I recently finished reading The Great Game of Business – Unlocking the Power and Profitability of Open-Book Management – by Jack Stack with Bo Burlingham.
Through this book Jack outlines his open-book management framework – which he calls “The Game” – while at SRC. As he states: “What lies at the heart of the Game is a very simple proposition: 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.” The ensuing chapters discuss the various aspects of this framework, covering a breadth of topics such as vision, goals, compensation etc. Below is an outline of these topics:
“1- Why teach people how to make money: On profit in general, On your company’s profits, On making money and generating cash, On jobs and job security, On wealth and wealth creation.
2- Myths of management: On the danger of telling the truth, On the danger of being a “nice guy”, On the role of the manager, On motivation.
3- The feeling of a winner: On the credibility of management, On the attitude of employees, On pride and ownership, On starting games, On celebrating wins.
4- The big picture: On defining the big picture, On Sharing the big picture, On moving people around the company, On sending mixed messages, On Connecting with communities outside the company.
5- Open-book management: On taking the emotions out of the business, On being the least-cost producer, On the fear of competitors, On the fear of employees, On sharing compensation figures.
6- Setting Standards: On critical numbers, On the purpose of standard costs, On setting up a standard cost system, On absorbing overhead.
7- Skip the praise – give us the raise: On designing the bonus program, On the effectiveness of the bonus program, On the size of the potential bonuses, On the issue of equal payouts, On educating with bonuses.
8- Coming up with the game plan: On budgets and game plans, On the sales forecast, On getting people to buy in, On changing the plan as the year goes along.
9- The great huddle: On staff meetings, On putting names on the numbers, On the timing of meetings, On the role of the Leader, On writing the numbers down.
10- A company of owners: On equity in general, On long-term thinking, On playing the game in employee-owned companies, On playing the game without the equity tool, On participation versus democracy in business.
11- The highest level of thinking: On the cost of health care and other benefits, On creating new opportunities for people, On cash-flow generators and overhead absorbers, On the hunger for ownership.
12- The ultimate higher law: a message to middle managers: On getting your boss to play the game, On playing the game without the boss, On having fun.”
A great educative book on management, that promotes openness, transparency and effectiveness!
Below are excerpts from the book that I found particularly insightful:
1- “The only way to be secure is to make money and generate cash. Everything else is a means to that end. Those simple rules apply to every business. And yet, at most companies, people are never told that the survival of the company depends on doing those two things…most important, no one tells people how to make money and generate cash.
2- “People only get beyond work when their motivation is coming from the inside…Management is all about instilling that desire to win. It’s about instilling self-esteem and pride, that special glow you get when you know you’re a winner. Nobody has to tell you. You just feel it. You know it.”
3- “Along the way, we learned some lessons about the kind of games and goals that work best: 1) Business is a team sport – choose games that build a team. 2) Be positive, build confidence. 3) Celebrate every win. 4) It’s got to be a game. 5) Give everyone the same set of goals. 6) Don’t use goals to tell people everything you want them to do.”
4- “I found out that people who had worked in two or more jobs had a whole different attitude about business. Cooperation was great. They were much better at seeing the other guy’s perspective. They understood how different functions fit together, how the depended on each other.”
5- “The best argument for open-book management is this: the more educated your work force is about the company, the more capable it is of doing the little things required to get better.”
6- “When you use financial statements as management tools, you have to adapt to your purposes…How you do that depends entirely on your business, but here are some general rules to follow: 1) Start with the income statement. 2) Highlight the categories where you spend most money. 3) Break down categories into controllable elements. 4) Use the income statement to educate people about the balance sheet.”
7- “The real power of the bonus program lies in its ability to educate people about business. Once they understand the math, they see how everything fits together, and how business can be a tool for getting them what they want. And it all does fit together. The system really works. You can’t criticize it because it is simply a reflection of reality. You can criticize individuals. You can take people to task for the way they do business. You can go after the ones who are greedy, who only want to help themselves, who exploit other people for personal gain. But the fault lies in those individuals, not in the nature of capitalism.”
8- “That’s because a company of owners will outperform a company of employees any day of the week..When you think like an owner, you do all the little things necessary to win…But people will only thing like owners if they have a larger purpose, if they are not just working for a paycheck…People have to see the Big Picture. They have to know what they are doing, why it’s important, where they are going, and how business is helping them get there. Only then will they have the desire to go out and use the tools you provide and play the Great Game of Business to win.”
9- “…”Everyone who comes fishin’ here gits the same number of bites. The only difference between thems that catch the fish and thems that don’t is preparation and concentration. You gotta make sure your hook is sharp and your line don’t have no nicks. Then you gotta watch that line. You pay attention to them little things, and you’ll catch all the fish you kin handle.” I think of that story whenever I run into people who don’t know what to do with their lives because there just aren’t enough opportunities around. I also think of it when I hear about companies laying people off because their services aren’t needed, because there isn’t enough work for them, because the opportunities have all dried up. What a waste. There are opportunities everywhere – opportunities to grow, opportunities to start new businesses, opportunities to create jobs and absorb overhead. Everybody gets the same number of bites. You catch the fish when you’re prepared and ready to respond.”