Category: Best Business Practices

  • Doing the Stuff that Matters – Box Number One!

    I remember a few years ago some very resonating training I received from Steve Covey (via a book, CD, DVD or something like that).
    Steven Covey
    It’s all about prioritising your work and revolves around two key concepts: Urgency and Importance.

    Importance means alignment to your strategy, your goals, your purpose.  “If I do this, good things will come to me”.  These are good things to get done.

    Urgency means it is time critical.  If it is not done quickly, something happens or does not happen, usually not something you want. Not the ideal to have, but for some reason they exist in our lives and must be delt with somehow, and quickly!

    By using 4 combinations of these two concepts (with their negatives) you can categorise any task/project/activity you are working on at any point in any moment in your life.  It’s pretty cool how it is so.  Once you are clear with why you are here and what you are doing, then EVERYTHING can go into one of the 4 boxes.

    Covey used a large square (a box) and drew up each combination into the quadrants of the large box. I think you’ll get the idea if I just type them:

    The four boxes:
    1. Important and NOT Urgent
    2. Important and Urgent
    3. Not Important and Urgent
    4. Not Important and Not Urgent

    Make sense?

    Points on each one:
    1. Do these at a nice and steady pace and life feels good.  You’re on track, whatever that means for you. You achieve your goals, what ever they may be. There’s a fun light feeling to everything.

    2. OK, must be done so do it, but WHY has it become urgent.  What happened to make this urgent.  (“Poor planning on your part does not constitute an emergency on my part”).  Obviously these must be done, and then work out how to stop them from happening again.  They cause stress and are not conducive to having fun. They interrupt healthy living. Delegate, change the rules, change the strategy, simply say NO! Do what ever you can to stop these landing in this box.

    3. OK, what happened here.  Can you delegate this non important task and get rid of it?  Can you not do it and nothing will happen? Try to avoid doing these as much as you can and study a little how they come into your life and take steps to avoid them.

    4. Why am I looking at this? This box is really a bin.  Bin it.  And get good at binning stuff. Most of the fluff that approaches us in life goes here.

    Make more sense?

    And if it gets confusing about what goes into what box, meditate on it. The answer will come from inside you, very clearly.

    Jeremiah Josey

  • Social Engineering: Self-Organising, Collaborating Groups, or Sociocracy for short (s)

    How do you improve human group dynamics, and allow people be more productive, business to be more profitable, groups to be more self reliant, whilst at the same time have it be more satisfying, more rewarding and straight out more enjoyable for the individuals involved?

    The solution: Develop a self organising, collaborative workplace (also known as  “Sociocracy“).

    [youtube https://www.youtube.com/watch?v=k4vzhweOefs&w=560&h=315]

    Many big companies have worked out how to do it: parts of GE, most of BMW, all of Semco (a Brazilian manufacturing company). Many more practicing it can be found here at Worldblu.  While Worldblu calls it “democratic workplace”, it’s really more likely to be collaborative one, since when you have a flexible organisation, it is more likely that 100% consent is necessary to achieve anything, and not merely majority rules – what a democracy is. The key word here is consent.

    How to achieve great success, with great results, rewards and satisfaction in a manner which is harmonious to the group, to other participants, and to the world in general? It is not through competition. It is through collaboration.

    Much of the presently accepted models in many organisations are competition based, and competition is a poor use of human potential.  Autocratic leadership methods necessary lead to almost total staff disconnection. Poor performance, and whip-like management mentality becomes the norm. Such a culture is easy to start, and success may be evident and easy to measure, but it soon grows into a dismal forgotten failure as any long term success measures are applied – staff turnover rates soar, production efficiency, product quality, and eventual profits plummet. It’s simply a dismal failure at humanity, at being human even. Even for those directly measured to have “succeeded” they experience high stress, poor health and eventual a short, and ultimately an unsatisfying life.

    One of the most successful examples of collaboration has been documented by Ricardo Semler with his company Semco.  His two books “Maverick” and “7 Day Weekend” explain everything in succinct terms.  How a small family run company grew to an international corporation with its principal, Ricardo ceasing his involvement a long time ago.

    “Semco has no official structure. It has no organizational chart. There’s no business plan or company strategy, no two-year or five-year plan, no goal or mission statement, no long-term budget. The company often does not have a fixed CEO. There are no vice presidents or chief officers for information technology or operations. There are no standards or practices. There’s no human resources department. There are no career plans, no job descriptions or employee contracts. No one approves reports or expense accounts. Supervision or monitoring of workers is rare indeed… Most important, success is not measured only in profit and growth.” – Ricardo Semler

    Here’s another great summary of Semler’s work here at Christian Sarkars blog

    Personally I have applied Semler’s processes (actually they evolved naturally from Semco employees) to great success in my own endeavors.  For example I’ve taken totally disconnected and non-performing employees, and turned them into stars, “fought” over within the office for new assignments. One of the very useful Semler tools I used was upward feedback.

    However amongst all of this, I’ve been searching for a methodical system to describe Semlers approach, and for a long time I called it “democratic” as he and many others have done. But I’ve never liked that, that word “democracy”. It is essentially a competitive system. Here’s why:

    Demo-ns!

    Dubbed “the worst form of government” by Winston Churchill, democratic environments automatically and immediately lead to the oppression of the minority. And oppression of any kind is never a good thing.

    “Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” Sir Winston Churchill, Hansard, November 11, 1947

    Democracy, by it’s very design, is an oppression regime: the oppression of a few by the many. “This is fair. It’s only natural”, I hear you say, but do you really think so? Is any oppression fair? Of anyone?  It is quite plain to see that any minority oppression in a social group no matter how large or small, has an ultimately negative consequence. Suppressed negative thoughts, feelings, and emotions harboured by the minority can only grow and manifest in other forms. The costs – both social and financial, short term and long term – to control, pacify, down-right-openly-oppress increases for the majority. Then something curious happens: the majority find themselves the minority, the minority becomes the majority and the cycle is repeated. Back and forth, back and forth. Those once-were-majority of course hang onto their once-granted-power with great enthusiasm and vigor, as long as they are able. The majority learnt what to do while in power. They learnt the rules of the game. The still-ongoing Occupy Wall Street  or “99% protests” (yes, still ongoing since 17 September 2011) are a good example of a majority now being controlled by a minority that has a much better understanding of the rules. Still resilience and perseverance can be a good thing.

    “Consent” a better thing.

    An another example is a recent US election with Obama and McCain running against each other: it was 53%/46%. Is that a “democracy” when almost half of the people have to yield their desires for the other half? This is more like a society close to reorganisation as the majority may soon become the minority.  Such a shifting of power will occur either violently (like has been seen in many Arabic countries recently) or passively, as with not-even-newsworthy Iceland recently.  In Iceland the people rejected the debt burden of the banks their brethren in government attempted to impose upon them. They arrested a number of bankers and changed their laws so it cannot happen again!

