the Great Game of Business
THE ONLY SENSIBLE WAY TO RUN A COMPANY
with Bo Burlingham
First published in Great Britain in 2013 by
PROFILE BOOKS LTD
3A Exmouth House
Pine Street
London EC1R 0JH
www.profilebooks.com
First published in the United States of America in 2013 by
Crown Business, an imprint of Random House, Inc., New York
Copyright © The Great Game of Business, Inc., 2013
The Great Game of Business is a trademark of The Great Game of Business,
Inc., a subsidiary of the Springfield Remanufacturing Corp.
SRC is a trademark of the Springfield Remanufacturing Corp.
1 3 5 7 9 10 8 6 4 2
Printed and bound in Great Britain by
Clays, Bungay, Suffolk
The moral right of the authors has been asserted.
All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the publisher of this book.
A CIP catalogue record for this book is available from the British Library.
ISBN 978 1 78125 152 2
eISBN 978 1 78283 007 8
The paper this book is printed on is certified by the © 1996 Forest
Stewardship Council A.C. (FSC). It is ancient-forest friendly. The printer
holds FSC chain of custody SGS-COC-2061
To Betsy,
for your incredible strength and love.
And to
Ryan, Katie, Meghan, Timmy, and Kylie
for everything you have taught me.
I don’t want to leave your generation
worse off than ours.
I want to leave it better.
INTRODUCTION TO THE EXPANDED AND UPDATED EDITION
DOES IT REALLY WORK OR IS IT JUST A BUNCH OF HYPE?
THE HIGHER LAWS OF BUSINESS
THE ULTIMATE HIGHER LAW
1 WHY WE TEACH PEOPLE HOW TO MAKE MONEY
2 MYTHS OF MANAGEMENT
3 THE FEELING OF A WINNER
4 THE BIG PICTURE
5 OPEN-BOOK MANAGEMENT
6 SETTING STANDARDS
7 SKIP THE PRAISE—GIVE US THE RAISE
8 COMING UP WITH THE GAME PLAN
9 THE GREAT HUDDLE
10 A COMPANY OF OWNERS
11 THE HIGHEST LEVEL OF THINKING
12 THE ULTIMATE HIGHER LAW: A MESSAGE TO MIDDLE MANAGERS
G GET IN THE GAME: THE “INTERACTIVE” GUIDE
ACKNOWLEDGMENTS
I think that in most people’s hearts, they want to write a book. And most people can. But here’s some advice: don’t write a business book. Write a western or a romance instead—anything but a business book. Why? Because few people keep your typical novel. They read the book and then they get rid of it. They rarely dog-ear it, Post-it-note it, flag it, bookmark it, highlight it, or underline it. It’s almost as if time stands still when you write a business book. It’s unlikely that someone will bring a mystery or a romance novel back to you twenty years later and ask what you meant by what you wrote on page 121 or whether you’re still doing the things you mentioned on page 67. When you write a business book, and profess to practice what you preach, you’re permanently putting your reputation on the line. Plus, your readers might actually do something with the advice you wrote about. That’s an awesome responsibility to live with.
Twenty years ago, Bo Burlingham and I wrote a book called The Great Game of Business. We weren’t trying to do much more than document how we at Springfield Re-manufacturing Corp. (SRC) in Springfield, Missouri, were operating our business, which was focused, at the time, primarily on remanufacturing truck and automobile engines. We were a classy garage shop. But what really made SRC different was that our business wasn’t run in the traditional top-down, command-and-control way most other companies were (and still are). We had built a repeatable system that enabled our associates to run the company—a business of businesspeople, as I like to call it, where everyone gets a chance to grab the brass ring if they choose to do so.
WHAT’S IN A NAME?
The name we used for our leadership system, The Great Game of Business (also known as the Great Game, the Game, or the GGOB), has caused a lot of head scratching over the years, especially by people who think that it trivializes business by equating it with a game. Business is serious, they say, where people’s lives, let alone life savings, are at stake. It’s a fair point.
