This series looks at the importance of corporate culture as a competitive advantage. The first question one should always ask about any company you are considering for investment is, what is its competitive advantage? Ricardo Semler runs SEMCO, which is renowned for its special culture. In this series we examine SEMCO?s culture at the hand of Ricardo Semler?s brilliant book, Maverick.

Chapter 28: Zero Tolerance

?You can run a successful business or be ethical. Take your pick.? ?Common saying in Latin America

Early on Ricardo Semler decided to take a stand against corruption, which is an integral part of business life in Latin America. Two building inspectors threatened to fine SEMCO $200,000 and close the business down after 30 days if the problem has not been rectified. Alternatively, SEMCO could pay them $20,000 in consulting fees and the problem will go away. SEMCO decided to blow the whistle. Armed with the names of the two men and the last name of the ringleader (Rota) they went to see a high ranking official in the Mayor?s office. After discussing the problem the official duly summoned the leader of his team of corruption busters. ?Minutes later, a tall, white-haired man strode into the office. ?Ah here?s our man now,? the official said to us. ?Mr Semler and Mr Bojikian, I?d like you to meet Mr Rota.?

Ouch! The frequency of inspections increased after that, but the inspectors seemed more honest.

In 1989 a tax inspector came around to do a routine check, which usually lasted a couple of days. This guy was still there five months later. He then claimed he could fine them for $700,000. However, for $150,000 he was willing to let the problem go away. Eventually the inspector was caught in a sting operation that the police carried out on SEMCO?s premises. The inspector was jailed, but his superiors weren?t even questioned, despite being involved.

SEMCO paid a price for its honesty. Shipments were delayed, trucks were stopped more frequently at border posts and life in general was made more difficult. However, SEMCO deems it easier to stick to the straight and narrow.

Chapter 29: Thinking for a living

Three SEMCO employees were known as the Nucleus of Technological Innovation (NTI). They came up with the idea of taking a small team of people who was familiar with the culture, systems and products of SEMCO and set them free. When removed from day to day activities they would be free to think. Free to think about strategy, new product design, production efficiencies, etc. SEMCO agreed, but five ground rules were established.

Members would not have a boss.

They could not hire subordinates.

They were free to set their own schedules, job descriptions and pretty much do exactly as they pleased.

They would report their activities twice a year to the Partners, at which time the latter would decide whether they could keep their jobs for another six months.

They would continue to receive a salary, although it would be less than what they are currently receiving. However, they could share in the proceeds of new products, savings of cost reductions and they could consult to anyone outside SEMCO.

At first the trio turned out to be a nuisance to everybody else, since they stuck their noses into everything. Eventually things turned around and NIT became a huge success. It even spun of an independent business unit, SEMCO Environmental Resources, which employed 25 professionals and 40 biologists.

A junior version of NIT was also established. A graduate would roam SEMCO for 1 year. During this year the graduate has to work in at least 12 departments and try to generate enough revenue to cover his or her salary. After the year the graduate is free to try and negotiate a more permanent arrangement with any of the departments he or she worked for.

Chapter 30: Rise and Shine

?Brazil has only one trustworthy boss, Ricardo Semler and SEMCO? ? Vecentinho Da Silva (SEMCO committee leader and member of The Workers Party)

In 1988 SEMCO gave flexitime a try. It thought that it was unreasonable to expect everybody to hit the factory at exactly the same time. Workers should be paid for results and not for their time. Also, why can a father not have breakfast with his kids and see them off to school so long as the work gets done. The major obstacle was distrust from the workers, who just thought this to good to be true. Eventually they did give it a try and found that it work great. Some of the workers came in earlier and were early to catch the train at a time when it was nearly empty. In Sao Paolo with 15m in 1988, this does not happen often. Some came in later. One guy, a welder, came in at 4h30 and was told to please come in later. The system was not easy to implement, because the logistics of a plant plays a big role in the flexibility that it allows. Nevertheless, in the end it worked out very well.

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

Mr. B

(20.53%/6.5)

mail_mrb@yahoo.com

Posted: 2003/12/04 16:58 View Archive