We had a great conversation on The Great Game of Business, by Jack Stack. This book follows along the business events in a company that was involved in a management buy-out. The Company is a manufacturing firm in Missouri. They were one of the first “open-book” management style management teams to have great success. Here are some high-lights of our conversation:
Competitive spirit – The Company asked these questions — “how do we get everyone in the competitive spirit? How do we get everyone pulling in the same direction?” They changed people’s perception from that of an employee to that of an owner. This allowed everyone to have a chance to win and have fun at the same time.
Sharing information was critical in their journey. They felt that in the absence of information people will fill in the blanks with their own ideas and bogus facts. They wanted to avoid misinformation and filled the gaps before it really began.
It takes a global perspective to fully understand how a business runs. Understanding of the production function or the sales function is not running a business. It took a breaking down of the silos that allowed everyone to see the entire field. 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 firm started out refurbishing large industry engines. But in some ways they felt that engines were incidental to what they did. They defined themselves as an education business. They taught people about business. Everyone was instructed on how to read an income statement, balance sheet and cash flow report. They taught their staff the difference between income and cash flow. Their primary objective was to focus on and increase cash flow. The only way to be secure is to make money and generate cash. Everything else is a means to that end. You can have great customer service and fail.
In most companies, people are taught how to do their 9-5 tasks and not given information on the larger picture. They are not taught how they fit in with the larger picture. So a gap grows between managers and workers. Sharing information and giving them a stake in the game can reduce that gap.
They firmly believe that every department should make forecasts of the business activity. Business got off track when they stopped asking people to make forecasts.
These are some of the highlights of our conversation. If you did not get a chance to finish the book, you might want to keep it on your reading list. It is worth the read.