Is it possible to run a company with no rules and total employee freedom?
I listened to a very interesting TED Talk recently. The speaker was Ricardo Semler who became CEO of his father’s Brazilian company, Semco, when he was only 21. Semler tried to reinvent his family-owned business by doing lots of management consulting type things. He broadened the portfolio by acquiring new businesses, and he fired all the old managers and brought in new ones who had very tough performance standards. It worked – for a while. But Semler didn’t think it was sustainable. Nobody liked working for the company, even him. It was too stressful.
So Semler did something really different – even crazy for the corporate status quo.
He got rid of all the rules and let the people take over. No set working hours. No project plans. Total transparency. People could decide what to do, how to do it, when to get it done by, and how much they should be paid. They even gave their managers performance reviews, not the other way around.
Amazingly, Semco became successful. It grew every year for 20 years, became a more profitable business, and the people were happy.
It seemed like a fairy tale to me. How could that possibly work?
Back in the real world
The closest I ever came to this kind of corporate democracy was when I start working for a family owned Greek tobacco company Papastratos back in 1999.
The leader of the company at the time was the Chairman of the Board. His family created the business since the beginning of the previous century.
The first time I met him, he asked me to see him at the factory at 7AM. In Europe, unless you are on a shift basis, no one at a sizable company goes to work before 8:30 at the earliest, so this was a big shock to me. Obviously, I couldn’t refuse.
I went over and we had a nice chat over a coffee. He was trying to onboard me in the new environment. He told me something amazing. All employees were encouraged to leave the office and go home around 4.30 or 5 PM because – he said – we want people to spend time with their families, go to theater, do sports, and other things that make life meaningful and interesting.
I had never heard of such a thing before! A company that wanted me to go to the theater and have a life?
But the leaders of Papastratos were different. They were well-respected in the community, and though they were very wealthy they lived simply and didn’t own fancy cars but did donate a lot of money to charity. My surprise went north when I saw a photo of team weddings. I was told that the owners in the post-World War II era encouraged marriages between employees and offered lucrative gifts – like small apartments for instance – to the brides and that the ceremonies actually took place in the yard of the factory. (I’ve have had this photo hanging in my office ever since). In other words, they really did care about their people and they ran their company in a very different way. The rules were less formal, but it did have a very strong culture and everyone knew what they had to do and what was right and wrong.
A paradise, right?
Papastratos was a genuinely caring company with a positive social agenda. But unlike Semco, it didn’t work.
The company was in decline by the time I got there because it didn’t truly innovate. The only ideas came from the top. The leader and founder would wake up with a new plan and everyone would work hard to make it happen, but the employees themselves had limited initiative. There were no attempts to think outside the box, change the operating system, understand evolving consumer needs better or try something really strategic and long shot.
I had my theories as to why. In a way, the family owners were too respected. If someone outside the company said something about them, the employees reacted instantly. But inside the company, employees didn’t challenge what leaders thought or did. Nobody wanted to rock the boat.
I think the company was also a victim of its own success. It was in a stable and profitable industry, and felt very little need to change and try out novelties. But this lack of agility and hunger hurt it badly when foreign companies with more aggressive strategies and better marketing showed up.
What would it take?
I’d like to see a company like that succeed. I think people respond well when they are empowered, creative, and driven. I just haven’t experienced a truly self-directed, self-regulated environment that worked.
I think simplicity would help. If the company was in a business that’s extremely straight-forward, and responsibilities were very clear, maybe it could reduce the need for oversight and planning, and just let people do their jobs.
There is another quite well known TED Talk by Yves Morieux on Smart Simplicity. I recently met Yves in Paris. If you listen to his speech, you can tell how passionate he is, but you have no idea how this comes through in reality. In fact, he is absolutely right.
But how many industries today are truly simple? Change and complexity are everywhere.
So I think the real answer to get a “Happy” yet Successful company is the Seamless Team. If you had teams of people within the company who were technically knowledgeable but incredibly close-knit, I think you could build a level of trust and collaboration that would enable the members to work together seamlessly and allow the leader to serve as more of a moderator or conductor than a manager. Hierarchies would not matter. Knowledge and expertise would make org charts irrelevant. People would “blog” and “tweet” to inform their colleagues on what they are up to. Collaboration, collective ownership, morning coffees, storytelling could replace some of the rigid processes, corporate presentations and complicated KPIs. Putting a person in a job, would be perceived as a life-time task not just another assignment.
I described this concept as “Love is in the Balance Sheet” in a previous article. In such a case, I think the leader’s role is to keep pushing people to come up with new ideas, to make it safe to try things and fail fast, and hopefully win big once in a while. You need a really strong culture to make that happen along with mature and skilful leaders, and people who really care about the success of the company and are creative and engaged in their work.
I don’t know many organizations working in such a manner. Corporate mythology refers to companies like Google and Amazon as possibly having created such a culture.
I like working this way with my teams. You?