We used the word game for our system because we wanted to find a way to make business approachable and less intimidating to our associates working on the shop floor or in an office. Business is not an art or a science. It’s a competitive undertaking with rules, winners and losers, ways of keeping score, and all the elements of luck and talent. It doesn’t have to be an instrument of exploitation, or a tool of greed, and you don’t need an MBA to understand it. Given all that, we figured there wasn’t any reason we couldn’t set up our company so that everybody could play the game together and share the rewards. We wanted to demystify business.
The truth is, when we still worked for International Harvester, we were great at building products like engines and tractors, but nobody had ever taught us how to build a company. I’ll never forget a guy who worked on the factory floor running a drill press. His job was to literally figure out how to make the perfect hole by correcting for millimeter-wide variances. Nothing more; nothing less. You could imagine my surprise when someone told me that the same drill press operator was actually a self-made millionaire who had built his wealth through savvy real estate investments. Here was this incredible entrepreneur working under our noses and all I had this guy doing was drilling holes. What a wasted opportunity.
This haunted me for a long time because we had missed out on using this drill press operator’s full range of talents. We only asked him to drill the perfect hole, not about how he thought we could build a better company. For thirty-three years, we only had him keep his head down thinking about control charts, measurements, and throughputs. He had given us his skills, but we lost the opportunity to tap his full intellectual capacity. What we didn’t realize at the time was that by failing to tap the strengths of every individual in our company, we were heading toward a dead end by dumbing people down.
Our wake-up call came when International Harvester told us it was shutting down our plant. When we took the opportunity to buy the company for ourselves in 1983, we knew we needed a smarter way to run our business. The old way didn’t work. We needed something that was the opposite of the command-and-control model that we had been taught and that had been used for years and years. If we were even going to have a shred of a chance to make it on our own, we needed to find a way to tap the strengths of every individual in the company.
In those early days, none of us knew squat about business. It was really, really hard to break free from our old ways. Even though we owned the company, there was still an attitude of “us versus them” between the managers and the workers. You still had people pointing fingers and waiting for commands. We had plenty of job descriptions that could tell you the size, measurements, and tooling you needed to make the perfect hole. But nothing in that description was tied to the success of the company as a whole. That’s where we fell short.
Even though we were owners, nothing really had changed. We were still experiencing the hangover from the Industrial Revolution. We weren’t moving forward, we just kept going backward. It was an example of how devastating the command-and-control model truly was.
It wasn’t until we appealed to everyone’s competitive spirit that we began to see change take place. It’s a universal law of nature that if you poll a group of people and ask them their opinion on just about anything, you’ll rarely get everyone to agree. Except when it comes to winning. Everyone likes to win—and no one likes to lose. That’s why we tried to open the business up using the analogy of games—things that people are interested in and have fun doing. Work is boring. But people love the idea of playing a game or competing. Call it a hook if you want. It was all born out of frustration about how to teach people the metrics of business. We wanted to find a way to get people to apply the same skills they were using to build the perfect tractor to also build the perfect company. We needed to change our focus so that the company was our product.
The GGOB became an accelerated learning process we used to bring about a cultural and behavioral change and take down the walls that our command-and-control system had created. When the lightbulbs started to come on, and we really began thinking about how we could build a great company together, the transformation was incredible.
By the time we wrote the original book in 1992, the results were already staggering. Revenues had grown from $16 million to $83 million, and the company’s value had skyrocketed from $100,000 to $25 million. Just as important, our Employee Stock Ownership Plan, or ESOP, had grown to the point where hourly workers who had been with SRC from the beginning had holdings worth as much as $35,000. But beyond any specific numeric goal, we were very vocal in that first book about our goal that everyone who worked at the plant would have a chance to buy a house of his or her own.
That was a heavy objective for a bunch of guys and gals with grease in their fingernails and sweat on their brows. It also brought us a lot of attention over the years. I can’t tell you how many times people who read the original book have asked me how that house thing worked out. I’m proud to report that the average ESOP account for our original hourly workers topped $400,000 in 2012. In Springfield, Missouri, that’s a house, a lake house, a bass boat, and a pickup truck. The most important thing is that our employees know how to achieve their dreams. That’s the real secret of the GGOB.
