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'..I believe in responsibility but not in pyramidal hierarchy .. the negative value of structure. Structure creates hierarchy, and hierarchy creates constraint..'

Posted by ProjectC 
'As for planning and the control it presupposes, I think good planning is always situational. Thinking about the future is a useful, necessary exercise, but translating such conjecture into “Strategic Planning” is worse than useless. It’s an actual barrier to survival. Strategic planning leads us to make things happen that fly full in the face of reality and opportunity.'

'..I believe in responsibility but not in pyramidal hierarchy. I think that strategic planning and vision are often barriers to success. I dispute the value of growth. I don’t think a company’s success can be measured in numbers, since numbers ignore what the end user really thinks of the product and what the people who produce it really think of the company. I question the supremacy of talent, too much of which is as bad as too little. I’m not sure I believe that control is either expedient or desirable.

I don’t govern Semco—I own the capital, not the company—but on taking over from my father, I did try to reconstruct the company so that Semco could govern itself on the basis of three values: employee participation, profit sharing, and open information systems. We’ve introduced idiosyncratic features like factory-floor flextime, self-set salaries, a rotating CEO-ship, and, from top to bottom—from the owner to the newest, greenest maintenance person—only three levels of hierarchy.

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On the whole, as I say, our approach has worked. Loyalty is high, quality is excellent, and sales and profits are surprisingly good for a manufacturing company in one of the world’s most lunatic business environments..

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As for planning and the control it presupposes, I think good planning is always situational. Thinking about the future is a useful, necessary exercise, but translating such conjecture into “Strategic Planning” is worse than useless. It’s an actual barrier to survival. Strategic planning leads us to make things happen that fly full in the face of reality and opportunity.

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The lesson this story teaches me is about the negative value of structure. Structure creates hierarchy, and hierarchy creates constraint. We have not utterly abandoned all control, but the old pyramidal hierarchy is simply unable to make leaps of insight, technology, and innovation. Within their own industries, pyramidal hierarchies can generate only incremental change.

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What goes for planning goes equally for culture, vision, and responsibility. We find that fragmentation is strength in all these areas. Semco has no corporate credo, for example, and no mission statement. An articulation of company values or vision is just a photograph of the company as it is, or wants to be, at one given moment. Snapshots of this kind seem to hold some companies together, but they are terribly static devices. No one can impose corporate consciousness from above. It moves and shifts with every day and every worker. Like planning, vision at its best is dynamic and dispersed.

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The point is simple but perhaps not obvious. Semco has abandoned a great many traditional business practices. Instead, we use minimal hierarchies, ad hoc structures, self-control, and the discipline of our own community marketplace of jobs and responsibilities to achieve high-quality, on-time performance. Does it make me feel that I have given up power and governance? You bet it does. But do I have more sleepless nights than the manufacturer who runs his business with an iron hand and whose employees leave their troubles in his lap every night? I think I probably sleep better. I know I sleep well.'

- Ricardo Semler, Why My Former Employees Still Work for Me, January 1994


Context

'..You really have to be able to think about the post-bureaucratic world..'

(Management innovation) - The End of Management and the Rise of Organizational Democracy