    Good posts about Iceland:

    Iceland Bankers Arrested

    More on Iceland

    And more on Iceland…

    Nice YouTube accounts on Iceland:

    1. Iceland Account 1
    2. Iceland Account 2

    So, what is it? What is the magic that means a group of people will be inspired to performance, all by themselves, with little external influence, other than maybe “Go!”

    This video clearly shows it is not the money.  In fact the study shows that for complex, creative projects, monetary incentives actually STOPS performance! It’s not carrot and stick that works best where creative thinking is required.

    Much has been done on the subject and reading Semler’s “Maverick” and “7 Day Weekend” you’ll understand that it is an evolutionary process, and it occurs by consent of the individuals of the group.

    This is the important word: consent.

    Work that recent came to me by the Dutch thinker Gerard Endenburg offers very substantial physical elements to this evolutionary process. A good short summary of this thinking is in “Sociocracy: The Creative Forces of Self-Organization”, by Gerard Endenburg and John A Buck. You can find this on the web in pdf.

    These two resources: Semler’s dual mini-tomes and Edenburg’s principles combined results in a very harmonious outcome: the flexibility of the benefits, and the basic parameters on how to get there.

    Endenburg defines four basic concepts for a self-organising group:

    Four Principles of Sociocracy

    1. Consent: The principle of consent governs decision-making. Consent means no argued and paramount objection. In other words, a policy decision can only be made if nobody has a reasoned and paramount objection to it. Day-to-day decisions don’t require consent, but there must be consent about the use of other forms of decision-making, for example, for day-to-day operations.

    2. Election of Persons: Election of persons for functions and/or tasks takes place in accordance with the principle of consent and after open argumentation.

    3. Circle: The organisation maintains a structure for decision making, consisting of semi-autonomous circles (i.e. groups of individuals). Each circle has it’s own aim and organises the three functions of leading, doing, and measuring/feedback. A circle makes its own policy decisions by consent, maintains it’s own memory system, and develops itself through integral research, teaching and learning. A circle makes consent decisions only in special circle meetings (also called round table meetings).

    4. Double-linking: A circle is connection to the next higher circle in the organisation with a double link. This means that at least two persons, one being the functional leader of the circle and at least one delegate from the circle, are full members of the next higher circle.

    With these four principles in place, more specific actions can occur. Here’s an example of a Sociocratic Circle Meeting:

    Sociocratic Circle Meeting

    1. Opening round: a time to tune into the members. Like an orchestra just before a concert.
    2. Administrative concerns: such as announcements, time available for the meeting, consent to minutes of last meeting, date of next meeting, acceptance of the agenda.
    3. Content: Agenda item, second agenda item, etc
    4. Closing Round: a time to measure the meeting process. E.g. use of time, did the facilitator maintain equivalence, how could the decision-making have been more efficient, did everyone arrive prepared. Also this is a time to mention agenda items that should be on the agenda for the next meeting.

    During the Circle Meeting there will be times to appoint a leader or a task or role or job to an individual. Here’s how it’s done:

    Template for Sociocratic Elections

    1. Task: establish the job description and the period of time the person will perform the job.
    2. Ballots: Fill our ballots and hand to the election leader
    3. “Public Gossip”: each person says why they made their nomination
    4. Changes: Election leader asks each person if they want to change their votes based on the arguments they heard.
    5. Discussion: Election leader usually proposes a name after step 4. However they may ask for discussion if the arguments are very unclear – i.e. informal consent has not been reached.
    6. Consent round: Election leader asks each person if he of she consents to the proposed person, asking the person proposed last. If there is an objection, the election leader takes everyone back to step five before trying another consent round.

    For making decisions by consent, a sociocratic organisation will operate in the following manner:

    Template for making policy decisions by consent

    1. Consent to the issue(s) to be decided. “What’s the concern, problem or challenge?”
    2. Generate a proposal. “What’s our opinion?” Often a person or persons may be asked to prepare a proposal and bring it to the next meeting.
    3. Consent to the proposal. “What is our decision?”
    a. Present proposal – questions and discussion is for clarification only
    b. Quick reactions round – quick feedback about the proposal (intended to illicit the “feeling response”, and not the “thinking response”)
    c. Amendments – proposer amends proposal, if needed, based on the questions, discussions and quick reactions
    d. Consent round – collect and record any objections on a flip chart. No discussion at this time
    e. Discussion – improve proposal to deal with the objections if any
    f. Consent round – Each person indicates their consent to the proposal, with the proposer speaking last. If there are remaining objections, they are recorded (no discussion), everyone goes back to e. Discussion, before trying another consent round.

    Implementing a self-organising group requires consent from the people who exert power over the group. Simply stated this means that senior management and/or organisation owners must support Sociocracy. Full stop. No “ifs” or “buts” or even “veto rights”. Otherwise internal fractures will be created when the a circle’s “assumed power” confronts the more senior “declared power”. If that happens, growth is stymied and a slide back to pseudo-autocratic or totalitarianism will follow.

    The great thing about this Sociocratic process as described by Endenburg, is that it’s an excellent way to get self-organisation into an existing organisation without changing or upsetting the existing power structure. The magic then begins to happen and once the system is running well, initiatives and improvements emerge organically and naturally. There is no revolution, only evolution.

    All companies and groups that utilise such or similar systems experience better performance, better products, innovation, higher moral, lower turnover, lower loss, lower costs.

    Semler advocates this because, after all, he invented the 7 day weekend!

    It is simply the human way to operate.

    What could be better?

    Jeremiah Josey

  • Piracy? Or Different Rules of the Game

    This was a good read about so-called “piracy” in China (link here).  What people do not understand is that this is not pirating. This has been labelled such by business lobbyists, out to protect their future revenue streams.

    Being a “Pirate” is taking something from someone else, something that is already owned. A “potential market” no one owns. It’s potential. In the future. Who owns the market is governed by who makes the best product or provides the best service for it – or the market is shared. Entering a market with a copied similar product is simply people doing business. We humans have done this for a very long time. We have always done it. We always will. It’s human.

    We have anti monopoly laws and we have patent protection laws: at their core, the two are in direct conflict with each other. No wonder the West is confused.

    Patents are only a recent invention in human history, and serve to stymie development and innovation, not stimulate it. No, I do not like my products being copied and stolen, but I like how it makes me think: creative and inventive to keep up development and protect – and share – my assets. It makes me create my revenue in different ways, creative ways.

    Google is the good example of being creative. How many patents? And how do they protect new developments? Very few, if any, and very carefully. (Read about it here).

    Patents are dangerous and create false economies. Look at what GM did with electric car and battery technology in the early 2000’s. They “bought” the patents to revolutionary battery technology and then shelved it, along with burying (and destroying) all of their existing physical electric car developments.

    In the end this was good a good thing. The Tesla car company in California rose up from the GM team that was dis-enfranchised, and they now make great cars. The documentary “Who Killed the Electric Car” was created and a following emerged. Now 10 years later and all major marques are releasing electrics cars or hybrid electrics.

    This buy & bury technique has been replicated as long as there has been “product rights”.