All the same, we never stopped marching forward. We’ve only gotten bigger and stronger in the years since the original book was published. We started this process a long time ago, but it’s never finished. The more we play, the more we learn. The more we fix, the better we get. It’s like working in a living laboratory.
A critical component of our success was that the more we taught people, the more they taught us. The more we opened things up, the more people wanted to know. It was contagious. In a command-and-control system, people don’t ask questions because they don’t know what to ask. But when you’re collectively trying to build a great company, you ask hard questions. And when everyone respects the people asking those questions, you get stronger because you have to work harder to come up with the answers. It still surprises the heck out of me how transformative it is when the lights go on in someone’s head and the person just gets it.
With the help of the GGOB, the people at SRC have continued to be profitable every year since we got our start back in 1983. SRC’s combined revenues have grown to more than $450 million. Just as important, the company has created thousands of jobs while building more than sixty diversified businesses over the past thirty years. Most of the SRC companies remanufacture products for the agricultural, industrial, construction, truck, marine, and automotive markets. We’ve diversified into core management, failure analysis, reverse engineering, logistics, kitting and packaging, and warehousing and distribution. Most would advise you to stay within your “core competencies.” To the contrary, we have been in banking, furniture, biotech, clothing, retail, and software. That growth and diversity has helped drive the share price of SRC’s stock from $0.10 in 1983 to $348 today—that’s a 348,000 percent growth rate, if you’re counting. To frame that another way, if you had put $1,000 in a Standard & Poor’s index fund back in 1983, you’d have about $8,434 today. If you had invested $1,000 in shares of Berkshire Hathaway, Warren Buffett’s company, over the same time frame, your stake would be worth about $113,000. Not a bad return on your money. But if you had invested your $1,000 in the people of SRC back in 1983, you’d be worth $3.4 million today. That’s incredible.
CHANGING PERSPECTIVES
The cumulative effects of the GGOB didn’t just stop at the stock price. What I’ve noticed over the years is that when things are going well, and when people are feeling good about themselves, they begin to feel good about others as well. It’s infectious when you get on a roll. You begin to do things first at home and then out in your community to make sure you don’t lose that feeling. You begin to pay it forward, which is something the media somehow seems to forget when they start attacking successful businesses.
As an example of what I mean, I asked our human relations team at SRC to find out how many of our associates serve in volunteer organizations throughout our community of Springfield, Missouri. When they told me that we had more than 115 of our people serving in a range of executive positions that included everything from a school district board member to a United Way organizer, I was simply blown away. And that doesn’t count all the folks like our chili cook-off king, those who coach soccer and Little League teams, and everyone else who gives back to the community in their own way. You build wealth, distribute it, and then continually recirculate it from generation to generation throughout your community. When you add it all up, isn’t this what the brighter side of capitalism is all about?
I believe that people who invest their time in building a business are just as important as the people who invest money. That’s not always a popular belief within the business community. A lot of people will say that because they risked it all, they deserve all the rewards. The investor who puts in $1,000 gets $2.9 million but the worker who spends thirty-three years on the line only gets his wages? To me, this is the darker side of capitalism.
What differentiates the GGOB is that it gives the associates in a company the chance to grab the brass ring and not just settle for arm-wrestling over wages. The people who invest their time should be given similar opportunities to reap rewards as the people who invested their money. The GGOB addresses the notion that the longer you stay with the company, and the more time you invest, the greater the chances are of reaping your rewards if the venture is successful.
THE ONLY SENSIBLE WAY TO RUN A COMPANY
I think one of the key reasons the original book was so popular was because the people who read it said—“I knew it! I knew this was the right way to run a business but I wasn’t allowed to do it. This book says it’s okay to do it.” Or “I was doing some of these things already, but I never made the connection as to why they were important. Now I get it!” That’s heady stuff and got people really interested in what we were doing.
