I think we have exhausted the current series on investment basics and therefore it is time to start a new one. You will find that I am moving more and more towards the ?soft? issues when discussing/analysing companies. The soft stuff is what really gives a company its sustainable competitive advantage. ?Softs? are things like trademarks, culture, patents, etc. We are going to investigate this by looking at interesting books that touch on the subject in various ways.

We kick off with a series of discussions of the book ?Maverick?, written by Ricardo Semler. But, be warned! The practices at SEMCO (Semler?s business) fly in the face of standard dogma. The first indication of this is the cover of the book. Semler, crouching, is casually dressed in a burgundy cardigan, red tie and cream shirt. A pair of spectacles is elegantly dangling from his right hand. It seems pretty ordinary, and even predictable, for the cover of a run-of-the-mill business book. However, when you look closer you notice that he is crouching on a boardroom table. This is a good indicator of Semler?s management style. An initial inspection of SEMCO shows things to be pretty average, but as soon as you dig a bit deeper you realise very quickly that something very odd is going on.

These days you will frequently find executives of the top global companies touring the facilities of SEMCO to try and learn the SEMCO magic. The likes of GM, Nestl?, Ford and Siemens have all visited this Brazilian manufacturer of pumps, air conditioners, mixers and equipment for biscuit factories. In case you hadn?t noticed, Brazil is not exactly the friendliest economy in the world in which to do business. High inflation, civil unrest, a weak currency and a corrupt government are just some of the regular business challenges facing Brazilian companies. So what does this mean to SEMCO? Not much, apparently! SEMCO compounded sales by 20% between 1993 and 2001?in US dollars!

At SEMCO headquarters, the first sign that things are different is the fact that there are no receptionists. If you venture a bit deeper into the building you still won?t find any receptionists, neither will you find any secretaries or personal assistants. As Semler puts it, ?We don?t believe in cluttering the payroll with ungratifying, dead-end jobs?. SEMCO believes that if you are a top manager, responsible for a whole factory, then you should be perfectly capable of answering the phone, making photocopies and receiving your own visitors. This is not so much a case of SEMCO being cheapskate. No, it is more a case of common sense - something which is quite scarce in businesses today. Sure, it is nice to have a PA, but is he/she really worth the money? SEMCO thinks not. In this series we won?t be looking at the rulebook because SEMCO doesn?t have one. In a nutshell, I would say that SEMCO?s rulebook is made up of two simple words:

COMMON SENSE!

Most corporate strategists (or should I rather say corporate strategy departments) would faint at the mere suggestion of throwing out all policy and procedural manuals. This reaction is due to two simple reasons. Firstly, it would merely confirm what they have been suspecting all along ? that nobody reads the damn things anyway. Secondly, they will suddenly find themselves without jobs. Therefore, they keep on telling the rank and file employees how important all the ?doing it according to the book? MBA-garble is and they keep churning out those ?delightful? manuals.

When you really think about it, the above makes sense. These days everybody is talking about how people are the soul of the company. And, about how they want an intelligent and flexible workforce within a learning organization. Yet, in practice they stifle any attempts at innovation. Procedural manuals and organisational structure, despite the good intentions behind them, usually only serve to stop people thinking. If you enforce a culture where everything the boss says is treated as the gospel, you block everyone else?s creative input. At SEMCO you will frequently find that the leader of a project is a shop floor worker, despite the fact that the shop floor manager is part of the project. You will also find that the shop floor workers set the production targets and the managers determine their own salaries and bonuses.

Now, this might all sound like the story about the guy the SEC arrested in New York the other day. Apparently he turned 8 hundred dollars into 355 MILLION DOLLARS in two weeks by playing the stock market. His defence to the charge of insider trading was to claim that he came from the future and therefore knew which stocks to pick!

Despite the fact that SEMCO?s story might also seem far-fetched, it is a case well worth investigating. Join me in this new series, where I will be looking in detail at the SEMCO story, as told by Ricardo Semler in his book ?Maverick?. We might just learn a thing or two.

Whatever you are up to, I hope it is profitable and ethical!

Mr. B

mail_mrb@yahoo.com

Posted: 2003/04/07 08:29 View Archive