    And who invented the radio? There were lots of people involved, and junior school history teaches incorrectly that it was the Italian Marconi?  How, when he copied 17 patents to do so? Patents created by Nicoli Tesla 10 years earlier?

    So, copy, China. Copy, copy, copy. Make things better, more efficient, more sustainable. Please.

    What doesn’t kill us only makes us stronger.

    Jeremiah Josey

  • It’s all in how we learn…

    The best learning is in the field; “on the job”, “through the school of hard knocks”. Getting getting lots and lots of “Nos” is how you work out what is right. The more Nos, the more you learn. This is how nature learns. Go watch it. Watch a vine climbing a fence. It’s kind of funny actually: this is the opposite to how we are taught formally. We are taught to “do it THIS way”, and formally we spend lots and lots of time learning one thing, one skill. If there is one little variation in the reality of our subject, then that learning becomes the WRONG way – it simply will not work. And no skill has been built to see that it IS the wrong way. Even worse, it is wrong to even admit wrong! You have to learn this yourself, the “hard way”, informally. There is only built in you the expectation that it is the right way. What a recipe for disillusionment! Better to start with little knowledge and build a successful path through many, many “Nos”… This is the life.

    Jeremiah Josey

  • Lessons Everywhere – the comparative value of knowledge

    I changed a tyre today. It wasn’t my tyre. It belonged to an Egyptian vet, well he said he was egyptian and the back of his car was full of needles and drugs for camels so I assumed that was his occupation. He waved me down on the road, 1 hour from the border with Iraq . When I stopped and asked what the problem was the message that got transferred to me in a mix of Arabic and English was that he had a flat tyre and had no jack or tools to change it. No problems. I could help. So I reversed up and proceeded to take my jack and wheel wrench from my car and together we set about to change his tyre. Then I discovered that his wheel nuts where smaller than the wrench I had… problem. I thought to myself: “This is a new car. Why is there no jack and wrench?” So I went around the back and sure enough, in a side panel was the requred tools my friend thought was missing, with of course the correct size wheel lug. In a matter of minutes the tyre was changed and all was good. Driving away I looked at the outside temperature – 42 degrees C – and it occurred to me how valuable a little knowledge was: something that I took for granted could save another man’s life. Assuming that there was no one else on the road, he would have died simple because he didn’t know where to look. And I did. What is that worth? How much does someone know that is given away, without the acknowledgement of that value. It was a valuable lesson.

    Jeremiah Josey

  • Ricardo Semler on Salaries

    We set salaries like this:

    A lot of our people belong to unions, and they negotiate their salaries collectively. Everyone else’s salary involves an element of self-determination.

    Ricardo Semler

    Once or twice a year, we order salary market survey’s and pass them out. We say to people, “Figure out where you stand on this thing. You know what you do, you know what everyone else in the company makes, you know what your friends in other companies make, you know what you need, you know what’s fair.  Come back on Monday and tell us what to pay you.”

    When people ask for too little, we give it to them. By and by, they figure it out and ask for more. When they ask for too much, we give that to them too – at least for the first year. Then, if we don’t feel they’re worth the money, we sit down with them and say, “Look, you make x amount of money, and we don’t think you’re making x amount of contribution. So either we find something else for you to do, or we don’t have a job for you any more. But with half a dozen exceptions, our people have always named salaries we could live with.

    We do a similar thing with titles. Counsellors are counsellors, and partners are partners; these titles are always the same. But with coordinators, it’s not quite so easy. Job titles still mean too much to many people. So we tell coordinators to make up their own titles. They know what signals they need to send inside and outside the company. If they want “Procurement Manager,” that’s fine. And if they want “Grand Panjandrum of Imperial Supplies,” that’s fine too.

    Jeremiah Josey

  • Ricardo Semler on Compensation

    Employers began hiring workers by the hour during the Industrial Revolution. Their reasons were simple and rapacious. Say you ran out of cotton thread at 11:30 in the morning. If you paid people by the hour, you could stop the looms, send everyone home, and pay only for the hours actually worked.

    You couldn’t do such a thing today? The law probably wouldn’t let you. The unions certainly wouldn’t let you. Your own self-interest would argue strongly against it. Yet the system lives on. The distinction between wage-earning workers and salaried employees is alive but not well, nearly universal but perfectly silly. The new clerk who lives at home and doesn’t know hot to boil an egg starts on a monthly salary, but the chief lathe operator who’s been with the company 38 years and is a master sergeant in the army reserve still gets paid by the hour.

    At Semco, we eliminated Frederick Winslow Taylor’s segmentation and specialization of work. We ended the wage analyst’s hundred years of solitude. We did away with hourly pay and now give everyone a monthly salary.

    Jeremiah Josey

  • Managing without Managers – Ricardo Semler

    Managing without Managers

    by Ricardo Semler, Harvard Business Review (Sep-Oct 1989)

    In Brazil, where paternalism and the family business fiefdom still flourish, I am president of a manufacturing company that treats its 800 employees like responsible adults. Most of them –including factory workers – set their own working hours. All have access to the company books. The vast majority vote on many important corporate decisions. Everyone gets paid by the month, regardless of job description, and more than 150 of our management people set their own salaries and bonuses.

    This may sound like an unconventional way to run a business, but it seems to work. Close to financial disaster in 1980, Semco is now one of Brazil’s fastest growing companies, with a profit margin in 1988 of 10% on sales of $37 million. Our five factories produce a range of sophisticated products, including marine pumps, digital scanners, commercial dishwashers, truck filters, and mixing equipment for everything from bubble gum to rocket fuel. Our customers include Alcoa, Saab, and General Motors. We’ve built a number of cookie factories for Nabisco, Nestle, and United Biscuits. Our multinational competitors include AMF, Worthington Industries, Mitsubishi Heavy Industries, and Carrier.

    Management associations, labor unions, and the press have repeatedly named us the best company in Brazil to work for. In fact, we no longer advertise jobs.  Word of mouth generates up to 300 applications for every available position. The top five managers – we call them counselors – include a former human resources director of Ford Brazil, a 15 year veteran Chrysler executive, and a man who left his job as president of a larger company to come to Semco.

    When I joined the company in 1980, 27 years after my father founded it, Semco had about 100 employees, manufactured hydraulic pumps for ships, generated about $4 million in revenues, and teetered on the brink of catastrophe. All through 1981 and 1982, we ran from bank to bank looking for loans, and we fought persistent, well-founded rumours that the company was in danger of going under. We often stayed through the night reading files and searching the desk drawers of venerable executives for clues about contracts long since privately made and privately forgotten.

    Most managers and outside board members agreed on two immediate needs: to professionalize and to diversify. In fact, both of these measures had been discussed for years but had never progressed beyond wishful thinking.

    For two years, holding on by our fingertips, we sought licenses to manufacture other companies’ products in Brazil. We travelled constantly. I remember one day being in Oslo for breakfast, New York for lunch, Cincinnati for dinner, and San Francisco for the night. The obstacles were great. Our company lacked an international reputation – and so did our country. Brazil’s political eccentricities and draconian business regulations scared many companies away.

