The Age of the Unthinkable (30 page)

Our goal now should be to empower as much of the world as we can, even if at times that means encouraging forces that make
us uneasy at first glance: political systems that look different from our own, for instance, or economic notions like redistributing
wealth to some of the poorest (and angriest, most polluting, sickest) people on the planet. This means placing, right at the
heart of our international policy, a goal of giving everyone basic survival rights. These are the sorts of things most of
us take as a given every morning when we wake up: education, some control over what we do for a living, enough to eat. This
new approach doesn’t mean junking our military in the hope that the world will become a peaceful place (though, as we have
seen, it does mean using it more wisely). It also doesn’t mean jamming people into democratic systems and thinking that’s
enough — and then giving up when democratic experiments backfire. Instead, it suggests elevating to the highest level of grand
strategy — the same level where we put warfare and ballistic missiles and thinking about whether we should embrace or bomb
Iran — the quality of the lives of people who have been largely ignored in mainstream strategic thinking. I am betting that
empowered people will act like T cells in our global immune system. The more of them we have, the more likely we are to spot
and control and fight deadly but inevitable outbreaks before they spread. And, like T cells, empowered people are not optional.

We can’t control the sort of growth we need to foster, can’t dictate what it will look like or force it into existing models.
Trying to do that would kill the very spirit of innovation we’re looking for. We need to accept the charming Christmas-morning
law that kids often get more joy out of the leftover boxes than from the toys that were once inside and apply it globally:
the more something lends itself to invention and imagination, the more enduringly useful it becomes. This is as true for human
lives as it is for software, music, or children’s toys. Practically, this means a dramatic, globe-defining effort to touch
the lives of billions of people. It means moving away from the government-to-government connections that dominate our policy
and toward broad, aggressive attempts to deal with the basic obstacles to personal power. “What can we do to make these people
peers?”
is the question that matters. A peer-produced world offers hope that local innovation and a flowering diversity of ideas can
begin to cope with everything from water shortages to terrorism. Writing about managing a world of chaos in the early part
of the twentieth century, Hannah Arendt once defined power as “the ability to act in common.” This is where we’ve got to aim
now, but our acting in common will be as people and peers, not only as nations, as it was in Arendt’s time. The rights we
need to ensure at first are not complex: the chance to go to school, to find a job that lets you grow, to live with some assurance
of health care — all the pieces of a stable life. And we also need to add as many connections as possible between people and
global sources of information and ideas.

The Brazilian intellectual and politician Roberto Unger has called what lies ahead of us the creation of a “caring economy.”
Our current approach to the world, he has said, has been “reduced to the passing of checks through the mail” — a danger that
means our generosity is often wasted and always isolates us from a world that we need to feel and not simply see or touch
at a distance. “This is far too thin a social ferment,” Unger has said. “On the contrary, the universal principle must be
established that every able-bodied adult must in the course of his life hold a job in both the production systems and the
caring economy and participate in some part of his working life or working year in the responsibility of caring for the old,
the young and the infirm beyond the limits of the family.” Unger is right. This is our only hope for matching distributed
action against the distributed risks we now face. How to do this? Well, we’ll turn to that next. But certainly we know that
our new direction should be guided by the words of the sociologist Immanuel Wallerstein, who has said, in what is surely one
of the simplest calls to action in an interconnected world, “What we do to others, we do to ourselves.” This is as true for
good as it is for ill.

In the late 1980s a young Brazilian businessman named Ricardo Semler took over the operation of his family’s thirty-year-old
marine equipment company, Semco. In ordinary circumstances, in almost any country, this would have been a natural rite of
passage. But Brazil in the 1980s was in the midst of a period of hyperinflation that was rare in economic history. In a good
year prices would double. The bad years were much, much worse. In 1990 prices rose more than 1,000 percent. The situation
was so bad that the finance minister, in a less-than-totally-lucid moment, decided to seize 80 percent of the cash in the
Brazilian system. Somehow this had the effect of driving prices up further.

“In Brazil,” Semler wrote as he looked back on this chaotic decade, “no state of the economy is permanent. Few last long enough
to be called temporary.” Running a business in Brazil, he said, was like riding a Brahma bull during an earthquake: “Some
of the worst jolts come not from the bull but from the landscape.”

Semco was among the best engineering firms in Brazil, with customers as far away as Los Angeles and Oslo. But, Semler discovered,
the quality of Semco’s products and its international client base were no protection against those earthquakes. Simply borrowing
money to finance upcoming orders, for instance, required paying a premium of 30 percent over the rate of inflation. One day
Semco took out a loan with an interest rate of 930 percent. It will not surprise you that between 1990 and 1994, one in every
four Brazilian manufacturing firms went bust. Industrial output fell to the same level as in 1977. Semler, in short, had inherited
a business that, no matter how well it might be run, was probably doomed.

Semler felt tremendous pressure to keep the firm alive. He brought in management techniques from American business schools.
They didn’t help. He reorganized the firm along the lines of a Japanese kanban (just-in-time) management system. That failed
too. Following the government’s decision to seize the bank accounts of most Brazilians in 1990, Semler and his managers met
with employees in groups of one hundred at a time and confessed they were out of ideas. There appeared to be only two options:
cut salaries, which would devastate many of the workers, who were narrowly surviving as it was, or lay off employees, sacrificing
some of the company’s workers to save the rest. No one liked either choice. “We went on desperately searching for a third
way out,” Semler recalled. Finally, after some careful consideration, Semler’s employees proposed an alternative. They would
agree to a dramatic pay cut in exchange for three things: a larger share of the profits; a 40 percent pay cut for Semler and
the management team; and, to make sure they knew where the money was going, a member of their union cosigning every check
the company wrote. “At that moment,” Semler wrote, “we
had
no profits to share, so there was nothing for us to lose and everything to gain.”

