The Great Game of Business. By Jack Stack. The Great Game is defined: The best, most efficient, most profitable way to operate a business is to give everybody. The Great Game of Business started a business revolution by introducing the world to open-book management, a new way of running a business that created. The Great Game of Business, Expanded and Updated: The Only Sensible Way to Run a Company - Kindle edition by Jack Stack, Bo Burlingham. Download it.
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The Great Game of Business is teaching employees to think and act like owners, using open-book management techniques developed by Jack Stack. The Great Game of Business: The Only Sensible Way to Run a Company by Jack Stack. Read online, or download in secure PDF or secure EPUB format. Cash. Revenue Growth. Return on Investment. Cost Control. Financing. Satisfied Customers. Paycheck. Job Security. Good Benefits. Overtime. Time Off.
Something is happening. If we waited for an accounting person to tell us, it would be too late to do anything about it. With supervision and tracking more distributed, they spend more time on setting long-range targets — which, if anything, means more intense work, because the targets must be defended both up and down the hierarchy. A forecast, in other words, is seen as a promise from a manager or employee to the rest of the company.
A financial number is seen, as Mr. It provides the missing direct experience of the business specifics, in a way that people have reason to trust, because they know their bosses are looking at the same numbers. It may seem disingenuous to hear financial data described as a humanizing influence, or even as a source of high-quality production information. But when times get tough at SRC, the rules stay fair: Bonuses are cut out first, then ESOP payments, then salaries, and only then is cutting jobs considered.
Open-book management is thus an antidote against the brutality of most layoffs. In a typical business downsizing, says Mr.
In fact, it makes clear what many wage earners would never otherwise understand: the reasons cost-cutting may be the right thing to do under certain circumstances for instance, in a cash-flow crunch By the standards of management pundits and consultants, Mr. Stack and the other SRC people are rough-spoken and informal. SRC managers tend to work out their own theories at a local bar, with managers from the various companies continually dropping in for discussion of the future over beer and chicken wings.
Most of his ideas, Mr. Stack chose to revitalize it instead, using a technique that had worked for him in Illinois: setting up competitions based on productivity targets. This naturally led him to revamp cost measurements to make it easier for shop floor people to discern, say, the various expenses that went into making one component. During the recession, which hit agriculture particularly hard, the farm and construction equipment manufacturer demanded that some of its plants, including the one in Springfield, cut back production.
But Mr. Stack and his wife had fallen in love with the convivial small city of Springfield, and he also felt there was a better way. From there it was natural to offer to download the plant from Harvester and set it up as an independent company Mr.
Stack and his partners had very little money of their own at that time, and it took two years to secure the financing, with the year-old Mr. Stack taking on the grueling but eye-opening task of wooing investors.
Soon Mr. Ultimately, the partners raised just enough money to download the plant — and, immediately upon opening SRC, they lost one of their key customers.
Stack and his 12 confederates felt they had no choice but to let everyone in the plant know exactly how bad things were. It turned out that people appreciated the opportunity to learn and to take part proactively in saving their jobs. If you bought a tool, you realized what the effect of that expense would be.
If I learned the numbers, I could figure out the business for myself and determine if it would do for me and my family what I thought it should do. Stack became its central figure — the guy everyone wanted to please, the leader who asked the tough questions, and the one who pressed people to think broadly.
From 4 p. It also helped that everyone could see managers out on the floor at the end of the month, working to ship the last bit of product. In , the company and Mr. Stack were the subject of a cover story in Inc.
Meanwhile, the company began to diversify — the first time, into automobile engines in , after a janitor a former stockbroker at a major Wall Street firm who moved to Springfield for a less pressured life stopped Mr. Stack in the hallway to remind him truck engines were a cyclical industry.
One of the original 12 managers who had bought the company with Mr. Stack left the company in At most firms, either that figure would have been hidden, or there would have been a taboo against discussing it.