    Still, good luck and a relentless program of beating the corporate bushes on four continents finally paid off. By 1982, we had signed seven license agreements. Our marine division –once the entire company – was now down to 60% of total sales. Moreover, the managers and directors were all professionals with no connection to the family.

    With Semco back on its feet, we entered an acquisitions phase that cost millions of dollars in expenditures and millions more in losses over the next two or three years. All this growth was financed by banks at interest rates that were generally 30% above the rate of inflation, which ranged from 40% to 900% annually; There was no long-term money in Brazil at that time, so all those loans had maximum terms of 90 days. We didn’t get one cent in government financing or from incentive agencies either, and we never paid out a dime in graft or bribes.

    How did we do it and survive? Hard work, of course. And good luck – fundamental to all business success. But most important, I think, were the drastic changes we made in our concept of management. Without those changes, not even hard work and good luck could have pulled us through.

    Semco has three fundamental values on which we base some 30 management programs. These values – democracy, profit sharing, and information – work in a complicated circle, each dependent on the other two. If we eliminated one, the others would be meaningless. Our corporate structure, employee freedoms, union relations, factory size limitations – all are products of our commitment to these principles.

    It’s never easy to transplant management programs from one company to another. In South America, it’s axiomatic that our structure and style cannot be duplicated. Semco is either too small, too big, too far away, too young, too old, or too obnoxious.

    We may also be too specialized. We do cellular manufacturing of technologically sophisticated products, and we work at the high end on quality and price. So our critics maybe right. Perhaps nothing we’ve done can be a blueprint for anyone else. Still, in an industrial world whose methods show obvious signs of exhaustion, the merit of sharing experience is to encourage experiment and to plant the seeds of conceptual change. So what the hell.

    Participatory Hot Air

    The first of Semco’s three values is democracy, or employee involvement. Clearly, workers who control their working conditions are going to be happier than workers who don’t. Just as clearly, there is no contest between the company that buys the grudging compliance of its work force and the company that enjoys the enterprising participation of its employees.

    But about 90% of the time, participatory management is just hot air. Not that intentions aren’t good. It’s just that implementing employee involvement is so complex, so difficult, and not uncommonly, so frustrating that it is easier to talk about than to do.

    We found four big obstacles to effective participatory management: size, hierarchy, lack of motivation, and ignorance. In an immense production unit, people feel tiny, nameless, and in capable of exerting influence on the way work is done or on the final profit made. This sense of helplessness is underlined by managers who, jealous of their power and prerogatives, refuse to let subordinates make any decisions for themselves – sometimes even about going to the bathroom. But even if size and hierarchy can be overcome, why should workers care about productivity and company profits? Moreover, even if you can get them to care, how can they tell when they’re doing the right thing?

    As Antony Jay pointed out back in the 1950s in Corporation Man, human beings weren’t designed to work in big groups. Until recently, our ancestors were hunters and gatherers. For more than five million years, they refined their ability to work in groups of no more than about a dozen people. Then along comes the industrial revolution, and suddenly workers are trying to function efficiently in factories that employ hundreds and even thousands. Organizing those hundreds into teams of about ten members each may help some but there is still a limit to how many small teams can work well together. At Semco, we’ve found the most effective production unit to consist of about 150 people. The exact number is open to argument, but it’s clear that several thousand people in one facility makes individual involvement an illusion.

    When we made the decision to keep our units small, we immediately focused on one facility that had more than 300 people. The unit manufactured commercial food-service equipment – slicers, scales, meat grinders, mixers – and used an MRP II system hooked up to an IBM mainframe with dozens of terminals all over the plant. Paperwork often took two days to make its way from one end of the factory to the other. Excess inventories, late delivery, and quality problems were common. We had tried various worker participation programs, quality circles, kanban systems, and motivation schemes, all of which got off to great starts but lost their momentum within months. The whole thing was just too damn big and complex; there were too many managers in too many layers holding too many meetings. So we decided to break up the facility into three separate plants.

    To begin with, we kept all three in the same building but separated everything we could –entrances, receiving docks, inventories, telephones, as well as certain auxiliary functions like personnel, management information systems, and internal controls. We also scrapped the mainframe in favor of three independent, PC-based systems.

    The first effect of the break-up was a rise in costs due to duplication of effort and a loss in economies of scale. UnfortunateIy, balance sheets chalk up items like these as liabilities, all with dollar figures attached, and there’s nothing at first to list on the asset side but airy stuff like “heightened involvement” and “a sense of belonging.” Yet the longer term results exceed our expectations.

    Within a year, sales doubled, inventories fell from 136 days to 46, we unveiled eight new products that had been stalled in R&D for two years, and overall quality improved to the point that a one-third rejection rate on federally inspected scales dropped to less than 1%. Increased productivity let us reduce the workforce by 32% through attrition and retirement incentives.

    I don’t claim that size reduction alone accomplished all this, just that size reduction is essential for putting employees in touch with one another so they can co-ordinate their work. The kind of distance we want to eliminate comes from having too many people in one place, but it also comes from having a pyramidal hierarchy.

    Pyramids and Circles

    The organizational pyramid is the cause of much corporate evil, because the tip is too far from the base. Pyramids emphasize power, promote insecurity; distort communications, hobble interaction, and make it very difficult for the people who plan and the people who execute to move in the same direction. So Semco designed an organizational circle. Its greatest advantage is to reduce management levels to three – one corporate level and two operating levels at the manufacturing units.

    It consists of three concentric circles. One tiny, central circle contains the five people who integrate the company’s movements. These are the counselors I mentioned before. I’m one of them, and except for a couple of legal documents that call me president, counselor is the only title I use. A second, larger circle contains the heads of the eight divisions – we call them partners. Finally, a third, huge circle holds all the other employees. Most of them are the people we call associates; they do the research, design, sales, and manufacturing work and have no one reporting to them on a regular basis. But some of them are the permanent and temporary team and task leaders we call co-ordinators. Counselors, partners, co-ordinators, and associates. Four titles. Three management layers.

    The linchpins of the system are the co-ordinators, a group that includes everyone formerly called foreman, supervisor, manager, head, or chief. The only people who report to co-ordinators are associates. No co-ordinator reports to another co-ordinator – that feature of the system is what ensures the reduction in management layers.

    Like anyone else, we value leadership, but it’s not .the only thing we value. In marine pumps for example, we have an applications engineer who can look at the layout of a ship and then focus on one particular pump and say, “That pump will fail if you take this thing north of the Arctic Circle.” He makes a lot more money than the person who manages his unit. We can change the manager, but this guy knows what kind of pump will work in the Arctic, and that’s worth more. Associates often make higher salaries than co-ordinators and partners, and they can increase their status and compensation without entering the “management” line.

    Managers and the status and money they enjoy – in a word, hierarchy – are the single biggest obstacle to participatory management. We had to get the managers out of the way of democratic decision making, and our circular system does that pretty well.

