Innovation In Semco Organization The Case Study

Length: 11 pages Sources: 20 Subject: Business Type: Case Study Paper: #49426266 Related Topics: Authentic Leadership, Problem Solving, Correctional Officers, Business English
Excerpt from Case Study :

The levels of control and solution imposition are limited and the problems emerged are expected to be resolved by the parties in the problem. This system of problem solving is constructed on the principles of honesty and integrity, as well as trust in the organization (Andrews). In other words, such an environment was created in which finding solutions to problems is a mutual goal as the accomplishment of organizational goals is a common goal for both employees as well as leaders.

3.4. Communications

While there are indeed business operations which do lack in the adequate innovation, the same cannot be said about the relationship between the employer and the employees. At Semco, this relationship is constructed on nothing else but innovation. It implements a model in which the employees are encouraged to make more decisions, to become more involved and to even question the decisions implemented top down. "The entire company is organized around the principle that people need to decide for themselves how their work is organized" (Morris, 2006). These high levels of employee empowerment lead to tremendous organizational benefits. For instance:

Participation of employees could materialize in more input, which would lead to better decisions (Levine, 2006)

The reaching of higher levels of employee motivation and on the job satisfaction as the staff members feel that their input is considered valuable by the entity

The results materialize in lower levels of employee turnover (and the subsequent reduction of the adjacent costs), higher levels of organizational productivity, or the professional development of the staff members (Harigopal, 2006).

Yet, despite these advantages, fact remains that excessive levels of employee empowerment can also lead to certain disadvantages. Semco S.A. could for instance be faced with the following downsides of employee empowerment:

Insufficiently trained staff members could lead to the making of poor decisions, which could in turn negatively impact the organization

The necessity for the creation of a controlled environment in which employees make decisions requires additional financial investments, which could in turn imply the postponing of other innovation projects

Employee empowerment creates the sensation of employee authority, and when these promises of authority are not materialized, they can easily lead to dysfunctional employee behavior (Gronfeld and Strother, 2006).

While it cannot be argued that the company does not implement innovation in its relationship with the employees, it can however be safely argued that it has not innovated its relationship with the customers. Semco S.A. does not implement an adequate customer relationship management program through which to communicate with the customers and better serve their needs. The same can be said with the other categories of stakeholders -- such as business partners, purveyors, the general public and so on -- with which the organization maintains minimum and inefficient communications.

3.5. Technology

The use of information technology within Semco S.A. is fairly limited. The manufacturing equipments are rather old and their operational efficiency is decreased. In some instances, the Semco management encouraged staff members to open their own manufacturing plants (smaller family businesses) and contract work from Semco. The company would lease its manufacturing equipments to the employees became entrepreneurs and it would do this in advantageous conditions. In case the new business did not retrieve the desired success rates, Semco would take back both the equipment as well as the employees (Thompson and Martin, 2009).

While this endeavor is laudable as it supports the economic development in Brazil, it also reveals the low levels of technological innovation. In a context in which the company is focused on employee development and invests most of its resources in the creation of an open and friendly working climate, it tends to neglect the role of technology in the business process. And this is obvious not only in terms of manufacturing equipments, but also in terms of hi-tech equipments....


The lack of adequate technological appliances within the entity materializes in poor communications with both customers as well as business partners.

4. Recommendations for Improvement

In the context of the previous assessment, the following recommendations for improving the innovation levels at Semco S.A. are made:

(1) Increasing the efficiency of the decision making and problem solving processes by integrating more performant tools, rather than combined consensus of both managerial team and employees. The integration of innovative decision making processes would lead to the making of more informed decision, constructed on objective facts, rather than personal preferences.

(2) Placing a greater emphasis on the relationships with the various categories of stakeholders. In terms of customers for instance, this materializes in the need to implement an adequate customer relationship management program, which would increase the levels of customer satisfaction and simultaneously decrease marketing costs (Sharp, 2003). Relative to the general public, a specific action could materialize in the offering of interviews to the local media channels, which could also improve the organization's reputation (Heath, 2005).

