I don’t like very much and there’s nothing I can do about it.

The fear of letting go is all that is needed. You may come up with many excuses to avoid giving up control but in the end, that is the only way you can ensure long term survival.

On dealing with resistance
When you put a frog in hot water, it will jump out. But put it in warm water and keep increasing the heat slowly and it will die without even knowing that it has.

It’s important to introduce changes slowly and allow people to get accustomed to new ways of doing things. When we first suggested the introduction of flexi-timing, the workers were extremely sceptical and for six months we faced resistance. Imagine, we are giving them more freedom and they still resist!

2 Replies to “Anti-control freak”

  1. Insightful! Lends a fresh perspective on what a model modern corporation can be, only if people would just let each other be, and relinquish ‘control’. Control is dope, and those who have had the high once find it difficult to even imagine what withdrawal would be like.

Leave a Reply

Your email address will not be published. Required fields are marked *