The result was that at the same time we were opening our books and teaching business to our associates, we were also opening up our company to other people from literally all over the world. We felt compelled to share and help other companies get started playing the GGOB because it had made such a difference to us. And the more we opened up our business to others, the more accepted the GGOB became within SRC itself. The fact that people from Europe, Africa, Asia, and South America would travel for thousands of miles to learn what we were doing helped validate our system, and it encouraged our associates to dig deeper. The more we shared with others, the better at the GGOB we became. The reciprocal effect was amazing.
At first, we would give tours. We just let people in and allowed them to talk to whomever they wanted. Then, we started holding seminars where we shared some of the tools we were using to teach our associates how to play the GGOB. Year after year, scores of people would come visit us and tell us, “Yes, this is exactly what we need.”
Those seminars eventually grew into an annual conference we now call the Gathering of Games, an event that also celebrated its twentieth anniversary in 2012. In total, more than fifteen thousand people from more than five thousand companies from literally every industry you can think of—including health spas, pizza restaurants, hospitals, and even members of our government—have visited our facilities or attended our conferences and seminars over the past twenty years.
Eventually, in true SRC style, we also recognized that there was a real opportunity to build a new training and education company, which we also named the Great Game of Business, that could help teach and reinforce the rules of the GGOB both inside and outside of SRC. Today, the GGOB (you can visit the company at greatgame.com) sits at the center of a vast community of people spread around the globe who believe in the GGOB.
WHY THE GREAT GAME OF BUSINESS MATTERS
One message that I wish I emphasized more in the original book was how freeing the GGOB becomes for leaders. Too often I see leaders who are afraid to come out of their offices without their ties perfectly straight or who suffer strokes because they’re so stressed out from feeling like they have to know every answer to every problem. People think that as leaders they always have to make the right decisions—something that terrifies them.
But leaders don’t have to have all the answers. They need to know where to go. What I didn’t know twenty years ago was the sheer impact that results from tapping the power of teamwork and collaboration by trusting, delegating, and ensuring that everyone knows his or her role. I just thought working together as a team was the right thing to do. It was common sense. But what I didn’t realize at the time is that the GGOB allows anyone, regardless of his or her position inside the company, to make a difference. It frees people.
The GGOB also matters because it helps build leaders—and we have built an incredible group of leaders at SRC over the past thirty years. That’s why we’ve been able to build such a diverse range of companies over the years. I can’t tell you how many times I’ve heard from other businesspeople about how they had to bypass an incredible opportunity because they didn’t have the people on board to do it. If leaders are so important, then how come we aren’t teaching people to lead all the time? Why don’t we have an everyday system that works on giving people the tools they need to become leaders? By using the GGOB, we can delegate information to make people responsible for making decisions. People appreciate their jobs more when they are given the opportunity to make a difference. The GGOB matters because we can use knowledge and communication to teach and build leaders. Then we give people who are ready the chance to lead.
Historically we’ve adopted this idea that people need to be managed, which is reinforced by business books and gurus who have never run a business. But I believe, deep in my heart, that people don’t like to be managed. The idea of working a system instead of a hierarchy is that when you have a variance or a deviation, you attack the reason for the discrepancy, not the person. But the opposite is also true: when someone exceeds a standard, no one can swoop in and steal his or her recognition. That’s because everyone sees where he or she fits in.
The GGOB then becomes the foundation for a company’s reward and recognition system. Credit and acknowledgment goes to those who deserve it. Nobody is stealing accomplishments or results. You never see anyone taking credit for something someone else did. In this system, you have ownership of your results. That kind of behavior grows people. They then grow the company.
TO THE DOUBTERS
Despite the success of the GGOB at SRC and companies around the world, it’s astounding how many people insist that this system won’t work in their company. Believe me, I’ve heard all the excuses. They range from a fear of disclosing information to competitors to the notion that employees simply aren’t interested or don’t have the ability to think like businesspeople. It makes me sad that people have this fear. As George Gendron, the former editor of Inc. magazine, put it so eloquently: the reason people don’t practice the GGOB is because they have too many secrets in their companies.