    But we go further. We don’t hire or promote people until they’ve been interviewed and accepted by all their future subordinates. Twice a year, subordinates evaluate managers. Also twice a year, everyone in the company anonymously fills out a questionnaire about company credibility and top management competence. Among other things, we ask our employees what it would take to make them quit or go on strike.

    We insist on making important decision’s collegially, and certain decisions are made by a company-wide vote. Several years ago, for example, we needed a bigger plant for our marine division, which makes pumps, compressors, and ship propellers. Real estate agents looked for months and found nothing, So we asked the employees themselves to help, and over the first weekend they found three factories for sale, all of them nearby. We closed up shop for a day, piled everyone into buses, and drove out to inspect the three buildings. Then the workers voted – and they chose a plant the counselors didn’t really want. It was an interesting situation – one that tested our commitment to participatory management.

    The building stands across the street from a Caterpillar plant that’s one of the most frequently struck factories in Brazil. With two tough unions of our own, we weren’t looking forward to front-row seats for every labor dispute that crime along. But we accepted the employee decision, because we believe that in the long run, letting people participate in the decisions that affect their lives will have a positive effect on employee motivation and morale.

    We bough the building and moved in. The workers designed the layout for a flexible manufacturing system, and they hired one of Brazil’s foremost artists to paint the whole thing, inside and out, including the machinery. That plant really belongs to its employees. I feel like a guest every time I walk in.

    I don’t mind, The division’s productivity, in dollars per year per employee, has jumped from $14,200 in 1984 – the year we moved – to $37,500 in 1988 and for 1989 the goal is $50,000. Over the same period, market share went from 54% to 62%.

    Employees also outvoted me on the acquisition of a company that I’m still sure we should have bought. But they felt we weren’t ready to digest it, and I lost the vote. In a case like that, the credibility of our management system is at stake. Employee involvement must be real, even when it makes management uneasy. Anyway, what is the future of an acquisition if the people who have to operate it don’t believe it’s workable?

    Hiring Adults

    We have other ways of combating hierarchy too. Most of our programs are based on the notion of giving employees control over their own lives. In a word, we hire adults, and then we treat them like adults.

    Think about that. Outside the factory, workers are men and women who elect governments, serve in the army, lead community projects, raise and educate families, and make decisions every day about the future. Friends solicit their advice. Salespeople court them. Children and grandchildren look up to them for their wisdom and experience. But the moment they walk into the factory, the company transforms them into adolescents. They have to wear badges and name tags, arrive at a certain time, stand in line to punch the clock or eat their lunch, get permission to go to the bathroom, give lengthy explanations every time they’re five minutes late, and follow instructions without asking a lot of questions.

    One of my first moves when I took control of Semco was to abolish norms, manuals, rules, and regulations. Everyone knows you can’t run a large organization without regulations, but everyone also knows that most regulations are poppycock. They rarely solve problems. On the contrary; there is usually some obscure comer of the rule book that justifies the worst silliness people can think up. Common sense is a riskier tactic because it requires personal responsibility.

    It’s also true that common sense requires just a touch of civil disobedience every time someone calls attention to something that’s not working. We had to free the Thoreaus and the Tom Paines in the factory and come to terms with that fact that civil disobedience was not an early sign of revolution but a clear indication of common sense at work.

    So we replaced all the nitpicking regulations with the rule of common sense and put our employees in the demanding position of using their own judgement.

    We have no dress code, for example. The idea that personal appearance is important in a job – any job – is baloney. We’ve all heard that salespeople, receptionists, and service reps are the company’s calling cards, but in fact how utterly silly is that. A company that needs business suits to prove its seriousness probably lacks more meaningful proof. And what customer has ever canceled an order because the receptionist was wearing jeans instead of a dress? Women and men look best when they feel good. IBM is not a great company because its salespeople dress to the special standard that Thomas Watson set. It’s a great company that also happens to have this quirk.

    We also scrapped the complex company rules about travel expenses – what sorts of accommodations people were entitled to, whether we’d pay for a theater ticket, whether a free call home meant five minutes or ten. We used to spend a lot of time discussing stuff like that. Now we base everything on common sense. Some people stay in four-star hotels and some live like spartans. Some people spend $200 a day while others get by on $125. Or so I suppose. No one checks expenses, so there is no way of knowing. The point is, we don’t care. If we can’t trust people with our money and their judgement, we sure as hell shouldn’t be sending them overseas to do business in our name.

    We have done away with security searches, storeroom padlocks, and audits of the petty cash accounts of veteran employees. Not that we wouldn’t prosecute a genuinely criminal violation of our trust. We just refuse to humiliate 97% of the work force to get our hands on the occasional thief or two-bit embezzler.

    We encourage – we practically insist on – job rotation every two to five years to prevent boredom. We try hard to provide job security, and for people over 50 or who’ve been with the company for more than three years, dismissal procedures are extra complicated.

    On the more experimental side, we have a program for entry-level management trainees called “Lost in Space” whereby we hire a couple of people every year who have no job description at all. A “godfather” looks after them and for one year they can do anything they like as long as they try at least 12 different areas or units.

    By the same logic that governs our other employee programs, we have also eliminated time clocks. People come and go according to their own schedules – even on the factory floor. I admit this idea is hard to swallow, most manufacturers are not ready for factory-floor flextime. But our reasoning was simple.

    First, we use cellular manufacturing systems. At our food-processing equipment plant, for example, one cell makes only slicers, another makes scales, another makes mixers, and so forth. Each cell is self-contained, so products – and their problems – are segregated from each other.

    Second, we assumed that all our employees were trustworthy adults. We couldn’t believe they would come to work day after day and sit on their hands because no one else was there. Pretty soon, we figured, they would start co-ordinating their work hours with their co-workers.

    And that’s exactly what happened, only more so. For example, one man wanted to start at 7am, but because the forklift operator didn’t come until 8, he couldn’t get his parts. So a general discussion arose, and the upshot was that now everyone knows how to operate a forklift. In fact, most people can now do several jobs. The union has never objected because the initiative came from the workers themselves. It was their idea.

    Moreover, the people on the factory floor set the schedule, and if they say that this month they will build 48 commercial dishwashers, then we can go play tennis, because 48 is what they’ll build.

    In one case, one group decided to make 220 meat slicers. By the end of the month, it had finished the slicers as scheduled – except that even after repeated phone calls, the supplier still hadn’t produced the motors. So two employees drove over and talked to the supplier and managed to get delivery at the end of that day, the 31st. Then they stayed all night, the whole work force, and finished the lot at 4:45 the next morning.

    When we introduced flexible hours, we decided to hold regular follow-up meetings to track problems and decide how to deal with abuses and production interruptions. That was years ago, and we haven’t yet held the first meeting.

    Hunting the Woolly Mammoth

    What makes our people behave this way? As Antony Jay points out, corporate man is a very recent animal. At Semco, we try to respect the hunter that dominated the first 99.9% of the history of our species. If you had to kill a mammoth or do without supper, there was no time to draw up an organization chart, assign tasks, or delegate authority. Basically, the person who saw the mammoth from farthest away was the Official Sighter, the one who ran fastest was the Head Runner, whoever threw the most accurate spear was the Grand Marksman, and the person all others respected most and listened to was the Chief. That’s all there was to it. Distributing little charts to produce an appearance of order would have been a waste of time. It still is.

