Tag Archives: Ricardo Semler

Zappos Goes Democratic

An article by Jena McGregor In her column, “On Leadership,” appeared in the Washington Post today on Brian Robertson’s contract with Zappo’s, “Zappos Says Goodbye to Bosses.” Zappos is owned by Amazon but runs independently and has long been known for its unusual employee-responsive culture.

The unusual approach is called a “holacracy.” Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.

John Bunch, Zappos “As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability,” says Zappos’s John Bunch, who is leading the transition.

The article is not particularly clear in explaining holacracy and doesn’t make the connection to sociocracy or other egalitarian organizational methods like Ackoff’s circular organization or  Semler’s round pyramid. McGregor is also confusing when explaining the change from “managers” to “lead-links.” Holacracy’s lead-links are described very much like managers. No mention of policy setting by all members of the circle to guide the actions of the lead-link.

The article reports that “Twitter cofounder Evan Williams uses it at his new company, Medium, and time management guru David Allen uses it run his firm — but Zappos is by far the largest company to adopt the idea.”

Robertson began his first company, Ternary Software in Exton PA, in 2001 based on the unique model of forming partnerships with many of the companies for which it developed software. This gave Ternary a vested interest in the performance of the software they designed and allowed promising but still developing companies to access to quality software. In 2006 and 2007, Robertson published two articles on his use of sociocracy at Ternary: “The Sociocratic Method,” in the 2006 strategy+business issue of Booz Allen Hamilton’s internal newsletter,  and in 2007 in the Wall Street Journal, “Can a Company Be Run as a Democracy?”.

On Transparency

Photo of Ricardo SemlerNo one can expect the spirit of involvement and partnership to flourish without an abundance of information available even to the most humble employee. I know all the arguments against a policy of full disclosure. … But the advantages of openness and truthfulness far outweigh the disadvantages. And a company that doesn’t share information when times are good loses the right to request solidarity and concessions when they aren’t.

Ricardo Semler

 Quotation on one value of transparency is from Maverick (1993, p. 136). Maverick was originally published in Portuguese as Turning the Tables in 1988.

Full Disclosure

No one can expect the spirit of involvement and partnership to flourish without an abundance of information available even to the most humble employee. I know all the arguments against a policy of full disclosure. … But the advantages of openness and truthfulness far outweigh the disadvantages. And a company that doesn’t share information when times are good loses the right to request solidarity and concessions when they aren’t.

Ricardo Semler in Maverick, 1993, p. 136.

Maverick was originally published in Portuguese as Turning the Tables in 1988.

Democracy Is a Lot of Work

Democracy is a lot of work, I kept telling myself and anyone else who would listen. It needs to be exercised with conviction and without subterfuge or exception. And it begins with the little things, like neckties, time clocks, parking spaces, and petroleum blue uniforms.

Ricardo Semler in Maverick, 1993, p. 136.

Maverick was originally published in Portuguese as Turning the Tables in 1988.

Maverick by Riccardo Semler

This is a wonderful little book by the CEO of Semco, a corporation in Brazil. His father started the company and in 1980s passed it along to his rather young son who built a new kind of corporation using “open management” and advocating a “natural” and “democratic” workplace for “industrial citizens.”

In 1984, Semco acquired a Brazilian subsidiary of Hobart and Semler describes how he began changing the structure of management. It began with lunch hour talks between the managers and workers that convinced the managers the workers should be more involved in decisions about their jobs, the products they made, and their work environment. The women, for example, led a coup that not only got the smelly men’s locker room cleaned up but led to new lockers and the conversion of unused production space to a game room used at lunch and on breaks. Plants appeared on the shop floor the way they appeared in personal offices. Workers began to paint the shop, each worker choosing the color of the column nearest their station.

They formed a cafeteria committee to improve the world’s worst food “outside an institution without bars.” Then they changed the company policy of paying 70% of the cost of lunches to a sliding scale with top management paying 95% and the lowest paid floor sweepers paying only 5%. Workers share 22% of the profits.

From dirty lockers, plants, paint, and lunch subsidies, workers formed committees and began looking at production and products improving processes, safety, and economics as they developed new products, techniques, and finishes. All worker initiated, often on their own time. Semler says the strength of the groups was their diversity: factory workers, engineers, office clerks, sales reps, and executives. The leaders were chosen by the committees based on their capacity to lead — calling meetings and leading discussions.

The workers themselves established and posted scoreboards above the factory floor to keep track of daily production for each product. When their self-determined quotas were in danger because parts had not been delivered the workers travelled to the suppliers to pick up supplies and worked through the night to finish before the end of the month.

Maverick is filled with such stories in which the workers are empowered and once empowered increased production by developing better processes and increased sales and profits by designing better products. All are inspiring and useful in making arguments for changing your workplace. This book was an all time best seller in Brazil when it was published there in 1988 as Turning the Tables. Semler was then 34. This is not a book about business; it is a book about work.

Maverick: The Success Story Behind the World’s Most Unusual Workplace by Ricardo Semler. NY: Tableturn, 1990. Buy the paperback from 1995 at Amazon

The later and similar book is The Seven-Day Weekend: Changing the Way We Work published in 2004 when he was a visiting scholar at Harvard. This book is less specific in giving examples and more motivational, encouraging people to think the way Semco management thinks in order to find the best solutions for their organization. In the end, I find this approach to be less useful. Feels good but what do I do on Monday morning? Available Used at Amazon