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Maverick: The Success Story Behind the World's Most Unusual Workplace

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Shortly after Ricardo Semler took over Semco, his family's moribund manufacturing business, employees began referring to him as Dr. Dickie. In the context of a hardened and confrontational union work environment, this nickname signaled the changes that were about to come.

Maverick tells the story of the transformation of Semco into a radical and high performing organization.

Here's a sampling of Dr. Dickie's good ideas...

* Make each business unit small enough so that those involved understand everything that is going on and can influence the outcomes.

* Implement a rounded pyramid organization structure with floating coordinators. Coordinators are the only supervisory level and are all at the same organizational level but different pay rates.

* Demonstrate trust by eliminating symbols of corporate oppression as well as the perks of status.

* Share all information and eliminate secrets. You can't expect involvement to flourish without an abundance of information available to all employees.

* Every six months bosses are evaluated by their subordinates and the results are posted.

* Salaries are public information unless the employee requests that they not be published.

* Allow employees to set their own salary. Consider these criteria: what they think they can make elsewhere; what others with similar skills and responsibilities make in the Company; what friends with similar backgrounds make; how much they need to live on.

* Share 23% of pretax profits. Employees vote how the pool will be split. They must vote to determine the manner of each quarterly distribution. In practice they always vote for equal dollar shares.

* Substitute the survival manual for thick procedure manuals. Eliminate policies and rules wherever possible.

* Job rotation; 20% of managers shift jobs each year.

* Set up workers in their own businesses as suppliers to the company.

* Eliminate the wearing of wristwatches whenever and wherever possible. It is impossible to understand life in all its hugeness and complexity if one is constantly consulting a minute counter.

* Either you can create complex systems so as to manage complexity, or you can simplify everything.

My company used Maverick as assigned reading for a management retreat some years ago. The result was a change of direction that it's hard to imagine would have been arrived at otherwise. Highly recommended for those open to having their organizational paradigms shifted.

Semler recounts the evolution of his family's company, Semco, from being a paternalistic, strictly hierarchical one, when he takes over the reins from his father, to a company like no other.

The book reads like an autobiography, and it is, but only with the focus on the transformation of Semco and how Semler and his colleagues evolved through it. The reader is escorted through the many gestation periods of Semler's organizational theories. It's an amazing trip that you can hardly believe took place.

Instead of paraphrasing Semler here I want to use a pretty long quote from one of the last pages of the book. There Semler has such a succinct description of his core theories and the way he put them into practice that I feel his words summarize the plot of this book far better than I ever could:

"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. In other words, the successful companies will be the ones that put quality of life first. Do this and the rest - quality of product, productivity of workers, profits for all - will follow. At Semco we did away with strictures that dictate the "hows" and created fertile soil for differences. We gave people an opportunity to test, question, and disagree. We let them determine their own futures. We let them come and go as they wanted, work at home if they wished, set their own salaries, choose their own bosses. We let them change their minds and ours, prove us wrong when we are wrong, make us humbler. Such a system relishes change, which is the only antidote to the corporate brainwashing that has consigned giant businesses with brilliant pasts to uncertain futures."

I truly enjoyed every page of this book and I highly recommend it.

Maverick, written by Ricardo Semler, is one of the most powerful and inspiring books I've ever read. It takes the idea of participative management to new levels and demonstrates, through the evolution of his company, Semco, that a completely new way of working is possible, a way in which workers decide when and where they work, who gets hired, and how much they get paid. And it gives a vivid account of Semco's story so that we see the way of life and hear the voices of the people who created it.

Clearly, the ideas in the book didn't come out of a vacuum. Semler read and studied widely, building on the ideas of people like Robert Townsend and Peter Drucker. But he has elaborated and improvised on those ideas to create an entirely unique, collaborative work culture at Semco in São Paulo, Brazil, that he has then sustained over a period of 25 years. Astonishing!

