Can we have a Semco for the poor and lazy, please?

Crises make people think. On the whole, we are a rather lazy species and we prefer to only change if we really have to. And so, the current financial crisis makes us think just a bit more deeply about how we organize our working lives. A topic right up the ally of the makers of the Dutch TV program ‘Tegenlicht’, which revolves around in-depth investigative journalism of societal issues. They produced a collection of inspiring documentaries, one of which featuring the promising miracle of social innovation called Semco, headed by the charismatic visionary Ricardo Semler. You can view it here (it’s in Dutch though).

What I picked up from the documentary is this: Semco is great (hallelujah) because it (allegedly) completely breaks with the classic way of organizing labor. That is, instead of having a boss that tells people what to do and how to do it, Semler expects his people to find out for themselves what they like to do best. He also expects them to form a sort of micro-society that caters to a wide range of needs not directly related to Semco’s operations, including recreation and education. Semco employees – or perhaps ’employees’ is too narrow a term, let’s call these people ‘Semconians’ – are even allowed and encouraged to recruit their peers.

To make this micro-society work, Semconians are also required to perform a wide range of tasks. If you are a technician responsible for maintenance of the technical infrastructure of buildings, you may also find yourself making the beds of the hotel that occupies those buildings. It’s a small sacrifice of living in this Semtopia; or the variation in work is one of the primary reasons why Semco is so attractive – it all depends on how you look at it.

An inspiring documentary about a slightly eccentric, wildly successful and ostensibly charismatic entrepreneur. Semler definitely seems to have a vision that is very friendly towards both his wallet and his fellow human beings, as laid down in the business principles of Semco. This brings the question: could the success of Semco be expanded and replicated all over the world? In pondering about that question, two thoughts popped into my mind and I just couldn’t shake them off. I still can’t, after a bit of desk research. The first one is about the financial success of Semco. Semler certainly seems to be a rich man, but we just don’t know how well his socially innovative business performs. The second one is about good people selecting other good people to become their peers. Which is nice for the good people, but it leaves you with the problem of the…not so good people.

Somewhere in the interview with Semler, passingly mentions something very significant: his bio-ethanol is thriving. Semco’s shareholders (i.e.: Ricardo Semler) have 35% ownership of bio-ethanol giant Odebrecht Agroindustrial (formerly known as ETH Bioenergia). This is currently a business with an annual revenue of roughly $1 billion. It would be nice to have more specific figures on turnover, ownership and profitability, but the inconvenient fact is that Semco and Odebrecht Agroindustrial are privately owned companies. It is therefore unclear to what extent the Semco social experiment is fueled with the profits from the bio-ethanol business mentioned above.

Not that it matters that much that Semco could be partly dependent on a cash flow from another business – there’s nothing wrong with feeding one promising business with the proceeds from another. But it would be interesting to see just how well Semco is really doing. I’d like to say ‘hallelujah’, but I’d also like to know how loudly. Depending on the gritty figures, I could start to form an opinion about the ethical ins and outs of cultivating and fermenting large amounts of sugar cane in Brasil, but possibly also Angola and Mozambique and using the profits to fuel a social experiment in Brasil.

The other issue I keep wondering about is the system of Semconians selecting and hiring their peers. The rationale behind this system seems to be the following: you start out with a bunch of good people. I.e. people with a set of values and ethics that you (as a socially acceptable entrepreneur) think are right. In the case of Semler, he seems to favor motivated, creative people who are on the constant lookout of interesting business opportunities and who are keen to support their community by doing all sorts of work. And since I heard Semler say that his Semco-based village does not feature substantial law enforcement, I assume that one of the requirements is also that Semconians do not steal, perform acts of vandalism, get involved in drunken fights, rob their neighbors of their sleep by playing loud music at night, etc. In other words: they seem to be not only perfect employees, but also perfect citizens.

Step two in the process is to let these perfect Semconians select other Semconians. They will apply the (high) standards that they themselves meet to their to-be-hired peers. That way, you ensure that these superior business ethics and societal standards become commonplace. Among your own population of Semconians, that is. Because obviously, thieving, foul-mouthed, lazy bastards won’t be part of the populace. Who would hire them?

Yet, society teems with people who make less than perfect employees and neighbors. And not all of them belong in jail. What about the operator who just wants to do his job (which he doesn’t really like that much, but it pays the bills) and then go home and dedicate the rest of his time to his family and hobbies? To me, he seems to be unfit for Semco. Not creative and motivated enough. Not likely enough to volunteer as a referee during the schoolkids’ football match. But does that make him (or her) unfit for living in a community with other people, some better and some worse than him (or her)?

I know I’m exaggerating a bit, but the Semco way does come down to this, in essence: they let perfect employees select perfect colleagues, and they then put them into perfect towns that make perfect societies and perfect businesses (hopefully). If we scale that practice up, will that yield a perfect world? I don’t think so. Like I said, many people aren’t perfect. Will they then end up being not selected? Where will they live? Will there be slums of non-perfect people and walled (gotta keep out the bastards!) Semconian communities? It’s a bit like the example of life insurance sometimes used to illustrate the mechanism of adverse selection. You end up with a population with insurance and high mortality due to lifestyle choices, paying insanely high premiums, and a population without insurance and good health/low mortality.

I know I sound like a pessimist, when I mention the above two issues in association with the Semler approach. The truth is, I’d really like to believe his approach works. Somehow, I actually do believe it. I just hope that somewhere, someone has done the work that shows that this socially aware and economically viable way of doing business isn’t just reserved for that one group of people that needs it the least: those with the funds to invest in ventures as well as the commendable social and work ethics that would make just about any venture successful.

We might need a Semco that works for the poor and (relatively) lazy too. Semler should be appealed by this. Even though he certainly isn’t poor, he openly admits to starting every day by seeing which tasks he can either skip or delegate to other people. Sounds pretty lazy to me.

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