Maverick - The Success Story Behind the World's Most Unusual Workplace by Ricardo Semler - Summary and Book Notes

May 28, 2018
Booknotes

Ricardo Semler changed a traditional manufacturing company into one where staff set their own salary, vacations were mandatory, books were open, and workers had autonomy to run their job as they like. This democratized, trust based approach led Semco to great success during Brazil’s tumultuous 80’s.

Review

Maverick is an excellent example of how to run a large company in an unorthodox way. Semler writes about the history of Semco, and how it evolved from a traditional authoritarian company into a democratic, innovative, constantly evolving one. Unfortunately this narrative can be quite dry at times. For the CEO or business owner, the framework presented and real world examples make Maverick a worthwhile read.

“Ricardo Semler (born 1959 in São Paulo) is the CEO and majority owner of Semco Partners, a Brazilian company best known for its radical form of industrial democracy and corporate re-engineering.[1] Under his ownership, revenue has grown from 4 million US dollars in 1982 to 212 million US dollars in 2003[2] and his innovative business management policies have attracted widespread interest around the world” – wikipedia

I recommend this book for:

  • Business owners or high level executives, unsure of how to structure their company
  • Managers who want their employees to feel valued
  • Anyone involved in organizing large groups of people

Buy Maverick on Amazon

Quick Summary

  • The era of using people as production tools is coming to an end.
  • Top-down, authoritarian rules and regulations discourage and hamper employees
  • Instead, build a company full of cathedral builders
  • Do this by empowering employees to make decisions about how they work, organizing into small and independent units, and using very few levels of management

Recommendations for Further Reading

Book Notes

The following are rough notes I took while reading. These are mostly paraphrased or quoted directly from the book.

Natural Business

My role is that of a catalyst. I try to create an environment in which others make decisions.

We’re thrilled our workers are self-governing and self-managing. It means they care about their jobs and about their company

Symptoms of Trouble

we were all convinced the long hours were temporary and that normalcy would return [soon]

we were so impressed with our statistical abilities that it took us a while to realize that all those numbers weren’t doing us much good.

What I wanted was a company filled with cathedral builders

“We simply do not believe our emplyees have an interest in coming in late, leaving early, and doing as little as possible for as much money as their union can wheedle out of us. After all, these same people raise children, join the PTA, elect mayors, senators, and presidents. They are adults. At Semco, we treat them like adults. We trust them. We get out of their way and let them do their jobs.”

Coming About

Before I could reorganize Semco, I had to reorganize myself. Next, I resolved to delegate Furiously, and to summon up the courage to throw unneeded papers away

Causes of Semler’s Time Sickness [stress]

  1. The belief that effort and result are directly proportional
  2. The gospel that quantity of work is more important than quality of work
  3. “Things are a little uncertain at the office right now. I’ll just have to work a little longer until they straighten out.”
  4. Fear of delegation, and its cousin, fear of replaceability

We had so damn many numbers, inside so many damn folders, that almost no one was looking at them.

A five-year view is essential. In contrast, we take an operational view of six months.

Nearly every company of any size has its own FBI. Yet these same companies tell their employees they’re all part of one big, happy family.

Today I am a big believer in MBWA, or Management by Wandering Around. taking time to walk around with no destination known.

Democracy is a lot of work. It begins with little things, like neckties, time clocks, parking spaces, and petroleum blue uniforms.

One Change Leads to Another

There are similarities between this system and the Japanese approach, but also important differences. In our groups, younger members didn’t automatically submit to their elders. Once a team decided an issue, it stayed decided. There was no approval needed to make a change. Then again, there were no special rewards for new ideas. It was a spontaneous process.

The Trouble With Rules

It isn’t unusual for middle managers to be more zealous with authority than those at the top.

In their quest for law, order, stability, and predictability, corporations make rules for every conceivable contingency. It works fine for an army or a prison. But not for a business.

Without rules all answers are suggested by common sense. Some of our people stay in four-star hotels and others choose lesser digs. The point is, if we can’t trust a manager to use good judgement about such things, we sure as hell shouldn’t be sending him off to do business in our name.

Rules and regulations serve to:

  1. Divert attention from a company’s objectives.
  2. Provide a false sense of security for executives.
  3. Create work for bean counters
  4. Teach men to stone dinosaurs and start fires with sticks.

“The sad truth is employees of modern corporations have little reason to feel satisfied, much less fulfilled. The era of using people as production tools is coming to an end. Participation is infinitely more complex to practice than conventional corporate unilateralism, just as democracy is much more cumbersome than dictatorship.”

Too Big for Our Own Good

Get too big and you quickly discover the diseconomies of scale.

Semco’s structure was a functional system [hierarchical]. European companies seem to prefer a matrix system. Decisions in both take too long and are often the wrong decisions

computer generated information: Instead of helping us organize data, computers are drowning us in it.

Divide and Prosper

Semco started splitting their plants into smaller ~150 employee independent units, even if that meant duplicating machinery and personnel.