Semler inspired me to look at some of his sources like Robert Townsend's 1970 book, "Up the Organization," a similarly contrarian and original creation. Semler shares a kindred spirit with Townsend and his book is just as entertaining, and as concise and full of important ideas about governance and leadership. Townsend calls his style of management "Participative Management" and puts into practice many of the principles from Douglas McGregor's Theory Y (as proposed in his 1960 book, Human Side of Management). But whereas Townsend simply orders his ideas alphabetically, Semler's book is organized chronologically. Each of its thirty six chapters tells a story from the history of Semco, and each contains at least one important lesson. At the end of the book, as if in homage to Townsend, Semler encapsulates all his key ideas in what he calls his ABC's, which includes an alphabetic glossary of management ideas, as well as his ideas for time management and his "Survival Manual," which is given to new hires at Semco and contains just twenty-one cartoons illustrating its governing principles -- amplified by just one or two sentences -- that constitute Semco's only policy manual or rule book.

Just to give you a flavor of "Maverick", here is the story from one chapter, in which Semco gives up control to energize the workforce.

<em>"By the middle of 1984 we were...ready to buy another company," starts Semler. "Hobart Brazil's Ipiranga plant, near São Paulo, had a long but less than glorious legacy, endured by a weary band of employees, some of whom had invested as many as forty-five years there."

Some months after the acquisition, Fernando Lotamorro, who was Semco's executive in charge of operations, became convinced that the Hobart plant lacked organization, ambition, and controls and insisted that some action should be taken.

As Semler relates, "Clovis [Bojikian] and I discussed it often and, in the end, agreed with Fernando. We were worried about his hard-edged style and lack of experience as a general manager. But Fernando had the aggressive personality that we then believed a successful business required, especially one in a slump."

"Fernando changed everything about the Hobart plant in his first few months...I would soon have cause to wonder whether all this movement was taking it in the right direction. We thought we were more organized, more professional, more disciplined, more efficient. So, we asked ourselves with a shudder, how come our deliveries were constantly late?"

Semler became dissatisfied with the way things were going and says in the book, "During this time I often thought of a business parable I had heard. Three stone cutters were asked about their jobs. The first said he was paid to cut stones. The second replied that he used special techniques to shape stones in an exceptional way, and proceeded to demonstrate his skills. The third stone cutter just smiled and said, "I build cathedrals." This story, which is probably centuries-old, seemed to be a catalyst for a deep change in Semler's behavior.

"I was particularly distressed by the malaise that was all too apparent in our factories, both old and new. Workers just didn't seem to care."

Semler decided that he needed to take over Hobart and show that "improved performance and touchie-feelie style were not mutually exclusive." So he fired Fernando and took over the job of running Hobart.

"Every few weeks the Hobart plant's managers would spend a lunch hour talking to the workers, who would gather in the cafeteria, 200 strong, and talk about anything on their minds. No subject was taboo -- salaries, profits, new products, hiring and firing policies were all fair game...Everyone could be a cathedral builder."

"The pot soon began to boil and before long the old Hobart plant was unrecognizable...Workers who had for years -- even decades -- reported to the plant and promptly turned their minds off became full-fledged industrial citizens, making decisions not only about their jobs but also about the products they were making and indeed about their company." </em>

With its new philosophies and policies, Semco had one of the highest growth rates in Brazil and Semco became No. 1 or No. 2 in each of its markets. The Hobart plant became successful with Hobart scales going from 3 percent of the market to 23 percent in three years, despite many strong competitors, but it had to face many crises, and this was just one of the stories and one of the transformations that it underwent.

The concept of participative management and trust in employees is central to Semler's achievement. This is hard work and Semler is critical of other managers who pretend to this philosophy while failing to fully embrace it: "What people call participative management is usually just consultative management. There's nothing new to that. Managers have been consulting employees for centuries. How progressive do you have to be, after all, to ask someone else's opinion?...It's only when the bosses give up the decision making and let their employees govern themselves that the possibility exists for a business jointly managed by workers and executives. And that is true participative management as opposed to merely paying lip service to it."

