Ann: Appointment of New Chief Executive Officer, page-78

Am a huge supporter of Riccardo Semlers business style, which Spacetalk continues to exhibit..... we will all be winners ultimately...

Semco 1980–1990[edit]

Semler went to work for his father's company, originally called Semler & Company, then a mixer and agitator supplier inSão Paulo. Semler clashed with his father, Antonio Semler, who supported a traditional autocratic style of management whereas young Semler favoured a decentralised, participatory style. Furthermore, Ricardo favoured diversification away from the struggling shipbuilding industry, which his father opposed.

After heated clashes, the son threatened to leave the company. Rather than see this happen, Antonio Semler resigned as CEO and vested majority ownership in his son in 1980 when Ricardo was 21 years old. On his first day as CEO, Ricardo Semler fired sixty percent of all top managers. He began work on a diversification program to rescue the company. Semler experienced health issues, culminating in afaintingspell at a pump factory (Baldwinsville, New York) when he was 25. After seeing a doctor at theLahey Clinic(Boston), he was diagnosed with an advanced case of stress.^[3]This inspired him to want a greaterwork-life balancefor himself and his employees.

Attempts to introduce amatrix organisational structurein 1986 failed to achieve desired improvements.^[4]

In the late 1980s, three engineers at Semco proposed setting up a Nucleus of Technological Innovation (NTI) to develop new businesses and product lines which Semler endorsed. At the end of the first six months, NTI had identified 18 such opportunities. Following the success of this initiative, satellite units were encouraged throughout Semco. By the late 1980s, these satellite units accounted for two-thirds of its new products and two-thirds of its employees.

An assessment of Semler's business philosophy through phenomenological analysis (within the radical change of Semco's management style), led Bombała to conclude that it was an"...excellent exemplification of good leadership."^[5]Eleanor Glor notes that the only accounts about the change in management style come from Ricardo Semler himself, rather than from the affected workers.^[6]

Semco 1990–2004[edit]

After dramatic restrictions onliquidityinstituted by Brazilian presidentFernando Collor de Melloto combathyperinflationin 1990, theBrazilian economywent into a severe downturn, forcing many companies to declarebankruptcy. Workers at Semco agreed to wage cuts, providing their share of profits was increased to 39%, management salaries were cut by 40% and employees were given the right to approve every item of expenditure.

Performing multiple roles during the crisis gave workers greater knowledge of the operations and more suggestions on how to improve the business. Reforms implemented during that time led to 65% reduction in inventories, a marked reduction in product delivery times and a product defects rate that fell to less than 1%. As the business climate improved, Semco's revenues and profitability improved dramatically.

As of 2003, Semco had annual revenue of $212 million, up from $4 million in 1982 and $35 million in 1994, with an annual growth rate of up to 40 percent a year. It employed 3,000 workers in 2003, as opposed to 90 in 1982. The company's units include:

• The industrial machinery unit, which now manufactures mixing equipment as opposed to pumps
• Sembobac, a partnership withBaltimore Air Coolermaking cooling towers
• Cushman and Wakefield Semco, a partnership withRockefellerproperty companyCushman and Wakefieldmanaging properties inBrazilandLatin America
• Semco Johnson Controls, a partnership withJohnson Controls, managing large scale facilities such as airports and hospitals
• ERM, a partnership withEnvironmental Resources Management, one of the world's leading environmental consultants
• Semco Ventures, offering high technology and Internet services
• SemcoHR, a human resources management firm
• Semco-RGIS, an inventory control firm

As Semco grew, Ricardo Semler received a great deal of recognition. He was named Brazilian businessman of the year in 1990 and in 1992, and theWorld Economic Forumnamed him as one of the Global Leaders of Tomorrow. A high-profile committee appointed byCIO MagazinefeaturingTom Peters,Jim Champyand Michael Hammer selected Semco as one of the most successfully re-engineered companies in the world. TheBBCincluded Semco in its series onReengineering the Businessfor creating one of the most successful management structures in business.