Thursday, May 23, 2013

Paying Attention to the Unintended Mis-direction




SEMCO is an extraordinary Brazilian company.  It operates on a Peer-to-Peer Accountability basis and has consistently performed superbly.  Like similar unusual and successful enterprises, NUMMI, Morning Star Company, Gore, and others, people visit the company from time to time to glean some ideas they might implement in their own enterprises to mimic SEMCO’s great results.

Sometimes, however, they take away the wrong thing.  Ricardo Semler, the owner of SEMCO wrote in an HBR article years ago, that the U.S. president of Allis-Chalmers came to visit.  During his tour he became enamored with their accounting departments fast, comprehensive, detailed, and organized monthly reporting process.  It even reported how much coffee workers were drinking in a particular plant.  He was so impressed with it that he ordered his Brazilian subsidiary to install the same type of system in their much larger business.

His interest in the system caused SEMCO to take a more critical look at it themselves.  As it turned out they realized that the meaningful information was being buried by the shovelfuls of detailed data.  They scrapped it favor of a much less detailed accounting and reporting system.  The reports now became much more valuable.

What happened to Allis-Chalmers in Brazil.  Well they ended up losing so much money and market share that the parts were broken up and sold off.  

Just because you observe a very successful company doing something, doesn’t mean it is a source of their success.  It may just be something they do.
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