I believe these people are missing the opportunity of a lifetime to build a great company. A key theme of our second book, A Stake in the Outcome, was emphasizing what happens when you stop dumbing down your people and have them focus on more than just making products and services. If you ask people to build great companies, and give them the information they need to do it, you’ll get great products and services as a result. The only way you can actually experience success is when your people understand the big picture, not just the small frames.
Two sure ways to kill a company are through arrogance and through ignorance. Keeping employees in the dark about the company’s financial health only stirs the rumor mill. I believe that people have answers to all the questions that business owners don’t want to deal with. Maybe you don’t want to share the books because you don’t want people to know your profits and how large or small they might be. But in the absence of real information, people will fill in the blanks with their own numbers. And they’ll be wrong. When people lack facts, they fill the void with fiction, often mistakenly believing that a company’s owners are lining their basement with gold bricks. It’s been my experience that the numbers people make up are off by a factor of six times. At SRC, for example, we surveyed our associates before we began playing the GGOB and they thought our profits were between 40 percent and 50 percent when we actually made between 3 percent and 5 percent. Once they knew the truth, I had one associate ask why we were even in business.
But once the truth is known, you can see a behavioral change where people are much more willing to contribute to make things better. When business owners hide the numbers, especially when they’re bad, they’re doing a disservice to their associates and to themselves. When people unexpectedly get pink slips, as they walk toward the parking lot, they’re wishing they could have done something about it … if they had only known.
I know because, once upon a time, I didn’t understand the critical nature of the big picture. It was only after trying to find financing to buy our company that I realized that although I knew just about everything about how to rebuild an engine for a bulldozer, I didn’t know anything about how to build value in a company. My “aha!” moment came when I learned to evaluate our business like an investor or a buyer would.
I also came to realize that almost anyone could be taught to be a businessperson and a leader. We invented the GGOB as a way to help our associates build confidence in becoming businesspeople by running a repeatable system built on three principles:
1. Every employee should be given the measures of business success and taught to understand them: Know and Teach the Rules.
2. Every employee should be expected and enabled to act on his or her knowledge to improve performance: Follow the Action and Keep Score.
3. Every employee should have a direct stake in the company’s success and risk of failure: Provide a Stake in the Outcome.
If you explain to everyone how your business works—and why moving the numbers in the right direction leads to more reward and recognition—magic happens. This is how you create what I like to call “psychic ownership” within the minds of your associates. Because you have trusted individuals with the information, they feel a commitment and a sense of ownership to act on it. Why would people commit to action or making a decision if they haven’t been given enough information?
While “opening the books” is essential to playing the GGOB, it is actually just a component of the overall system. I think a lot of people have come to use the phrase open-book management— which was coined in 1990 by John Case in Inc. magazine—interchangeably with playing the GGOB. And it stuck. In fact, in 2009 when Inc. dubbed me the “Father of Open-Book Management,” I saw it as a kind of a curse.
The definition of open book by itself implies a company is merely sharing financial information with its associates. Sharing this information does not necessarily mean those associates understand or realize how their work affects the numbers. Just because you have a profit-sharing program at your company, for instance, isn’t good enough until you teach everyone how to create profits.
I have run into many people over the past twenty years who pull me aside and tell me how frustrated they are because, as they say it, “I gave my people the numbers and nothing happened.” I have to tell them they missed the point entirely. The GGOB isn’t about giving people the numbers. It’s the people who own the numbers and they’re the ones who give them to the system. This all flows back to a Japanese business principle that says that no one knows a job better than the person doing the job. In other words, who knows the numbers better than the person actually doing the job?