The results were transformative. Within two months, Semco was running at breakeven. To save money, employees started handling
work the firm had once contracted out. They served as security guards and janitors and helped cook in the Semco cafeteria.
The union official who shared check-writing duties challenged almost every expense. “For four or five months,” Semler recalled,
“we made a small profit in the worst economic times any of us had ever seen. But we kept on looking for a better solution.”
When the Brazilian economy began to right itself and the firm passed from near-death to mere crisis, Semler and his fellow
managers sat back to consider what had happened. They knew they could now afford to go back and reclaim their old way of working,
to get the union out of their bank accounts. But when they were honest about it, they knew that what had just happened at
Semco was more than a simple matter of survival; it was a corporate miracle. In contrast to the desperate environment at other
firms or even to the toxic fiscal atmosphere of the Brazilian economy in general, at Semco there had been “an explosion of
energy, enthusiasm, and flexibility.” And since Semler was well aware that the Brazilian economy, even in its best years,
was “lunatic,” he wondered: was there a way to run the business over a longer period of time by these new rules?

Semler began considering a radical new way of organizing his firm. Instead of running it along the lines of manufacturing
policies that had been around for centuries — a top-down, centralized approach to making and selling products, with power
resting in the hands of an imperial CEO — Semler decided to build what he called a “free-for-all” corporation. He would have
as little structure and management as possible. Semler turned most of his employees into independent contractors, whom he
called “satellites.” He let all of his employees set their own salaries and working hours. He broke the firm into tiny pieces,
ensuring that no work unit had more than one hundred or so employees, even though this meant redundant costs for things like
buildings and administration. He made every element of company life, from executives’ salaries to profit margins to corporate
secrets such as product design available to all employees. He let Semco’s line workers decide for themselves how and when
they would produce new products — and how much they would charge for them. Once, when he needed to open a new plant, he let
his employees scout for locations, then bused them from site to site so they could see what their future might hold. Finally,
he asked them to vote for the place where they wanted to work. And when, after looking at all the options, they decided on
a location directly across the street from a plant that was home to some of the most persistent labor unrest in Brazil, Semler
went ahead and followed their decision anyhow. “With two tough unions of our own,” he wrote later, “we were not looking forward
to front-row seats for every labor dispute that came along.”

Instead of striking more often, Semler’s employees struck less. They quadrupled their productivity. The employees took such
care in building and managing the new plant that when he came for a visit, Semler often felt more like a guest at someone
else’s company than the owner. And because Semco let its employees do what they wanted when they wanted, they were constantly
inventing new businesses, finding efficiencies in production, and refining products. When one group of production workers
wanted to start work at 7:00 a.m., they found they couldn’t because the forklift drivers did not arrive until 8:00 a.m. So
everyone on that production line learned how to drive a forklift. When a group of engineers asked Semler if they could take
a pay cut and just look around for projects to work on in exchange for a percentage of the profits from those projects, Semler
agreed. Within a year the group was the fastest growing at Semco. By the time Semler’s system — if you could even call such
a loose pudding of management a
system —
was fully implemented, he was able to observe that “no one in the company really knows how many people we employ.” It was
at this point that Semco became one of the fastest-growing companies in Brazil.

What Semler and his workers had discovered in their furious search for a way to survive was a way of thinking and, frankly,
living that was ideally suited to a world of rapid change. In a country like Brazil in the 1990s, nothing — not how many reals
you had in the bank, not how good your products were, not how many customers swore by your brand — mattered as much as your
ability to adapt. You had to ride both the bull
and
the earthquake. Semco’s best businesses were ones that employees invented themselves in reaction to some opportunity they
saw right at the ground level of their work. Over time these bottom-up businesses were so much more successful than the ones
chosen by top management that Semler closed down most “strategic planning” at Semco. “I think that strategic planning and
vision are often barriers to success,” he explained. You needed a general sense of where you were headed, to be sure, but
the moment you became too fixated, you were likely to miss an opportunity or chase a bad idea into bankruptcy. In any event,
you deprived yourself of the chance to change as quickly as the world around you. What kept Semco alive was the fact that,
whether he knew it or not, Semler wasn’t building a business so much as he was, in every decentralizing act, building an immune
system.

The ecologist C. S. Holling once wrote that in really complex systems, wealth should be measured, not in money or power but
rather in the ability to change and adapt. This sort of wealth, he explained, “sets limits for what is possible — it determines
the number of alternative options for the future.” You should measure what you have, in other words, by what you can do. It’s
the reason that a Christmas box can have more entertainment power than a Barbie: there’s more you can do with it. In an earthquake-prone
ecosystem like Brazil, Semler understood that the ability of an institution, be it a bank or a government, to accumulate options
was the difference between survival and extinction. And it wasn’t simply accumulating these choices; it was shuffling bad
old ideas out of the way and replacing them with new ones as fast as possible. “I own a $160-million South American company,”
Semler observed, “and I have no idea what business it’s in. I know what Semco does — we make things, we provide services,
we host Internet communities — but I don’t know what Semco is. Nor do I want to know.” The minute you pinned yourself down,
he feared, you put your company and your employees into a mental straitjacket. It took a near-deadly crisis for Semler to
make that leap to giving away so much power. It could just as easily, he remarked later, have killed his business before he
had time to adjust.