According Roberts (2005: 12), “achieving high performance in a business results from establishing and maintaining a fit among three elements: the strategy of the firm, its organizational design, and the environment in which it operates”. These three components are intrinsic related, and since companies can not control the environment changes, they should adequate their strategies and restructure their organization to fit new sceneries. The importance is crucial: as stated by Child (2008: 3), “the gains previously to be had from market protection, proprietary technology, and scale economies have become steadily eroded by trade liberalization, technology transfer, and the development of flexible production technologies, that could be acquired from the market or imitated”. But, he observed, “organization, on the other hand, is an asset that each company has to develop to suit its need and situation, and it cannot be bought off-the-shelf”.
Globalization, new technologies, the knowledge-based economy and hypercompetition are just some of the challenges that modern firms must deal with these days. So how companies can develop competitive advantage in such continuous changing environments? Let’s study two firms and see what make them successful over years of background changes.
Starting in 1971 with three Boeing 737 aircraft serving three Texas cities, Southwest Airlines became one of the “World’s Most Admired Companies” by Fortune 500 (2009), with more than 3,300 flights a day, 35,000 total employees and a business of eleven billion dollars (Southwest, 2009). What they did to be so successful? How they created – and adapted – their strategy to new market conditions?
According to Gittell (2003), “is its ability to build and sustain high performance relationships among managers, employees, unions, and suppliers, characterized by shared goals, shared knowledge, and mutual respect”. Observe that all the ecosystem is involved, external parties inclusive. The unions are viewed as partners, rather than adversaries. Concerning to deal with employees, we can cite some strategies.
Solid corporate culture. From general managers to front line workers, the corporate culture and policies must be followed. A reasonable personal development plan is also another motivational measure to create a high productive atmosphere. They take seriously rewards and celebrations, and doing that, interconnects the three key organizing processes, as stated by Child(2008), control, integration and reward.
Respect employees. The no-layoff policy showed to employees that they are valued. Treating people as equal and with respect, they could reduced hierarchy and bureaucracy. They created competitive advantage making the work environment fun, and it was transmitted to customers, and as observed by Roberts (2005: 18), that culture “operates as a social motivation and control system”. With proactive conflict resolution, they improve performance and satisfaction. Among with job security, people helped whenever necessary to provide a quality service, independent of formal positions.
Market Dominance. With lowest fares and most productive work force, they started to dominate the market, with now 60% in almost every non stop city-pair it serves (Freiberg & Freiberg, 1996). These factors were converted into highest completion factor and best safety record, and made Southwest Airlines the successful company it is.
The Brazilian Semco is a good example of how different and innovative an organization can be. Founded on the 1950s by an Austrian engineer and started manufacturing centrifuges for vegetable oil industry, today Semco Group is market leader in industrial equipment area and solutions for postal and documents management (Semco, 2009), with 2,200 employees, annual growth of more than 20 percent and a 100 million dollars/year conglomerate (Guimaraes & Southerst, 2003). On 80’s, at that time 28 years old, Ricardo Semler took the family company from his father and started his revolution. Even during Brazilian erratic economic on 80s and 90s decades the company only grew up, sometimes over 100% an year. According Semler (2006), the democratic organization, with fully space for participation and freedom of information, make all difference between success and fail. What is the formula of success that several important companies are trying to copy? Some of the following factors contributed.
Participation and involvement. At Semco, workers decided every single aspects of company: from their own salaries to budgets and production goals. Democratic committees are spread throughout the company and they are so connected with corporate decisions that preferred a pay cut than facing layoffs (Semler, 2002). But to perform this, they need information, which leads us to the next factor.
Freedom of information. Even the executives’ payroll is available for every employee. More than that, all of semco’s financial data is accessible. As observed by Child(2008: 398) “workers are free to question managers on any aspect of the business”.
Reducing hierarchy and bureaucracy. At Semco, from executives to the trainees, there are only three levels (Guimaraes & Southerst, 2003). To optimize production, workers choose their working hours. I believe that this is the hardest aspect to implement on a big organization, and Semler accomplished it by the integration of the previous factor and a strong organizational culture.
Culture. To Semler, “an own and defined culture, that is not only adapted to the conditions of the moment, but perennial in their basic beliefs is an essential condition to companies survive in the long term” (Semler, 2002: 70, own translation from the Portuguese text). The organization was molded to be more effective to people, and doing that, Semler created a very profitable company.
Others organizations failed to copy these companies because the focus only on strategy, but they did not create the necessary environment. The approach with people are completely different. They maintain the same hierarchical structure, without sharing of information. Every aspect mentioned are complementary. Alone, they will not give the same results and the strategy will fail.
These two companies have in common strong organizational culture, few hierarchy and a worker empowerment through a free information flow and participation. This is not a recipe to success, but examples of how extraordinary and innovative organizations can be, and we have many to learn from them.
Child, John (2008) Organization: Contemporary principles and Practice. Malden: Blackwell Publishing
Fortune 500 (2009)World’s Most Admired Companies [Online]. Available from http://money.cnn.com/magazines/fortune/mostadmired/2009/snapshots/2068.html (Accessed: 21 December 2009)
Freiberg, Kevin & Freiberg, Jackie (1998) Nuts!: Southwest Airlines’ crazy recipe for business and personal success. New York: Bard Press
Gittell, Jody Hoffer (2003) The Southwest Airlines Way: Using the Power of Relationships to Achieve High Performance. New York: McGrwaw-Hill
Guimaraes, Roberto & Southerst, John (2003) Semco: work + space = freedom [Online]. Available from http://www.steelcase.com/em/files/eb5340fb8a984abab98477a0f83ab080/SemcoWorkSpaceFr.pdf (Accessed: 22 December 2009)
Roberts, John (2007) The Modern Firm: organizational design for performance growth. New York: Oxford University Press
Semco (2009) About the Semco Group [Online]. Available from http://www.semco.com.br/en/ (Accessed: 22 December 2009)
Southwest (2009) Southwest Airlines Fact Sheet [Online]. Available from http://www.southwest.com/about_swa/press/factsheet.html (Accessed: 21 December 2009)
Semler, Ricardo (2002) Virando a própria mesa. São Paulo: Rocco
Semler, Ricardo (2006) Você está louco! Uma vida administrada de outra forma. São Paulo: Rocco