Semler has not rested on his achievements at Semco, going on to work on environmental issues and founding the Lumiar International School, a progressive school that serves all segments of São Paulo society.

Larry Fisher, writing in the Winter 2005 issue of strategy + business magazine, is respectful, but expresses some skepticism that Semler's ideas would work elsewhere, giving doubting quotes from Warren Bennis and Charles Handy: "I just wish that more people believed him," laments Charles Handy, the British management guru and social philosopher. "Admiring though many are, few have tried to copy him. The way he works -- letting his employees choose what they do, where and when they do it, and even how they get paid -- is too upside-down for most managers. But it certainly seems to work for Ricardo."

True, the model is idealistic, but it is no easier to apply in Brazil than in America. Robert Townsend, back in the 1960s, made participative management work at Avis -- and Dennis Bakke was similarly successful at AES in the 1980s. In fact, it seems to me that there is an inevitable movement towards participative management and democratic practices in the workplace simply because it consistently produces better results than more traditional autocratic styles of management.

Nor should people make the mistake of thinking that participative management is necessarily a worker's paradise, or that the workers at Semco have it easy. This model can only work if it motivates people to perform at very high levels. This happens at Semco because workers have to compete in a global marketplace and there is zero tolerance for low performance. As Semler puts it, "The pressure is greater at Semco because we truly believe in the market. We don't protect anybody from the vicissitudes of the business cycle or the crazy Brazilian economy. This is not for everybody."

Semler is ahead of his time. His ideas are consistent with the needs of the future. Eventually, they will not seem as radical as they do today. (See, for example, Drucker's "Management Challenges for the 21st Century," written in 2001, which argues that management will need to change radically to accommodate changes in society and particularly the aging populations of the world.)

In conclusion, this is a book full of profound lessons about how people can be motivated to work together in an organization and how the productivity that is hidden inside each of us can be unleashed. It reaches both to an organizational level -- making us question common business assumptions -- and to a deep personal level -- making us question whether we are doing enough to create meaning in our work lives. Semler points a way to a better workplace and ultimately a better life.

Graham Lawes

From 1992 to 1994, I suffered much to work under a rigid framework of Japanese multinationl. It is this book that change my life. End September 1994, I found out Semler's book in a book store in Tokyo, and I am intuitively sure that it should work. Then,I was assigned to work in Ivory Coast in West Africa. I decided to experiment his model in Africa to see whether his method works. Result. It really works! I delegated all the power to decision making to the staffs who is closest to the environment. Thus, the problem of alignment was easily solved. Not only the organization start working effectively without my hard efforts, but also the motivation of all the staffs skyrocketed. Even some of the staffs who could not read and write, decided to go to school to learn read and write (it is a history in Africa). These staffs also became a proactive staffs by talking on behalf of the language of the organization. The key message of Semler is to freeing everybody from the traditional management by rigid control associated with extrinsic reward system to self control with self ethical value associated with intrinsic reward. In this way he succeeded to skyrocket the motivation of staffs and let them work to search the right direction. Thus, the company could encourage the staffs to continously adapt to the perpertually changing environment. It is an excellent fieldbook to transform a mechanistic organization to an organic and learning organization, which is the key of the success in today's business environment.

Maverick has a good claim to must read status for those interested in modern management in that it is probably the best exposition of a democratic workplace in successful practice. As both the story of a company and the autobiography of a unique business leader, it is of interest in various ways.

Semler's account of how he arrived at Semco's democratic organizational culture is a fascinating case of personal growth. Some readers, however, may be less interested in "how I got there" and some of the Brazilian background than in its account what Semco has actually achieved in workplace governance. In this respect, Maverick is a seminal book, because Semco's management style is so unusual. Just reading about it is a liberating experience!

As to practical application, the book has some very readable sections such as the excerpts from the famous Semco operating manual, its glossary (which has "valuably eccentric" ideas), and a test for employees to rate supervisors. These sections give a very good introduction to empowerment and workplace democracy that can be read usefully anybody.

