The New Rock & Roll

When I was growing up, business was boring. Business people were definitely not interesting. What did I care about the process that made sure chocolate bonbons were ready for my weekly pick n mix at Maynards in Hill Road and that Shoot (a football magazine, long since disappeared) was on the shelf at Seeley’s ready for my consumption? All that mattered was they were on the shelf, they were good and my Mum’s purse was open.

But as teenage maturity (is that a contradiction?) took over and thoughts turned to life at University so the world of business became more relevant and dare I say, interesting. Who made the Bonbons? How did they get them to the shop? Why did the magazine cost 30p? Who wrote the articles? Could I work for them?

With my interest in business starting to develop I took the well-travelled route of a Business Studies degree to broaden my knowledge and understanding and as background I started to read about the personalities. And as time has gone by some of these ‘dull’ business people have become celebrities, TV stars in their own right and often more well-known than their businesses.

So who are some of these heroes?

First up, put your hands together for Ricardo Semler. Who? 

Ricardo Semler. Brazilian businessman known to many business experts as the guy who does it all wrong and yet seems to get it right!

Ricardo began working for his father’s long established shipbuilding company but quickly clashed with his father over the style of leadership and company culture. His father, Antonio, insisted that the traditional autocratic style be maintained whilst Ricardo favoured a more participatory, democratic style with the emphasis on decentralisation and diversification to enable the company to survive and then grow.

In 1982, after many heated exchanges, Antonio took a very brave decision.

He resigned as CEO and passed majority ownership of Semler & Company to his son. The results have been spectacular but not without many dramas. On his first day, the new man fired over half of the top managers.

And in 1983,  a life defining moment occured (regular fainting spells) which forced Ricardo to re-assess the work-life balance for himself and his employees. New company structures  were introduced which after some early failures, have over the years brought substantial improvement and success. A lattice structure with 6-10 staff in charge of particular tasks has created a sense of ownership and financial responsibilty. Many managers left but gradually the system became popular with many workers doubling or tripling their wages when bonuses (25% of all company profits go to the employees) are distributed by a democratically elected committee.

Employees also introduced a Nucleus of Technological Innovation to encourage forward-thinking and investigation of new projects. The rapid success of this employee led initiative encouraged satellite units to be set up.

Within just a few years these units accounted for over 50% of all new products and staff.

In 1990, SEMCO along with the rest of the Brazilian economy faced troubled times. Hyperinflation, government led liquidity controls and political unrest were the daily news mix. However whilst many Brazilian companies went under, SEMCO survived through its own unique solution. Employees agreed to substantial wage cuts  in return for an increase in profit share, management salaries were slashed and employees could veto every item of expenditure. Employees also began to appraise their managers!

Employees took on multiple roles which gave them greater knowledge and a greater input into how to run the business better. Inventory levels dropped, delivery times improved and return rates fell to less than 1%. The net effect was and still is, rising turnover and profitability.

In 1982 revenue was $4m. By 2003 this had increased to over $212m. In the same period, the number of employees has risen from 90 to over 3000.

For Ricardo Semler the experience has been truly life changing. Time Magazine included him in their Global 100 Young Leaders in 1994. He has been voted Latin Businessman of the Year (1990) and Brazilian businessman of the year (1990 & 1992). Two books about SEMCO’s transformation and workplace re-engineering,  Maverick and The Seven Day Weekend, have become international best-sellers. He is a regular public speaker and a popular face in the media.

Harvard Business School have also involved him as a visiting scholar. Semler is also a member of SOS Atlantic Forest, Brazil’s leading environmental defence organisation.

SEMCO is one of the most celebrated examples of how radical change to a business can substantially change the lives of its employees which in turn has brought sustained growth to the business. Some of the changes may no work in some companies or economies but Ricardo Semler has shown that with imagination and a willingness to take a risk, the upside can be massive. Many of the practices introduced have now been replicated around the world and SEMCO is a regular stop-off point for tycoons and executives looking for real-life answers.