Story by Pedro Carvalho (Época Negócios) – Interview with Professor Vicente Falconi, founding partner of FALCONI
“This country lacks planning”, says Vicente Falconi
The renowned business consultant discusses corruption, the inefficiency of the public sector and how the “Ambev recipe” could help the government
Vicente Falconi, aged 75, is one of the most influential business consultants in the country. He was the mastermind behind the so-called Ambev culture (which he would much rather call Falconi culture), marked by its obsession with goals and meritocracy. He replicated this model in several corporations, such as Itaú and Gerdau, and has been taking this experience to the public sector in the last 15 years. Falconi likes to day that he promoted a “”management shock treatment” and applied it to municipal governments, public administrations and federal organizations, which goes from Aécio Neves (in Minas Gerais) to Lula and Dilma. Here, he points out paths that ought to be taken so that public services can become more efficient.
Why does the public sector face so many difficulties in order to become more efficient?
Some organizations, such as the Federal Police, are doing very well. We have worked with the Federal Police during the Lula administration, and we know there’s a good attitude there. The same scenario is found in institutions such as the Prosecutor’s Office and the Central Bank. Others, such as the Ministry of Health, are not doing so well. This happens because they have no HR Department, for example. There is no selection, assessment, training or structured career plan. The Ministry of Health has a high turnover rate; people pass public examinations to work there and then they keep an eye for other opportunities elsewhere, as there is no future there for anyone. The future is moving to the Federal Police or the Central Bank. I wrote three letters to President Dilma soon after the elections to address these matters.
Did she reply?
No. She receives approximately 500,000 letters. The biggest problem is that our country has no planning. It lacks a plan for the next 50 years: our intended growth rate, what the demands in terms of energy and resources will be, and how the population will vary in terms of age.
You made a plan to improve management at the Ministry of Health. What went wrong?
This is what happened. Jorge Gerdau [the businessman] took me to a luncheon with the President, back in 2011. We had a really good conversation. And she talked a lot about health care. We spent BRL 1 million to devise the project. We went to the Ministry and presented our proposal. The idea was to rain 300 public servants to tackle one of the Ministry’s biggest problems: the management of public hospitals. We would focus on two elements. First of all: carry out a screening process upon admission. Does the patient need to be hospitalized or not? If they don’t, then they can be referred to a basic health care unit, take some medication and return to their home. We were going to create a hospitalization rhythm indicator. Once hospitalized, we would create another indicator – average time of hospitalization. Nowadays, it’s approximately 15 days. In private hospitals, this indicator is close to 3 days. If you take public hospitals and decrease this indicator by 50%, that is 7.5 days, we would then double the hospitals’ ability to provide care. It’s like building new hospitals at no cost. And we decided to work with cost price in order to help out the country. However, they did not take up our offer.
Where did the negotiations get stuck?
They may have thought: “this Falconi guy is from PSDB, he likes to work with Aécio”. It’s hard for people to get their heads around it. They said “no, thank you”.
Isn’t managing a country different from managing a company, as it involves more sensitive issues?
This is hogwash. From a managerial point of view, it’s exactly the same as a company. All you have to do is set the correct goal: not to make profit, but to serve. What are the indicators? What is the goal? If this goal is not reached, who will be responsible? Education is better than health care for a simple reason: the Ideb index and the Enem national exam were created, in addition to the use of international indicator Pisa. When there are indicators, you can carry out assessments, set goals. The Ministry of Education has all these tools. You can even complain about the country’s education, but you cannot say it is not improving, because it already is – without a doubt.
In private conversations, Jorge Paulo Lemann says that, if Ambev people were appointed to positions in the public administration, the management will improve. Do public services need some Ambev in them?
Everyone can have an Ambev, Klabin, or Suzano mentality. There are a lot of good companies in Brazil. What do these companies have? An HR Department that recruits the right people, which carries intense training sessions and assessments, in addition promoting the best employees. These are basic elements that the public sector does not have. The Federal Police does. And so does the Central Bank. I believe that the Federal Police is like Ambev, and the Central Bank is like Ambev. I believe he has used this expression to say the following: if you train people and use meritocracy, you then have a machine that manufactures results.
Meritocracy at Ambev…
Yeah, everyone talks about Ambev… Ambev uses the FALCONI system. Several companies adopted this model. I believe the Brazilian private sector is doing very well, thank you.
Some companies are not doing so well.
Let me tell you something. People like us, who are elderly, have been through a lot. I started researching about management in the 1970s. I found some Canadian quality standards and started studying the subject. From these studies we started building what we are today. I started writing books. Between 1989 and 1996, I wrote six books, and I sold over 1 million copies. A lot of the terminology used was created by me. Afterwards, a managerial culture started in Brazil. The standard of Brazilian managers has greatly improved. Greatly.
The contributions brought by this work are undeniable, but there is some criticism to be made. It is heard that at Ambev, for example, there is excessive pressure to achieve goals. What do you think of this?
Look, I don’t know anything about this pressure. People who talk like this do not understand it. There is no war, pressure, people saying “oh no, this is so bad”. All goals are negotiated at every stage. The process of trying to achieve the goal is, in fact, a process of pursuing knowledge. Do you know why Ambev professionals have high value in the market? Because they are competent.
The ethical crisis in the country, worsened by the problems at Petrobras and at construction companies, may leave the perception that Brazilian companies are more corrupt than the average. You carry out consultancy services in several countries. Is this perception any real?
I don’t see it like that. I have never seen this explicitly with our clients. In the long run, ethical diversions are not worth it for a company.
But they are present in news reports every single day.
Maybe in some segments, but it is not something generalized.
Do you think about taking over public office after retiring?
No, I will be leaving the country with almost 80 years old. But I am not necessarily quit my work. As long as I live and breathe, I will be helping the company whenever I am asked to help. And it is very likely that I’ll be asked to help. I am very beloved by our consultants.
Text published in the January 2016 edition of Época Negócios magazine.