Put Maverick's operating philosophy together with Tom Peter's reinventing work ideas (most particularly in his The Circle of Innovation). Then, add in some Greenleaf servant leadership and combine with some shared vision (a la Chapter 11 of Senge's Fifth Discipline). You then have an excellent recipe for best practice 21st century management. More books like this showing in detail how advanced ideas actually have been successfully implemented in the workplace are very much needed.

As a management consultant I found this book very useful indeed - much of it is directly applicable to shop-floor and pressure-politics situations - the 20-page cartoon "rulebook" at the end is more than worth the price of the book itself - buy it! And if you have the guts, apply what it says, too: It's been known for some time that organizations are designed according to "command and control" principles that very poorly match how humans are really built to behave. More complex self-ordering behavior is always observed when any lack of hierarchy exists, and the hierarchies that do emerge tend to be more effective than those that were designed by managers with experience in previous eras. Semler just chose to trust it more than, say, Tom Peters. Prof. Nicholson, head of London Business School recently wrote (in the Harvard Business Review) that Semler's model was the only one to really respect "stone age nature" of human behavior (the many insights from evolutionary psychology that tell us that we're far more often feeling our way through decisions than thinking our way through).

Workplace democracy is not an "experiment" nor a threat to productivity, it's a working fact in a hundred mature industries in a dozen countries - we have applied Semler's principles to systems integration, software development, finance, etc., and his experience is well worth spending a few hours on.

This is one of the finest gifts I have ever received in my life, and from one of the finest gentlemen I have known so far!

A wonderful book to read and an insightful journey into the entrepreneurial experience of a man who is not only a good leader but a wonderful human being too - Ricardo Semler. It is really difficult to carry business and personal life on the same track and yet not mix them together. This was exactly what Mr. Semler has done to his business making sure his employees get benefited too.

There are a lot of multinationals working somewhat on the thoughts and ideas of Mr. Semler but no company achieved the status that Semco enjoys. A company where all human values are respected, where workers are not questioned, where there are no set times to enter office, where there are no dress codes, where employees decide there own salaries, where adults are treated like adults and given the respect they deserve - that is what Semco is all about.

There are unions of workers almost in all organizations - and they are in Semco too, but with a difference. The rules set for unions are absolutely humanistic and makes sure that the decisions of Unions are respected too. This we see in action when the union goes on strike. The rules Semco follows are somewhat different from other companies. These are as follows: -

1. Treats everyone as adults 2. Tell the strikers that no one will be punished when they return to work. Then don't punish anyone. 3. Don't keep records of who came to work and who led the walkout. 4. Never call the police or try to break up a picket line. 5. Maintain all benefits. 6. Don't block worker's access to the factory, or the access of union representatives to the workers. But insist that union leaders respect the decision of those who want to work, just as the company respects the decision of those who don't. 7. Don't fire anyone during or after the strike, but make everyone see that a walkout is an act of aggressiveness.

This is just one example - there are a lot of other things, which makes Semco a real Masterpiece. Semco is a smorgasbord that signifies all possible qualities of a successful business with complete humane values incorporated in its decision-making.

I would suggest this book to every senior personnel in any industrial set-up, to every entrepreneur, to every management student, and to all those who love to read real management and successful stories.

This is in deed a great book and I would suggest it as a must read for even those who are not related to business, because it also teaches the humanistic side of any company whatsoever the business conditions are.

A must read for anybody who loves to read.

Happy reading!

Semler's book "Maverick" is perhaps the most inspirational book that I have ever read. I am a student of commerce at Canterbury University of Christchurch and Semler's ability to question the very makeup of standard business practise is commendable. What is most incredible is that the book is not a fictional work of a business scholar spouting theory but no practise, but instead an account of what Semler himself has accomplished. This work is a must for any business person, team leader, or entrepreneur seeking a successful and meaningful career. Many ideas that Semler produces are as obvious as they are brilliant, it would appear the answers were so simple yet it took for someone like Semler to point them out. A truly memorable writing achievement from an incredible man.

i read this book & gave to the CEO of our Company, who, fortunately agreed with the philosophy & attempted to implement the same, with remarkable success. If all CEO's implement at least 5% of the philosophy explained by Semler, the workplace would be a transformed home, with high energy levels at work! Internal talents would no longer be wasted, buzzwords of management gurus would be meaningless! May the maverick tribe increase in the world.