Businesses also somehow got off track when they stopped asking people to make forecasts. There is a reluctance to put a name beside a forward-looking number. I don’t know how you run a company without forecasting. We’ve found that the more information you share with people, the more they can plan and improve on the accuracy of their forecasts. The whole idea of a forecast is projecting where you want to go and making the commitment to each other to get there. You’re not making up a number to please a boss—you’re making a commitment to take a journey together. This is a beautiful thing. An accurate forecast takes the uncertainty out of the process and sets an expectation for yourself to live up to. If you can control a forecast, you can control the world. I remember one awed CEO who, after his associates started forecasting their results, told me: “I can’t believe there is this much information inside my own company!”
With the GGOB, the players themselves track, forecast, and identify the biggest weaknesses standing in the way of a company’s success. The secret to changing culture lies in the simple act of repetition, repetition, repetition. It’s not only the planning. It’s not only the bonus program. It’s not just the equity sharing. It’s the repetition. It’s nailing down the routine and getting people to forecast accurately, week in and week out. That’s how people learn and how cultures change. It’s commonsense business management, and it works.
WILL THE GREAT GAME OF BUSINESS WORK FOR YOU?
Someone once told me that somewhere around ten thousand new business books come out every year. That’s a lot of dead trees. I’m no saint because I used to read as many of them as I could. Whether it was Total Quality Management, Six Sigma, or Management by Objectives, I spent fifteen years looking for answers and ideas to run our business better. And every year, there was a new best practice to learn. Although there is value in what these processes can teach you, none of them are the whole solution on their own.
This belief was confirmed for me after I read Beyond Performance Management by Steve Player and Jeremy Hope. I wasn’t all that surprised to learn that just 30 percent of change programs, according to the authors, succeed. And that includes the balanced scorecard, benchmarking, and customer relationship management programs; the authors spend an entire chapter on open-book management. As I said earlier, even open-book management is also not an end in itself.
It wasn’t until I went through the process of borrowing capital that I realized that the financials never go away. They’ve been with us since the beginning of business. But so few people can read or make sense of them today. While managers like me were looking for systems to help us, the answer was right in front of us. You can’t have a healthy company if you don’t have a healthy balance sheet. How did we miss something as basic as this? That’s why at SRC we embraced the financials instead of hiding from them. Better yet, we found a way through the GGOB to make the numbers a part of the very lifestyle and the culture of our company.
It breaks my heart when people read this book or come to visit us in Springfield and leave with only a piece of the GGOB. Some of the managers and executives like our bonus programs; others like how we run Huddles or our open-book philosophy. So they take that back to the office on Monday. And when they do, they see results—for a while. But often, after a few years, it gets boring and everyone goes back to running things the way they did before. The point is that you can’t have an effective bonus program if you don’t have a forecasting system that’s taking people forward to where they want to be. You can’t just keep score. You need to get people involved. It’s like people read the book and then pull out whatever components appeal to them without recognizing that each of the components of the Great Game of Business is designed to work within a system as a whole. It’s only when you combine all the steps that you truly get sustainability.
What we recognized at SRC back in 1983 is that we needed to quit trying to cover holes with Band-Aids and instead lay the foundation for a whole new operating system for the company. That’s what the GGOB is all about. I’ll be the first to admit that playing the GGOB isn’t easy—especially if you’ve already been in business for a while. It takes real courage to put aside everything you’ve been taught or break free from the bad habits you may have fallen into.
Doubters over the years have also said that our system is too focused on the numbers and not enough on the “softer” side of running a business, like delivering great customer service or building a great culture. Let me tell you, we have some of the biggest and toughest customers around. But they don’t just love our products and services—they love our people. When you focus on building a great company, you have to provide great service and products to make it happen. Our system helps us avoid arrogance by forcing us to go out into the marketplace and find out what our customers want from us, which we can then deliver in a timely fashion with an attention to quality. That’s how we make customers happy.
Twice a year we go through a process we call high-involvement planning, where we ask everyone in the organization to sign off on the direction we’re heading—a process we discuss in more detail in Chapter 8, “Coming Up with the Game Plan.” We look at the economy, the industry, and the competition. We bring the marketplace to our people so they can make some tough decisions. They all vote on the annual plan. And they only agree with it if they believe in it. It all starts not in the boardroom, but with each of them.