    What I’m saying is, put ten people together, don’t appoint a leader, and you can be sure that one will emerge. So will a sighter, a runner, and whatever else the group needs. We form the groups, but they find their own leaders. That’s not a lack of structure that’s just a lack of structure imposed from above.

    But getting back to that mammoth, why was it that all the members of the group were so eager to do their share of the work – sighting, running, spearing, chiefing – and to stand aside when someone else could do it better? Because they all got to eat the thing once it was killed and cooked. What mattered was results, not status.

    Corporate profit is today’s mammoth meat. And though there is a widespread view that profit sharing is some kind of socialist infection, it seems to me that few motivational tools are more capitalist. Everyone agrees that profits should belong to those who risk their capital, that entrepreneurial behavior deserves reward, that the creation of wealth should enrich the creator. Well, depending on how you define capital and risk, all these truisms can apply as much to workers as to shareholders.

    Still, many profit-sharing programs are failures, and we think we know why. Profit sharing won’t motivate employees if they see it as just another management gimmick, if the company makes it difficult for them to see how their own work is related to profits and to understand how those profits are divided.

    In Semco’s case, each division has a separate profit-sharing program. Twice a year, we calculate 23% of after-tax profit on each division income statement and give a check to three employees who’ve been elected by the workers in their division. These three invest the money until the unit can meet and decide – by simple majority vote – what they want to do with it. In most units, that’s turned out to be an equal distribution. If a unit has 150 workers, the total is divided by 150 and handed out. It’s that simple. The guy who sweeps the floor gets just as much as the division partner.

    One division chose to use the money as a fund to lend out for housing construction. It was a pretty close vote, and the workers may change their minds next year. In the meantime, some of them have already received loans and have begun to build themselves houses. In any case, the employees do what they want with the money. The counselors stay out of it.

    Semco’s experience has convinced me that profit-sharing has an excellent chance of working when it crowns a broad program of employee participation. When the profit-sharing criteria are so clear and simple that the least gifted employee can understand them, and perhaps most important, when employees have monthly access to the company’s vital statistics – costs, overhead, sales, payroll, taxes, profits.

    Transparency

    Lots of things contribute to a successful profit-sharing program: low employee tumover, competitive pay, absence of paternalism, refusal to give consolation prizes when profits are down, frequent (quarterly or semi-annual) profit distribution, and plenty of opportunity for employees to question the management decisions that affect future profits. But nothing matters more than those vital statistics – short, frank, frequent reports on how the company is doing. Complete transparency. No hocus-pocus, no hanky-panky, no simplifications.

    On the contrary, all Semco employees attend classes to learn how to read and understand the numbers, and it’s one of their unions that teach the course. Every month, each employee gets a  balance sheet, a profit-and-loss analysis, and a cash-flow statement for his or her division. The reports contain about 70 line items (more, incidentally than we use to run the company, but we don’t want anyone to think we’re withholding information).

    Many of our executives were alarmed by the decision to share monthly financial results with all employees. They were afraid workers would want to know everything like how much we pay executives. When we held the first large meeting to discuss these financial reports with the factory committees and the leaders of the metalworkers’ union, the first question we got was, “How much do division managers make?” We told them. They gasped. Ever since, the factory workers have called them “maharaja.”

    But so what? If executives are embarrassed by their salaries, that probably means they aren’t earning them. Confidential payrolls are for those who cannot look themselves in the mirror and say with conviction, “I live in a capitalist system that remunerates on a geometric scale. I spent years in school, I have years of experience, I am capable and dedicated and intelligent. I deserve what I get.”

    I believe that the courage to show the real numbers will always have positive consequences over the long term. On the other hand, we can show only the numbers we bother to put together, and there aren’t as many as there used to be. In my view, only the big numbers matter. But Semco’s accounting people keep telling me that since the only way to get big numbers is to add up the small ones, producing a budget or report that includes every tiny detail would require no extra effort. This is an expensive fallacy, and a difficult one to eradicate.

    A few years ago, the U.S. president of Allis-Chalmers paid Semco a visit. At the end of his factory tour, he leafed through our monthly reports and budgets. At the time, we had our numbers ready on the fifth working day of every month in super-organized folders, and were those numbers comprehensive! On page 67, chart 112.6, for example, you could see how much coffee the workers in Light Manufacturing III had consumed the month before. The man said he was surprised to find such efficiency in a Brazilian company. In fact, he was so impressed that he asked his Brazilian subsidiary, an organization many times our size, to install a similar system there.

    For months, we strolled around like peacocks, telling anyone who cared to listen that our budget system was state-of-the-art and that the president of a Big American Company had ordered his people to copy it. But soon we began to realize two things. First, our expenses were always too high, and they never came down because the accounting department was full of overpaid clerks who did nothing but compile them. Second, there were so damn many numbers insidethe folder that almost none of our managers read them. In fact, we knew less about the company then, with all that information, than we do now without it.

    Today we have a simple accounting system providing limited but relevant information that we can grasp and act on quickly. We pared 400 cost centers down to 50. We beheaded hundreds of classifications and dozens of accounting lines. Finally, we can see the company through the haze.

    As for Allis-Chalmers, I don’t know whether it ever adopted our old system in all its terrible completeness, but l hope not. A few years later, it began to suffer severe financial difficulties and eventually lost so much market share and money that it was broken up and sold. I’d hate to think it was our fault.

    In preparing budgets, we believe that the flexibility to change the budget continually is much more important than the detailed consistency of the initial numbers. We also believe in the importance of comparing expectations with results. Naturally, we compare monthly reports with the budget. But we go one step further. At month’s end, the co-ordinators in each area make guesses about unit receipts, profit margins, and expenses. When the official numbers come out a few days later, top managers compare them with the guesses to judge how well the co-ordinators understand their areas.

    What matters in budgets as well as in reports is that the numbers be few and important and that people treat them with something approaching passion. The three monthly reports, with their 70 line items, tell us how to run the company; tell our managers how well they know their units, and tell our employees if there’s going to be a profit. Everyone works on the basis of the same information, and everyone looks forward to its appearance with what I’d call fervent curiosity.

    And that’s all there is to it. Participation gives people control of their work, profit sharing gives them a reason to do it better, information tells them what’s working and what isn’t.

    Letting Them Do Whatever the HeIl They Want

    So we don’t have systems or staff functions or analysts or anything like that. What we have are people who either sell or make, and there’s nothing in between. Is there a marketing department? Not on your life. Marketing is everybody’s problem. Everybody knows the price of the product. Everybody knows the cost. Everybody has the monthly balance sheet that says exactly what each of them makes, how much bronze is costing us, how much overtime we paid, all of it. And the employees know that 23% of the after-tax profit is theirs.

