Book review: Maverick by Ricardo Semler

There’s a reason for this being the first book review posted on my blog: this book should definitely be on the reading-list of every entrepreneur or manager. I think Ricardo Semler is a true visionary regarding organizational structure and I believe every company could learn from his practices.

In Maverick, Ricardo Semler tells the story of how he transformed the company he inherited from his father in the 1980’s. The Brazilian manufacturing company, Semco, had a (traditional) hierarchical structure when Ricardo took over the business from his father. The book describes how Ricardo started changing the organization into a circular structure where every employee knows what’s going on in the company and, more importantly, understands what their own role, responsibility and value is.

The following excerpt from the book describes the effect of bureaucracy in a company, especially with respect to innovation. From my own experience I can only say that I fully agree:

In their quest for law, order, stability, and predictability, corporations make rules for every conceivable contingency. Policy manuals are created with the idea that, if a company puts everything in writing, management will be more rational and objective. Standardizing methods and conduct will guide new employees and insure that the entire company has a single, cohesive image. And so it became accepted that large organizations could not function without hundreds or thousands or tens of thousands of rules.

Sounds sensible, right? And it works fine for an army or a prison system. But not, I believe, for a business. And certainly not for a business that wants people to think, innovate, and act as human beings whenever possible. All those rules cause employees to forget that a company needs to be creative and adaptive to survive. Rules slow it down…

With few exceptions, rules and regulations only serve to:
1. Divert attention from the company’s objective.
2. Provide a false sense of security for the executives.
3. Create work for bean counters.
4. Teach men to stone dinosaurs and start fire with sticks.

The desire for rules and the need for innovation are, I believe, incompatible…Rules freeze companies inside a glacier; innovation lets them ride sleighs over it…A turtle may live for hundreds of years because it is well protected by its shell, but it only moves forward when it sticks out its head.

I honestly believe that employees who are not bothered by corporate rules, policies and regulations will always be more productive, creative and motivated. Trust the people who are working for your company, give them responsibility and they will take the responsibility. Don’t know where to start? Here are some of Ricardo’s best-practices:

  • Make each business unit small enough so that those involved understand everything that is going on and can influence the outcomes.
  • Share all information and eliminate secrets. You can’t expect involvement to flourish without an abundance of information available to all employees.
  • 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.
  • Demonstrate trust by eliminating symbols of corporate oppression as well as the perks of status.

This is only a small part of all the ideas and practices you’ll come across while reading Maverick. I can definitely recommend it, provided that you’re not afraid to change your thoughts about how successful business should be organized.

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