A CEO-less company?
As a long-time consumer of IH, I want to say thank you to everyone who’s built this community through their posts and comments. 🙏🙏🙏🙏🙏 This is one of my favorite places on the internet!
I’ve always been interested in how companies are structured and why they’re structured that way. This interest got a shot in the arm when I started working in SAAS.
At my first company, I began to bristle at how employees were being treated and how my company wanted SO MUCH CONTROL while offering so little trust. They had a strict ‘no work from home' policy and insisted on specific work hours regardless of time zones. 15-minute lunches were the expectation and we were required to clock in when entering the office.
It got so bad that we even had to go to the bathroom at specific times. Yes, I’m not making that up. 😬 🚽
Equally frustrating was having no voice in the company. I kept begging for us to start using channel partners as a way to get our software in front of customers but instead, we plowed VC funding into our sales org to sell our low ARPU product. It wasn’t till after I left the company that the new CRO with industry connections began to implement this strategy.
I was genuinely confused about why we had to operate this way. It felt a lot like public school in the US, outdated and very paternalistic. Be quiet and do what you’re supposed to do.
Back in uni, I stumbled across the contrarian Ricardo Semler. After being appointed CEO of his father’s company Semco at the age of 21, he fired 60% of the company’s executives and over time instituted some radical changes to the company structure and culture. He replaced the traditional hierarchical model driven by executive decision-making with an “industrial democracy” that gave Semco employees an unprecedented amount of trust and control.
Changes included:
- No longer tracking employee work hours
- Flexibility to work at any of their offices
- Removing the dress code (innovative in the ‘80s)
- Allowing employees to decorate the office (including painting and potting plants)
- Removing their org chart
- Requiring all employees to interview their boss before hiring
- Keeping two seats on the board of directors empty for anyone in the company to attend meetings and actually vote! They had cleaning ladies sitting in their board meetings and deciding policies
- Providing loans to employees for unforeseen situations
- Allowing employees to set their own salaries. They helped explain Semco’s P&L, what other employees were making, and provided salary benchmarks for the same role at different companies
Amid all these changes at Semco, the biggest transformation was the company culture shifting to individual empowerment. Each employee had more autonomy to improve the company so organic growth followed. Semco, originally a manufacturer of industrial marine pumps for the shipbuilding industry, expanded into multiple non-adjacent markets like industrial mixers and air conditioners because their employees saw opportunities. Under Semler, they survived a recession in Brazil (the employees decided who to lay off) and grew to 3,000 employees by 2003 with 212 million in revenue.
Semco adopted a lot of the practices we see in tech/startup culture today- no dress code, remote work, open startups, communal hiring, and benefits focused on employee’s personal lives. Yet one practice we’ve yet to see implemented is an organizational democracy. Autocratic leadership remains the default model.
The detail of the Semco story that is most remarkable to me is Semler eventually became redundant at his own company and stopped showing up to work (which in his words made his employees a lot happier). The company ran itself and did really well.
This is the crux of what I’ve been chewing on lately- what if a company didn’t have a CEO? Could a company operate autonomously driven by the collective decisions of its employees?
Imagine a 30-person SAAS company with two founders, neither taking the CEO role but operating as executives (CMO, CTO, etc.) The company is considering hiring either a sales or customer success rep. After sharing all of the data openly with the company (revenue, costs, etc.) and explaining the pros and cons, they put it to a vote either for all employees or to a committee.
Obviously not every choice needs to be voted on. Like at Semco, tactical decisions would be made by the employees while strategic decisions are acted on by the group.
But I’m wondering how different would a company be if it operated this way. Faster growth? High employee satisfaction? Slower decisions? Would they end up making the same decisions anyway?
Curious to hear your thoughts,
Probably a bit late to the party on this.
I loved Semlers ideas when I first studied them on a course, it felt like it was truly visionary in terms of what he was trying to achieve.
I've often thought about this for a the basis of a business.
The ideal would be that you would have less top down thinking, more rapid decision making and potentially quite innovative ideas.
A lot of this would ultimately hinge on the blend of people you have in the business, if you had a diverse set of people and skills and a democratic decision making structure this could work well.
The opposite of this, is a lot of power struggles as in any hierarchical organisation with slow and protracted decision making with a set of safe ideas and outcomes that are no different from a top down structure.
My interests are in outdoor sports, and I feel a lot of the characteristics of succesful outdoors people are those that are much needed in succesful businesses - risk dedication and consistent, risk management, planning, teamwork, communication.
A pipe dream at the moment is to try and create a company which attracts these types of people and see where this would go.
@GridNorth not too late at all!
glad to hear this isn't the first time you've heard about Semler. i felt like my eyes were being opened when I started consuming his ideas.
I agree 100% with your take- success on something like this would largely depend on the people implementing it and finding enough people that would be willing to join a company like this. I like to think people would jump at the chance to join a Semco (I would) since it gives them the invaluable traits of autonomy and impact. but in the US this is pretty radical.
I'm kindaaaaa working on that pipedream you mentioned and since you are one of two people to respond, i'd love to run the idea past you :) at the very least having someone critically examine the idea is useful!
if you're interested, drop me a line at timothy@autonomouscompany.io
thanks for responding,
That is impressive changes!
I don’t how much being CEO of his father’s company influenced this drastic transformation.
yeah that's a good point. he actually was on the verge of quitting and pursuing his music career when his dad suddenly retired and gave Ricardo control over the company.