But at SRC, it came up in one of the huddle meetings. As Mr. Stack tells the story, an hourly worker said he was very happy to have the ESOP stock, especially with its value rising so rapidly. But what would happen when he and his peers began to retire, many of them around the same time 20 years hence?
Where would the money come from to download the stock? Stack in his memoir-in-progress. This is, of course, one of the great unspoken problems of entrepreneurialism, especially in places like Silicon Valley where stock options are rampant. Many companies solve this difficulty by going public. This leaves the entrepreneur with no real option but to leave, raise venture capital for a new company, and start the process all over again, in a blockbuster-style syndrome that, in the long run, is probably destructive to the entrepreneurs, the markets, and the industry.
At SRC, nobody wanted to relinquish control to an outside group who might misunderstand their Great Game, and its requisite investments in training and huddle time. They trusted themselves and their hard-won business sense more than they trusted anyone else, and they wanted to build a legacy business that could live longer than they would.
They also disliked the option of putting cash aside for downloadback time; they wanted cash available for growth when they needed it, not tied up in reserves.
There had to be an alternative — a way to use the built-in entrepreneurial incentive of the SRC system to keep creating enough wealth to allow them to download back their shares Then Mr.
Stack found his inspiration — in a story from a Springfield neighbor named Mike Ingram, a fireworks importer who had trekked into the Chinese hinterlands to visit the manufacturer firsthand. Expecting to see a factory, he had emerged over the crest of a hill to see a village spread out before him, with hundreds of little huts.
The huts were the factory. If one hut exploded, the others could continue operating. Stack recalled.
But in , the second new company took root. It was called Engines Plus Inc. Stack figured he could create his own supplier. If SRC needed cash suddenly to download out shareholders, it could sell this expendable subsidiary and keep the main company solvent for a while longer. Thus, if the new company succeeded, its share price would rise dramatically, too.
Engines Plus was the first of the SRC affiliates; the number of companies has grown at an accelerating pace ever since. The original purpose was more than fulfilled; cash generated from the affiliates has enabled SRC to download back the shares of retiring employee-shareholders without having to sell any of them at least so far.
Since the various companies can share resources like a collective health care fund that replaces health insurance , their overhead is also lowered. Over the years, SRC has evolved a variety of strategies to keep the plan from running away with itself and endangering either the employee-shareholders or the company.
SRC funds an extensive k retirement plan in addition to the stock, so that if all the SRC companies tank together, retirees will still be protected. The company maintains investments in fixed assets, like real estate, that can be sold off in a hurry if need be. He is also considering taking one company public, just to see if there is a way to do it and keep the basic principles intact. One of the most important weapons, in fact, would be the years of experience with financial literacy, disclosure, and close-to-the-edge financial operations.
They are expected to amplify that by diversifying their customer base and product lines as quickly as possible. There may be 10 years or less to find new lines of work, or they will be forced into a decline — open-book management and all. Engines Plus is probably the first of the subsidiaries to take this awareness to heart. Engines Plus now makes and sells small power generators, primarily used to generate electricity from the waste gas in oil and gas well heads. This is the start of a potentially booming business, given the current energy shortages in the U.
If employees focus on revenue growth, the job security takes care of itself. If the employees focus on creating return on investment, the benefits will be there.
Your employees will get on board with you; people support what they help create. To do that, utilize the one thing we all share in common, and that is the need to win.
All of these points have a financial equivalent. Steve incorporated them into a three-step system that can be applied at any company today: Know and teach the rules.
This is about financial transparency, education and involvement. Your employees need to have access to company financial reports, and also be able to understand them.
Encourage your employees to help create something called a critical number. It should be a number that everyone can connect to on an emotional level. For SRC, it was the repayment of their bank loan, which meant job security for everyone.
If employees help name the critical number, chances are they will work like heck to help achieve it.
This is where you do all your communicating around the numbers. You do it through a simplified income statement which shows how your company makes money and how it flows to the business. Everyone gets together and discusses where they are in the game, next steps, etc.
The more you practice forecasting the easier it gets.