Modernization of Indian Railway

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RICARDO SEMLER AND SEMCO S.A.
* Mr. Ricardo Semler, One of the youngest ever MBA graduate from Harvard took control of his parental business at the age of 24.

* He renamed the company SEMCO, implemented the aggressive product diversification strategy and consequently within 6 years SEMCO transformed to $100 million Company from $35 million.

* Right from the first day he was focussed to diversification as his belief was that diversification in other product line can save the future of the company. As soon as Semler took over, he fired two-thirds of the top management of Semler & Company and restructured a flexible management based on three interdependent core values: Employee participation, profit sharing and free flow of information.

* He initially attempted to form matrix structure, but reporting to two managers simultaneously didn’t go well with the employees and hence he divided the company into autonomous business units, each headed by General Manager. But this resulted in inter-unit competition and inhibited the growth.

* In mid 1980s, Semler created lattice organization and self managed groups were placed in charge of all aspects of production. This model worked; resulting in increased employee productivity. Then, he introduced profit sharing plan according to which one-quarter of the net profits of their respective divisions profit will be distributed among employees through committee selected by employees democratically.

* SEMCO was more a leaner organisation now as the 12 layer management bureaucracy was reduced to three concentric circles. The inner most circle consisted of six Counsellors who devised the general policy and strategy. Each of the Counsellors including Semler took a six month turn as CEO. Any employee can attend any meeting and enjoy the equal voting power. This resulted in free flow of information and transparency in organization. To minimise the economical differences, the salary of upper level...
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