Here Shweiki Media Printing Company teams up with Steve Baker, Vice President of Marketing at The Great Game of Business, to present a much-watch webinar on utilizing open-book management to see positive financial results and create lasting cultural change.
The Origins of Open-Book Management
There are very few people who know that Springfield, Missouri, is the birthplace of open-book management. It all started at SRC, a company that manufactures engines.
The Great Game of Business is the smallest division of Springfield ReManufacturing Corp. (SRC), with about 1,500 employees and 14 core divisions. Most of the divisions are involved in re-manufacturing or joint ventures with companies, such as John Deere. Although they are the smallest division within SRC, they were actually established to handle a high demand of company tours as more people learned about open-book management. Today, The Great Game of Business has grown into the largest and most well-known resource for open-book management training and education.
The book, The Great Game of Business: Rapid Financial Results Lasting Cultural Change came out in 1992, and it is the story of SRC and open-book management. The amazing thing is that some very famous people have paid attention to this book, including Jim Collins, author of Good to Great, who had the following to say:
“The whole concept of The Great Game of Business is beautiful–consistency alignment, and transparency, infused with core values and brought to life with powerful mechanisms, it is inspired and inspiring.”
There are so many businesses with operating systems, and very few actually have the mechanisms to bring them to life and give companies the financial results and cultural change they are looking for.
Through the years, Great Game companies typically see twice the national average in revenue growth and six times the profit growth. Along with that, there is a cultural change of three times the business literacy and employee engagement.
How does a company do that? How does a company get these numbers? Oftentimes, the best place to start is by helping owners understand that perhaps they should engage their employees on a different level.
Owners and Employees
There is a serious problem with energy in the United States that could even be called an energy crisis. Annual surveys of employee engagement show that 70% of America’s workforce are not engaged in their work every day.
The fact is, when people rent things, they tend to treat them completely differently than they would if they were to own the things themselves. It is the idea of ownership that separates owners from this employee mentality.
Employees and owners will often find themselves at odds, probably because they don’t have the same goals in mind and they are definitely not speaking the same language. Employees will typically lie awake at night worrying if they will have a job in the morning or will they get a check or if it will even cash. This is a common occurrence in America.
On the other hand, owners spend their time thinking about cash, competition, material costs, labor, etc. If owners can get their employees to worry about the same things they do, meaning employees are thinking like owners, everyone is working towards the same goal. This allows the company to come up with ideas regarding cash, growth, and investments. Getting employees and owners on the same page will allow more career opportunities, job security and benefits. Everyone wins.
Generally speaking, people need security, and too often owners will not teach their employees where this job security comes from. Job security really comes from a growing, profitable and sustainable business. One should think of a company as a product or service.
Modern Accounting Systems and The Industrial Revolution
The father of accounting, Luca Pacioli, introduced the world to modern accounting systems. Financial statements, as the world knows today, have not changed in half a millennia and won’t change anytime soon.
Financial statements are the universal score cards, the secret language of business. It does not matter what kind of business it is or what they do, because financial statements measure everything and affect everyone on this planet. They touch every life, and yet very few people have access to them.
During the Renaissance period, financial books were open to the public. During the Industrial Revolution, however, the financial books became closed off from the public and the business was taken out of business as owners divorced people from the daily decisions they made. People no longer had access to the financial results of the business, and many large industrial giants suffered because of this.
Jack Stack and SRC
The late 1970s and early 1980s were a scary time for people. Unemployment was at a record high while car sales were at a record low and interest rates topped out at 22%. Companies like International Harvester were dying. In Springfield, Missouri, there was a tiny division of International Harvester called the Springfield Renew Center–also known as SRC.
Jack Stack and 12 other managers went on an incredible odyssey to try and save the jobs of everyone working at SRC. Therefore, Stack bought SRC and became SEO.
They figured out that International had the best report cards all around. They had the best quality, the best warranty record, the best safety and the best customer service by far, yet somehow the company was still failing.
How is it possible that a system was created in which employees could do their jobs extremely well while the company around them still failed? Stack realized it was because International had no idea how to run a business properly. There was only one solution: they had to learn the universal language of business and how to use financial statements. This is where the idea of open book management originated.
Stack knew that he had to teach his people business, otherwise their company would fail. He used the concept of a game to engage people around the idea of learning businesses without feeling that everyone had to become an accountant.
Abraham Maslow came up with the concept of a hierarchy of needs or universal human needs. Stack figured out that the basic human, universal need to win is way down at the bottom of the pyramid. This is where employers can engage their employees. In order to get people to think like owners, who are at the top of the pyramid, employers must engage their employees at the bottom and work them up.
Business has all of the elements of a game:
- There is a goal
- There are rules
- There is a score card (the financial statements)
- There is a reward for winning
The overall goal of the game is a company’s critical number and it’s surrounded by three elements.
It is important to remember that no one wants to play a game if:
- They do not the know the rules
- They do not know the score and/or are unable to change it
- They cannot win
In The Great Game of Business, every employee:
- Is given the measures of business success and taught to understand them
- Is expected and enabled to act on their knowledge to improve performance
- Has a direct stake in the company’s success
When employees think, act and feel like owners, then everyone wins.
Check out the Great Game of Business website for more information on management, its origins, and its fundamentals, and watch all the videos featuring Steve Baker and The Great Game of Business on Shweiki’s YouTube channel.