    We are very, very rigorous about the numbers. We want them in on the fourth day of the month so we can get them back out on the fifth. And because we’re so strict with the financial controls, we can be extremely lax about everything else. Employees can paint the walls any color they like. They can come to work whenever they decide. They can wear whatever clothing makes them comfortable. They can do whatever the hell they want. It’s up to them to see the connection between productivity and profit and to act on it.

    Jeremiah Josey

  • Read The Manual

    Read The Manual

    A handful of years ago I was asked to join Western Mining and build a major part of their new AUD 1 billion fertiliser facility in far north western Queensland. Western Mining was then led by two icons of the Australian mining industry, Hugh Morgan and Andrew Michelmore. The facility was going to built at a remote site called Phosphate Hill. I grew up in areas like Phosphate Hill so I was excited to be outback again.

    I arrived on the project when design and build tenders were being evaluated in WMC offices at Riverside Centre, 123 Eagle Street, Brisbane, Australia. Coming from the “grubby” oil and gas game, you gotta love the Australian mining business: red carpet and art work in the in the foyer and lobby areas and almost-gold faucets in the toilets. I was the client engineer in charge of the Phosphoric Acid facility and my project engineer was going to be from Bechtel. Together we would be taking phosphate rich rock and dissolving it in sulphuric acid to make feed stock for fertiliser. Fun stuff. I was 26 years old

    The Phosphate Hill Fertiliser Facility, North West Queensland

    The facility manufactures 1,000,000 tonnes per year of ammonium phosphate fertilisers and is located approximately 1,000 km west of Townsville on a large phosphate rock deposit. The entire operation combines world-class, low-cost manufacturing facilities spread across multiple sites. At Phosphate Hill, ammonia is produced from methane gas sourced Santos’s Ballera gas facility located 800 km to the South. Sulphuric acid is supplied via specialised GATX rail cars delivered by train from a purpose built sulphuric acid plant located 150 km to the north at Mount Isa. There, waste gases containing sulphur are collected from Xstrata’s copper smelting facilities and converted into acid. To the east in Townsville there are the warehousing and export port facilities. During construction approximately 1,000 personnel where located on site, housed at a camp at the nearby Monument. Now a crew of about 250 personnel cover the operations of:
    – Mining and Gypsum stacking
    – Beneficiation
    – Ammonia production
    – Phosphoric acid production
    – Granulation

    Built by WMC Resources, owned briefly by BHP, now owned by Incitec Pivot
    Phosphate Hill Fertiliser Facilities

    Bechtel where wrapping up their assessment of tenders so there wasn’t much to do except watch what was happening. And then visit all the locations. The chosen contractor was a consortium of Norsk Hydro‘s using hemihydrate technology (based in Rotterdam, Netherlands), Mitsui process design (Tokyo, Japan) and Clough detailed design and construction (Perth, Australia). Norsk had operating plants in Thailand and Jordan, so within a few weeks of arriving in WMC’s offices on Eagle Street, three of us from WMC and the Bechtel project engineer went on a world tour taking in Japan, Thailand, Jordan and The Netherlands. It was 1997. The trip is a story in itself, but most memorable was the introduction to Japan which I savoured and repeated several times since including an extended period I call my “Japan time”. There’s a reason why Toyota is the best car in the world.

    For fun, I formed the social club during the construction period and the club became responsible for beer purchases. We did ‘beer and barbies’ – this was Australia after all. We averaged 2 cases, or 48 375 ml cans of full strength beer per person per week. That was a “six pack” every night for every person in our 1,000 construction crew for 3 years. That was a lot of beer for a construction site with zero alcohol policy. I’m surprised that only 1 person was killed during the work.

    As an aside, Bechtel have an amazing story. Still a family owned business, it was founded around 1898 and their key to success is taking a 5% commission on all procurement they manage. And they want to manage all of it. [Pro tip: always be between those that can, and those than can’t. Be he middle man!].

    I owe a lot of my lessons to the head of my construction consortium, Michael ‘Mike’ Anderson. A veteran in project management, he knew how to build a plant and he knew how to make it profitable. I just had to watch and learn. He used the most wicked, and most effected application of critical chain theory I had ever seen. His got his team to make estimates for their respective work scopes: BOQs, GAs, structural, concrete, tendering etc. Then he got his project planner to make two plans: one with the information as given. And a second plan with all of the times simply cut in half. He then put the first plan into a locked drawer and got his planner to swear he would never tell anyone about the first plan. The project then proceeded to run on the second “compressed” schedule. It was what I call planning to win as opposed to planning to fail as traditional Gantt chart planning does. It worked perfectly, with Mike coming in 6 months early on his contract. My task as the client then evolved into making the path as smooth as possible for Mike and his team to do what they had to do: build a world class phosphoric acid plant.

    Mike the man

    DELKOR Filter Belt similar to the four at Phosphate Hill

    One of the things that struct me was the laissez-faire, relaxed nature of the WMC/Bechtel management office. I had come from the oil industry. Among my previous gigs after the refinery, were as project engineer for Chevron’s USD 4.5 billion gas pipeline from their Kutubu gas fields in Papua New Guinea to Gladstone; and saving the Moonie to Brisbane oil pipeline which was in danger of being washed out across it’s multiple creek crossings and Santos was stalled on the fix for more than 2 years on what to do. (More stories there also). Why so relaxed for such a huge facility? It wasn’t until I walked into my first phosphoric acid facility in Thailand to understand why. There where no consequence of failure. If anything went wrong, it would just be a plop on the ground, not an explosion in the air. It was very hard to get killed in a phosphoric acid plant. Once I realised this, all stress about the project fell away from me. Nothing could go wrong. Well almost. We “forgot” the fluorine. More on that next.

    Once the process design and preliminary layouts where done we where ready for HAZOPing. Coming from the oil and gas industry I was an expert, having re-designed the entire HAZOP procedure at BP where I was running 1 or 2 HAZOPs each month. Each were small – only a few hours sometimes, but every HAZOP runs the same. For Phosphate Hill we planned to HAZOP Japan for about 2 weeks to go through the 100 or so P&IDs we had. On the very first day we spent the entire day being ‘taught’ how to HAZOP by an ex-Shell consultant. We spent the entire day HAZOPing a 3 meter deep sump that ”could’ occasionally get hot water into it… It was hair pulling stuff. It was so draining that we actually forgot to properly evaluate the floruie coming from the rock. Passed off as “insignficant”, the singficant amounts of flourine in the rock caused massive problems later on during operations with staff having to wear alsmot full hazmat suits to go anywhere near the filter belts. When looking back, one of our process engineers had only ever worked on low floruine rock. If I wasnt’ so bored at the HAZOP I might have raise the issue to consider how much gas would be released compared to other sites worldwide. We would be one of the largest.

    P&ID for HAZOP

    The most immediate task I set for myself after the world tour and I was back in the office in Brisbane was to create a battery limit interface for my plant. There were hundreds of interactions coming from multiple contractors into (and out of) the phosphoric acid and I was the only one who really cared that they all worked. Even my contractor, Mike, ever playing the contractor game, would come up with inputs and outputs that simply didn’t align with other contracts. Granted however he was totally organised and no one else was. He was first so others had to catch up to him. So I became the negotiator in-between them all. After all, I wanted my plant to work. And talking with everyone else in the project I got to learn about how everything worked.