Maverick is an engaging account of the radical transformation at the Brazilian company Semco over a period of 13 years. Written by Ricardo Semler who took over from his father when he was just 21, the book brings about the best of corporate democracy, empowerment, teamwork and ownership.

Semco is a manufacturer of marine pumps when the economy in Brazil nosedives in the 80s. Noticing that his prodding of the top management is not yielding results, Semler fires over 60% of them on a single day. He then embarks on a journey that all of us are familiar with, viz. discipline, controls, rigor, cost centers and budget trackers. He also buys companies that manufacture marine and food services equipment. All of this gets Semco out of trouble & makes Semler happy; but it bothers him no end that workers still don't trust the management & Semco continues to be late on its deliveries.

The causes the first phase of transformation. By focusing on the work environment he wants to create, Semler brings changes at the most obvious level to communicate that employees are trusted. Semco stops frisking them when they leave. It asks its workers to decide the color of the uniforms (horrified managers complain to Semler that bright orange may be chosen; he is prepared, but workers choose petroleum-blue). Employees are allowed to paint their areas (this sometimes results in garish hues) and cubicle walls are replaced with plants.

Such steps lead into the next critical phase where all decision-making is now taken only by committees comprising relevant stakeholders. Does it result in long winding discussions where nothing is decided for ages? Yes. Does it cause immense grief since all information is now open? Oh yes. Over time however, workers and managers realize that this is their company and their decision, and the wheels slowly start turning.

Manufacturing cells replace traditional assembly lines. Workers determine areas of improvement. Economies of scale are thrown out in favor of optimal unit sizes. Sounds like kaizen so far? Sure - and here's more. Rules around travel, and eventually the entire rule book, are discarded. Employees are taught to read the balance sheet. There are no restrictions in speaking to the press. There are two open seats in board meetings for employees to sign up. Bonus payouts are distributed equally to all, meaning that the factory cleaner gets the same amount as an executive. Managers are reviewed every 6 months by their teams, and the results are posted openly. Salaries of managers are encouraged to be made public, and eventually they determine their pay hike. (This is not idealism as one would think. Since salaries are public, there is a strong incentive on the part of managers to be rational when it comes to choosing their hike.)

The final phase of transformation is completed when all hell breaks loose in Brazil. The country goes into a deep recession for two years. As everyone concludes that layoffs are inevitable, Ricardo Semler does his final act. He retains all functions such as design, engineering and assembly within Semco and outsources everything else to employees he plans to fire. Semco even leases them equipment so that capital costs for the subcontractors are minimized. The result is a larger pool of entrepreneurs and, hopefully over time, more Semcos.

Every book leaves the reader with something to marvel and ponder. This is what will get me thinking next. The traditional organizational pyramid has been built on the foundations of complexity and the need for control that came with the industrial revolution. But in Semco there are no controls & hence no pyramids. There are instead concentric circles. At the center are the Counselors who coordinate strategies & policies, and who typically are the equivalent of vice-presidents. The second circle are Partners who lead the business units. The last circle are Associates that includes everyone else. And floating somewhere are the Coordinators who perform the basic leadership roles at the unit level. This results in greater fluidity, job enrichment & above all, lasting peace since it is perfectly fine for Associates to earn more than the Coordinators. Semler posits that man has always adopted the four-layered organization from the time he was a hunter. The one who spotted the mammoth first was the Spotter. The one who ran the fastest behind it was the Runner. The one who threw the spear most accurately was the Marksman. And the one who managed to lead became the Chief.

And yes - individuals are free to print any title in their business cards that best describes their position. Semco does not interfere. Even if, as Semler says, the title is something fancy like the First Pharaoh in Charge of Royal Supplies.

Amen to a new way of working.