Managing by Omission – Ricardo Semler @ MIT in 2005

Nick Webb pointed me at this recording of a presentation given by Ricardo Semler at MIT in 2005, when he had joined for a semester as a visiting lecturer.

Semler is the head of Semco SA, a Brazillian engineering company, and is most famous for his 2003 bestseller, “The Seven Day Weekend”.

Semler got into the meat of his presentation as he likened the corporate machine to a military outfit, pointing out how we use a common language – “mission”, “tactics” – and then positioning innovators as the guerillas in corporate warfare (he came quite close to the bone comparing a garage-startup to a subway bomber…). Mentioning Semco for the first time, he led into a discussion of how asking “Why?” or “What if?” questions is central to the way the company has worked out its methods of management; highlights included:

  • On the subject of budgets and forecasts: “pretending [we know where we are going] is more dangerous than realising where we are”. Budgets are put together in six-month intervals, not 5-year forecasts. 91% of companies aren’t even around in 4 years.
  • Meeting attendance is voluntary. If everyone leaves a meeting when the actions are being handed out, and there is no-one left to take the actions, maybe they shouldn’t be embarking on that project…
  • Work/life balance: the democratic workplace. Whilst we spend 60% of our time in the workplace, we seem to care little for the freedoms we strive for outside of the workplace. Even though we have calibrated ourselves to send emails on a Sunday night, how many of us are can go to the movies on a Monday afternoon? How many us feel that the former is normal and the latter unthinkable? We need to re-balance.
  • Picking leaders: Semco doesn’t hire leaders according to the standard process, which Semler likens to online dating – the company pretending to be Brad Pitt and the candidate pretending to be Angelina Jolie… and it often not working out afterwards. Leaders are hired for their ability, and then chosen by the workforce from a pool of the best candidates. Every 6 months, bosses are reviewed anonymously by the people working for them to see if things are working out.
  • Employees: people are hired in a variety of ways that suit them, and the company is still experimenting with this. People are encouraged to change their attitude to work from “doing what you think you ought to do into doing what you can in a way you’re comfortable with”. As an illustration, people don’t have their hours checked, they have their results checked. This approach has led to a very low 2% turnover in staff.

“Management by Omission” is Semler’s management style of “actively doing nothing”. This works because there are enough catalysts in the business, who feel empowered enough to make decisions from within. In 2003, he celebrated 10 years of not making a decision.