    One of the most revealing events in this process was when I went to the project’s chief scientist with two pieces of paper: one was what the specification of what the Benefication plant was going to produce (ground up wet rock) and what the phosphoric acid was expected to receive (also ground up wet rock). They where different. At first I thought it would be a simple matter of alignment. A casual hallway chat. When nothing happened, I escalated to email. And then further discussions. This continued for some weeks until I was told to “just let it go. Ignore it”. When one of the senior managers on the project arrived to the office in a new Porsche a few weeks later, I was started to get the idea.

    But I was enjoying the complexity of the project. From a office overlooking the Story Bridge and the Brisbane River in one of the world’s most prestigious buildings, after a few months I moved to the site at Phosphate Hill and was baking in a construction donger before the air condition had been installed. For next several years I watched another creation of humanity come together and rising out of the earth.

    Over the duration of the project I kept negotiating my salary higher and higher until I was told that I was the highest paid member of the staff at my level. A few years later when I was consulting at Mt Isa mines and at the deepest point in their 3,5000 deep copper mine, I became friends with another engineer who told me he had been offered a job at WMC to run the phosphate acid project on such-and-such a date. Remembering back, that was my position! And it aligned with one of my negotiation pay raise cycles. I had obviously negotiated too well and my new friend was offered my place, but at even less than what I had started at WMC. He – obviously – didn’t accept. Again it told me about the games going on behind the scenes on the project.

    I had drawn up a Gantt chart on my office white board which remained to the end of the project. It showed how the how the entire project would be delayed by anywhere from 12 to 18 months and how my phosphoric acid plant would be 6 months early. It was always an interesting talking piece with the other team members.

    When drawing up my battery limit management plan, it was also apparent that the Phosphogypsum waste coming from my plant wasn’t being addressed. When I raised the question, again I was told not to worry about it. That is until later. The gypsum stacking facility had been entirely forgotten from the project.

    Eventually I was asked to also take care of the Gypsum stacking facilities – not a small thing as you can see from the google map. When the answer was “no” to my question, “would I be paid more?”, I declined. However I picked it up some time later because I was getting bored waiting for the rest of the project to catch up which was by now clear to everyone else running late. So I had a bunch of time up my sleeve. I also met an awesome chap who fixed dirt like I’ve never seen it fixed before. He was a civil construction guy brought in to build the earthen dams to hold millions of tonnes of future accumulation of phosphogypsum forever. Yes, there’s no apparent commercial use for these huge piles of white stuff.

    Through my time building the gypsum handling facilities I met and worked with one of the former advisers to the Queensland Premier, Sir Joh Bjelke-Petersen. This person, Mr Smith will do, was the architect of the entire North West Region Minerals province and the reason why the Phosphate Hill actually went ahead at all. Mr. Smith had an ambitious plan. He brought together arguing, warring government and semi-government factions of the likes of Santos, Queensland Rail, Mount Isa Mines and a bevy of private companies. Over 2 years he negotiated and cajoled to bring everyone into alignment: to install gas pipelines, have lower rail transport prices, make available port land in Townsville, and share port facilities with the coal industry amongst many other key factors. Twenty contracts where signed in 2 weeks at the end of those 2 years and the Phosphate Hill Fertiliser Facilities became possible. It was incredible to hear his story as he regaled them to me in the best business clubs across Brisbane.

    Sir Joh Bjelke-Petersen

    One day Mr Smith casually slid two massive tomes across the table to me. Each was 3 inches thick, cheaply bound in green cardboard and red spiral spine wire. I asked what they were and he replied they where the project manual for Phosphate Hill, in two volumes. Wow! I never knew these even existed. For days after I plunged into them and their 1980’s typewritten paper. I was amazed that the entire project existed in such detail from the mid 1980’s. In fact every single problem that had delayed the rest of the project had been identified, thought about and a solution or solutions already determined and documented. If everyone on the project had read this report before the project started hundreds of millions of dollars would have been saved in mistakes, cost overruns and simple ignorance. But then, I realised that wasn’t the main agenda. In the midst of mistakes money can be made.

    As Phosphate Hill was being commissioned someone else handed me the book Cash Flow Quadrant, by Robert Kiyosaki, and I didn’t look back.

    In a few days I read the book, consuming it with zeal. Suddenly I had all of the vocabulary I didn’t have before. All the knowledge that had been bouncing around in my mind came into alignment. I was financially literate. Well 101 level anyway. Within 6 months I was out of WMC, the project was into operations mode now, and within a further 3 months, after looking at more than 1,000 prospect rental properties across Australia, started on my property acquisition spree. I remembered Kiyoski’s advice “you only make money when you buy”. That leads to another story of how I turned AUD 25,000 into more than AUD 1,000,000 in less than 18 months. I’ve only ever consulted for fun thereafter.

    So, reading is the path to success. That was a clear lesson from my time with WMC.

    Jeremiah Josey

  • Flying Solo or Craftsman, or Businessman??

    This is a great discussion between Robert Gerrish or FlyingSolo and Michael Gerber, of E-Myth fame.

    Michael Gerber Interview by Robert Gerrish

    I made some comments to the interview:

    Business is a system. People working in the system have a “job”. Many solo runners in “business” operate in a “craft”, which is neither job nor system, but somewhere in between. Rather like a hobby they enjoy doing, but this hobby impacts little more than themselves and their family. If the soloist is doing the same thing over and over, then they have a job not a business, nor a craft for that matter. I doubt if they will like it.

    The best business operates as a tribe – a large group of people (up to 150) working in a harmonious, contiguous unit. After all, we are humans, animals, and working together is what we enjoy the most.

    Gerber is 100% correct – his wider world experience gives him that view point. His purpose is to touch as many people as possible, and help others to achieve the same, not just 1 or 2 (or the nuclear family) as Robert Gerrish promotes.

    Gerrish has a kind of “screw the corporation, we can do it on our own” approach. Which, coincidently – based on tribal research – is about 48% of the population (stage 3 – See the TED talk [David Logan on tribal leadership] for what stage 3 is).
    (David Logan on Tribal Leadership).

    This is probably why Gerrish feels right in what he believes: because he can find a lot of people to agree with him. Gerber is talking about the top 2% (stage 1) of the population who are already there, as well as the next 22% (stage 4) who know they can do it better.

    So in summary, it’s horses for courses, each to their own, et alii.  It’s being clear with your true feelings inside yourself, and why-you-are-really-doing-that-which-you-are-doing.  Are you truly enjoying it?  Yes?  Then keep going, keep doing it.  No? Then stop as soon as you can and find what makes your heart sing.  A bunch of happy folk is a heck lot more enjoyable to be around than sad, hard-done-by folk. Besides, life for youself is a whole lot betterer!

    See my other blogs about the same topic:

    Jeremiah Josey

Jeremiah Josey