Even with the duplication, the resulting total workforce was lowered.

Rather than creating waste by breaking up our plants, we were eliminating it. as Ipiranga grew bigger and more complex, there were more nooks and crannies where marginal employees could hide.

The Inmates Take Over the Asylum

Workers decides the manufacturing layout and choose to arrange it into manufacturing cells

In such a system the driving force of productivity is motivation and genuine interest, not hulking foremen.

Anyone who applies to be a machinist will be interviewed by a group of machinists, not an executive.

On worker decided profit sharing: “What would you rather have, the tail of an elephant or an entire ant?”

Miles of Files

Read it, understand it, act on it, and throw it away, that’s our motto now

Semco’s Headline Memo: The crucial information is at the top of the page. If you want to know more, read a paragraph or two. There are no second pages.

Trading Places

Helter-skelter job paths have been institutionalized under a job rotation program in which 20 to 25 percent of our managers make a shift in any year. Man is by nature restless. When left too long in one place he will inevitably grow bored, unmotivated, and unproductive. The cure was to encourage managers to exchange jobs with one another.

We are great believers in sabbaticals. Professionals can take a few weeks or even a few months every year or two away from their usual duties. They can spend the time reading books or articles, learning new skills, or redesigning their job. Or they can just think.

Minding Our Own Business

We don’t want to be a big, happy family. We want to be a business. No one should ever fall for that “we’re-a-family” line.

We always try to speak the truth and nothing but the truth. When the truth cannot be told, we say nothing.

A touch of civil disobedience is necessary to alert the organization that all is not right.

Hiring and Firing the Boss

We developed a program to insure that bosses were ratified by the people who work under them. Subordinates evaluate their managers twice a year.

An employee who meets 70% of the job requirements [for a new job posting] will be chosen instead of an outsider.

We don’t believe in stockpiling talent. People get unhappy waiting on shelves.

Rounding the Pyramid

Bureaucracies are built by and for people who busy themselves proving they are necessary, especially when they suspect they aren’t.

A pyramid is rigid and constraining. A circle is filled with possibilities. 3 circles:

  1. Small innermost with half a dozen people: Counselors
  2. second circle would enclose the seven to ten leaders of Semco’s business units and be called partners
  3. Last immense circle would hold virtually everyone else at Semco. Triangles? They would be scattered around that last, big circle, each enclosing a single person we would call a Coordinator [first crucial level of management].

Because coordinators could not embellish their titles with phrases such as “of Engineering”, we would avoid the confusing mumbo jumbo of appellations and ranks common in corporations. Because there would be limits on the number of coordinators, associates would have to take on more responsibility.

Asked everyone to choose their own salary. On an evaluation form, they listed age, how long they had worked at semco, how they spent their time, and so on. Then the form was given to their boss to fill in. Asked to consider what they could make elsewhere; what others with similar responsibilities and skills made at Semco; what friends with similar backgrounds made; how much money they needed to live.

3 Reasons reasonableness prevailed [when choosing own salary]:

  1. Everyone knew what everyone else was paid
  2. Top people are modest about their pay
  3. self-preservation. People know salaries account for most of our operating costs. No one wants to stick out during a budget problem.

Thinking for a Living

New unit: Nucleus of Technological Innovation Take a small group of people familiar with the business and set them free. They report their results twice a year to Partners, who decide if they should keep their jobs.

Junior version of NTI for young students

Launching Pad

Wanted to contract out many operations to other businesses. Instead, helped own employees start their own business in a Satellite Program.

Workers who fight for every extra minute of a coffee break will toil late into the night if it means keeping their own company alive.

Rebirth

Our people did not want a bigger company, they wanted a better company

Who Needs a No. 1?

Centralized power is a high-risk proposition.

Instead of one person at the top, Semco would be run by a committee of our Counselors.

While most CEOs insist they enjoy 70% of their jobs, I suspect its more like 30%.

I spend 30% of my time on Semco now. I like to think its the gratifying 30%

Modern Times

[Technology rapidly advances] And yet most businesses are still organized much the same way they were in 1633, with stultifying top-down management, close and distrustful supervision, and little room for creativity.

Technology is transformed overnight; mentality takes generations to alter.

The truly modern company avoids an obsession with technology and puts quality of life first.

No company can be successful, in the long run anyway, if profits are its principal goal. see Obliquity by John Kay

We offer employees a chance to be true partners in our business, to be autonomous and responsible.

One of the biggest misconceptions about modern man is that he is somehow different from his ancestors.

To survive in modern times, a company must have an organizational structure that accepts change as its basic premise, lets tribal customs thrive, and fosters a power that is derived from respect, not rules.

Semco isn’t a model, with programs to be followed with precision. Semco is an invitation. To forget socialism, capitalism, just-in-time deliveries, salary surveys, and the rest of it, and to concentrate on building organizations that accomplish that most difficult of all challenges: to make people look forward to coming to work in the morning.

Buy Maverick on Amazon

Further Reading