After graduating from Harvard at the age 20, one of the school’s youngest-ever MBAgraduates, Ricardo Semler returned to Sao Paulo to work for his father. From his arrival, itwas clear that Ricardo’s organizational philosophy clashed with that held by his father. Theelder Semler firmly believed in autocratic, paternalistic control, as well as the inextricableconnection between personal and business matters. Ricardo advocated a more participatorymanagement style, as well as a strict separation of work and personal life. During the yearsthat followed, these differences in philosophy were a constant source of conflict. Both fa-ther and son began to realize that any eventual transfer of power would not represent acontinuation of the status quo.The Brazilian recession of the early 1980s hit Semler & Company particularly hard.At that time, the company derived 90% of its sales from shipbuilding products. The youngerSemler was convinced that the future success of the company hinged upon diversificationinto other product lines, but no one, least of all his father, was willing to listen. Because of Ricardo Semler’s dissatisfaction with both the management of the firm and its strategicdirection, he threatened to leave during his third year. Faced with this possibility, AntonioSemler retired as CEO and transferred majority ownership to his son. Ricardo Semler wasfinally in a position to implement his own managerial and strategic philosophy.
The Semco Era
The key to management is to get rid of the managers.The key to getting work done on time is to stop wearing a watch.The best way to invest corporate profits is to give them to the employees.The purpose of work is not to make money. The purpose of work is to make the workers,whether working stiffs or top executives, feel good about life.
On his first day as the new CEO, Ricardo Semler fired two-thirds of the top manage-ment of Semler & Company, many close friends of his father, and began plotting a productdiversification strategy for the newly renamed Semco.Semler worked long hours to save the faltering business and made some limited progressin his first year toward the eradication of the old Semler & Company organizational legacy.However, it was not until he fainted while touring a factory in the United States and wasdiagnosed with a severe case of stress that he decided to drastically change his lifestyle andthat of his employees. Semler had not yet postulated a strategic vision, but clearly perceived“a sense of lifelessness, a lack of enthusiasm, a malaise at Semco, and [knew] that [he] had tochange it...”During the years that followed, Semler dismantled the rigid management structureimposed by his father in favor of a more flexible organization based on three interdepen-dent core values: employee participation, profit sharing, and the free flow of information.
The Beginning of the Revolution.…
Semler firmly believed that
people desire to achieve excellence. He felt that autocracythwarted people’s motivation and creativity. He thus decided that the authority to makedecisions at Semco should be more evenly distributed.