(3) Integrating more technological innovations in both manufacturing processes as well as administrative endeavors. The final result of this measure would be that of increasing the operational efficiency, as well as improving the relationship with the various categories of stakeholders as an improved medium for communication is accessible. Ultimately, all these innovations would materialize in increased organizational profits.

5. Lessons Learnt

Based on the situation presented at Semco S.A., several valuable lessons can be retrieved:

(1) the academic and/or theoretical model forwarded or implemented by theoreticians or practitioners are not applicable in all business contexts. This virtually means that it is necessary for the economic agents to develop and implement specific business models and strategies tailored to their particular needs and characteristics.

(2) the implementation and usage of the latest technological applications does not mean that the respective institution is innovative. Innovation should be present in all aspects of the business process, including the relationship with the various categories of stakeholders (such as employees, customers, the general public, business partners and so on).

(3) Communication is the key to organizational success and it has to be present in the relationship of the company with all categories of stakeholders, not just the staff members.

(4) it is crucial to motivate the employees by integrating them in the decision making process through employee empowerment, but a limit should be imposed in the sense of a clear delimitation of employee responsibilities and managerial rights to impose the strategic decision considered best for the organization.

(5) Whenever the organization reaches a state of imbalance or even outright decay and problems in the competitive arena, it is important for the managers to take a strong position. The more severe the problems, the more radical the solution. Still, like most other circumstances, it is necessary to adjust the solution to the unique needs and characteristics of the respective company and the industry in which it operates. Semco's revival through the implementation of the open management model was only possible in those specific conditions of the Brazilian market and the organization's features. Other companies might have to develop and implement their own suitable strategies.

(6) Despite the multitude of operations within an organization, success cannot be attained within the modern day community without the integration of the latest technological developments.

6. Conclusions

The modern day business community is faced with incremental challenges. It must for instance introduce new relationship standards with both customers and employees, but it must also become more environmentally friendly. In other words, it has to continually introduce new elements of innovations -- elements of innovation which go outside the field of technological applications. Yet, despite this recognized need for innovation, not all economic agents manage to actually implement the concepts. One such entity which has recognized the need but lack in adequate implementation is Semco S.A.

Semco S.A. is a Brazilian manufacturer of industrial equipments founded in 1950 and continually expanded through mergers, acquisitions and strategic partnerships. Semco S.A. is best known for the open management style it implements, managerial style which was introduced by its reputable leader Ricardo Semler. Yet, despite the pride taken in this model, it reveals several innovation shortages, which create severe organizational problems.

The managerial approach to control is limited by the tedious and complex processes, which are additionally made more difficult by the high levels of employee participation through empowerment. This specific matter of employee empowerment constitutes the very reason as to why the problem solving and decision making processes are also poor and lack in the adequate innovative elements. Finally, in terms of communications, these abound in the relationship with the Semco S.A. staff members, but are minimal in the company's relationship with other categories of stakeholders.

In light of the 5G model (Innovatorium), the following are concluded about Semco:

G1: The levels of technological innovation are reduced

G2: The appeal to the market is decreased

G3: The relationship between research and development on the one hand and marketing on the other hand is weak

G4: The integration of the business processes is medium,…

Sources Used in Documents:


Andrews. P., the art of authentic problem-solving, last accessed on June 24, 2010

Daft, R.L., Organization Theory and Design, 10th edition, Cengage Learning

Dinkmeyer, D.C., Dinkmeyer, D., Eckstein, D.G., 1996, Leadership by encouragement, CRC Press

Freeman, R.M., 1999, Correctional organization and management: public policy challenges, behavior and structure, Elsevier
Morris, L., 2006, Top-down innovation: leaders define innovative culture, Real Innovation, last accessed on June 23, 2010
Zakomurnaya, E., Semco SA: Brazilian miracle where employees set their salaries and sleep in hammocks, Good 2 Work, last accessed on June 24, 2010
2005, Lessons from Semco on Structure, Growth and Change, a Great Supervisor, last accessed on June 24, 2010
2009, the Semco S.A. Website, last accessed on June 23, 2010
Rothwell's five generations of innovation models, Innovatorium, / last accessed on June 28, 2010
Longman Dictionary of contemporary English, Online Version, last accessed on June 23, 2010

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