Open Book Management. Transparency that Works

The Great Game of Business is a company whose origins were from the Springfield Re-manufacturing Corp, (SRC).  For those who do not know about Jack Stack and Springfield Re-manufacturing, I will be writing more about this great story of American Manufacturing ingenuity in future posts.  Suffice it to say, Jack Stack and his smokestack industrial Midwest manufacturing companies are the real deal.  Key learning from the SRC story are all rolled up into an Open Book Management Concept they call the Great Game of Business, and it is an awesome system to utilize if you want your company to succeed and thrive for decades to come.

A very brief history.  SRC was a division of International Harvester, that century old international conglomerate making large tractors, trucks, and engines, along with parts supporting each division.  International Harvester generated billions in sales revenue back in the 70's and early 80's.  They were a venerated U.S.A manufacturing company that didn’t understand about the disruption that was to eventually cause their demise.  Things were going well, or so they thought, until the Japanese came along and had the daring audacity to ask their customers what they needed. 

International Harvester was a union dominated manufacturing company whose problems originated in the headquarters offices amongst the senior management and facility leadership, NOT ON THE SHOP FLOOR.  Folks on the shop floor embraced a culture of job security.  They wanted to protect their jobs at any cost.  And who could blame them.  The bosses were all sending mixed messages each month, often confusing the employees with directives that did not make sense.  They were self-absorbed, and not listening to the marketplace. 

The Japanese had a different idea.  They craved information from the marketplace.  They came to the U.S.A and talked with customers, and took the information back to their own manufacturing operations.  They modified their designs, changed their processes, and then delivered the goods in the form of a remarkable customer experience.  And they did that at a lower cost than what their customers had been paying from old line manufacturers like International Harvester.  A much lower cost.  They delivered quality consistently, and they made their customers very happy.

NBC's Tom Brokaw broadcast in the early 80’s that if we in the U.S.A. didn't do something about this and embrace global competition, our future as manufacturing leaders would be challenged, and companies in the U.S.A. would be at risk.

Jack Stack was sent to Springfield Missouri, home of SRC, to close the facility. But a different plan emerged.  Instead of closing the facility, he listened to the employees, listened to the customers, visited manufacturers in Japan, and came back convinced that International Harvester could never catch up.  The puck had moved to another rink, and Harvester didn't see the movement and market shift.  He had a vision of job security where each employee would have a stake in their own future.  He and a handful of plant personnel purchased the facility from the parent.  And the rest is the story of SRC Holdings, and the Great Game of Business.  SRC invested in the employees, believed in them, incentivized them appropriately with a share of ownership, and involved and engaged them in defining their own future.

Today, SRC is parent to a basket of related companies, all practicing the Great Game as it has become known.  I have witnessed the process at an SRC manufacturing facility, participated with the employees observing a company huddle.  My conclusion is the Japanese had better watch out.  The SRC employees are highly engaged, know their business, and forecast their opinions about what revenue, cost, and margin will be doing in the next weeks or months.  They own the forecasting process, and report it in huddles each week, or bi weekly.  It is a sight to see when machine operators are fluent in financial terms.   They are forward looking, evaluating trends, and predicting cost movement.  They are VERY in touch with customers, and future products and services are held in a reserve contingency.  Can you imagine how that would be in your company?   

Jack believes that we must hire our people for their mindshare, not so much for their contributions of labor, although they do that part better than most I’ve seen.  As leaders, we think we know the problems, and the solutions.  Let's all agree that the people that do the work know the problems, and know the solutions to them, especially when they listen to the voice of the customer.  In fact, they know them way better than we do.  Often our best answers to problems come from the employees doing the work.  And if incentivize them appropriately, and engage them in the Great Game of Business, we have a much better chance of winning. 

SRC Holdings, The Great Game of Business encourages job security by engaging the employees, teaching them about how a business operates, about the customers, the processes, the financials, and treating them like owners.   The objective is not necessarily growth of the company.  And it really works.  The proof is in Springfield Missouri, and at companies that have adopted the Great Game all over the world.

The irony is that when the jobs get protected, the business grows year over year at staggering rates.  It may be a stretch for some business owners ‘give up’ their control and allow this degree of transparency, but to ignore it and not engage your people is risking your future as a company.

You can bet on it.