The Great Game of Business
JACK STACK WITH BO BURLINGHAM
Reviewed by Jack
Jack Stack is credited as the first person to have written about Open-Book Management (OBM) when he penned The Great Game of Business about his company, Springfield Remanufacturing Corporation (SRC), a division of International Harvester. OBM is a management policy based on sharing all of a company’s financial data with employees. The theory is that if employees understand how they affect the company’s health as a whole, they will work harder and more efficiently. There are, however, a few codicils that can affect the success of this approach: management has to have credibility—this cannot be another “theory/flavor of the month”—and the employees have to have some fire in their eyes.
I began sharing numbers, or using OBM, years ago, because I felt that my employees, as a group, were way smarter than I could be working alone. I have always believed that transparency is the best and most honest way to work, and, as such, allows me to sleep better at night. When times were hard (we had several lean years), the employees knew why we needed to tighten our belts and why certain perhaps unpopular decisions were made. And when the company became more prosperous, the employees understood what it took to climb the mountain and were able to genuinely celebrate their contribution to our successes. But in order for this type of management to work, education—providing employees with an understanding of the basics of business finance—is key. OBM remains an uncommon management approach because it requires constant engagement with everyone on every level of the organization. I happen to believe, and I suspect Stack would agree, that it is this engagement that makes the workday worthwhile.
Stack and a group of managers bought a division of IH that refurbished diesel truck engines; then called Springfield Renew Center, the division was in sad shape. Introducing OBM meant first committing to employee engagement. In the early days, Stack knew that you couldn’t engage people unless they had pride in what they did and where they did it. He held an open house and provided employees with the equipment to paint and spruce up their work areas, and brought in finished company products to display. On the weekends, families were invited to see where their family member spent the day.
“The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the financial outcome, good or bad.”
Then for OBM to work, management needs to present the big picture to every member of the organization. This runs counterintuitive to old-style management practices, but as the Springfield division has proven and I have observed, it works. Employees also have to step up and speak up, become motivated by the information that has been shared, and make everyday decisions based on this knowledge. An analogy that best sums up the power behind OBM is that of “everybody pulling on the same oar.” Teams and team building play a large role in the success of OBM. Stack provides a list of some of the goals that worked best for SRC:
- Business is a team sport—choose games that build a team.
- Be positive, build confidence.
- Celebrate every win.
- It’s got to be a game.
- Give everyone the same set of goals.
- Don’t use goals to tell people everything you want them to do.
This approach may seem quaint since the book was written in 1992, but currently SRC Holdings has fifteen separate companies with overall sales of $300 million. A $1 investment in SRC stock in 1983 is now worth $800. The people who work at SRC own this stock, and the company has never laid off an employee.
I firmly believe that OBM played a significant role in my company’s growth and is the reason we have extremely low employee turnover. But the OBM approach Stack advocates requires a constant commitment from managers to completely share information with employees. It is a one-way trip: giving people more means that you can never take a step back, withhold information, or deny participation. JC
The Great Game of Business: Unlocking the Power and Profitability of Open-Book Management, Currency/Doubleday, Paperback 1994, ISBN 9780385475259
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