Once you get someone’s thumbs-up on a decision, it becomes a lot harder for him or her to criticize or play Monday morning quarterback later on. If our people want the Cadillac of health insurance plans, that’s great, because they understand the impact that choice will have on their bottom line and on the company’s stock price—something I guarantee that every single associate in our organization can quote for you every day of the week.
We have also been surveying our associates every six months for thirty years about how satisfied they are with their jobs and the company as a whole. Back in the early days, the scores told us we had some work to do. These days, our engagement scores average about eighty-five out of one hundred. The other fifteen makes us stop and think.
It’s also fascinating and validating to hear from other companies out there who are playing the GGOB. Getting the chance to connect with managers and employees playing the game from literally all over the world is one of the great benefits of our annual conference. I’ve lost count of how many stories I’ve heard where a business has turned to the GGOB as a last resort, after they’ve used up every other quick fix they could think of, which then spurred them to outrageous results.
The best metaphor I can think of to explain what happens is this: I believe everyone has two flywheels inside their brain. One of the flywheels is our creative side, where we get great ideas for a business (or for a book). This flywheel turns constantly at 6,000 rpm. On the other hand, we have our financial flywheel. For most of us, this turns at 60 rpm. But to get a successful result, we need to get the financial flywheel humming along at a much faster clip. When you can do that, that’s when you can achieve a remarkable outcome.
WHY WE WROTE ANOTHER BOOK
Tackling this update to The Great Game of Business was like performing a balancing act between messing up something that is good and is working, and cleaning it up. When Rich Armstrong and Steve Baker, the president and vice president of the GGOB, respectively, gently prodded me to think about writing a twentieth-anniversary edition of The Great Game of Business, I felt all the blood drain out of my face. Writing the original, and its follow-up, A Stake in the Outcome (which was published in 2001), with Bo Burlingham were unbelievably challenging—as well as ultimately deeply rewarding. It was not something I was sure I was ready to do again.
But Rich and Steve won me over. Why? Because I think that the world of business that I love is under attack. As I write this, not only are entrepreneurs and small-business owners still struggling to recover from our nation’s most recent recession, we continue to slog through an uncertain political environment where no one seems to know how to create jobs. Back in the 1980s, media people like Tom Brokaw were telling us that global competition would be the downfall of the United States. That broadcast continues to haunt me. It’s no different today as politicians and members of the media seem to compete for the chance to tell us how badly we are losing to our competitors in China and India.
But I wholeheartedly disagree with these critics. In fact, if you take an objective look at the economy over the past thirty years, you’ll see that we’ve had an incredible run on productivity because a lot of folks dug down deep to make things happen—at least until we all got tripped up in 2008. And that stumble was caused, at least in part, by our society’s lack of economic literacy and transparency. If we were all more economically literate and transparent, the events of 2008 might never have happened. Look, we have been very fortunate at SRC to have the kind of run we have had over the past thirty years. And we owe a great deal of that success to this system we have continued to tweak and improve upon over that time. I think the results I shared earlier speak for themselves.
If you’re a business owner or an entrepreneur looking for answers on how to weather this latest storm, or prepare yourself for the next one by growing your business and creating jobs, why do that alone? Why not appeal to the highest level of thinking on the part of your associates by trying the system described by the GGOB?
What’s so gratifying to me is that while the GGOB was a foundation for us to save and create jobs, we are now creating opportunities for our children in the workplace. The culture continues, and the fire keeps burning. After thirty years, we now have associates working with us who don’t know of any other way of running a company, since we’ve been doing it so long. These folks have grown up in a business of businesspeople, which has helped speed up the evolution and the GGOB at all levels of the company. We want to keep creating leaders who can build great companies. We need strategists who can make changes, start the diversification process, and sell. We need change agents with strong leadership skills. We need people who can build relationships. And we need people who are hungry to develop their talent.
It’s both exciting and nerve-racking to watch our next generation of players hatch new plans and dream about the future. It’s exciting because they literally get what it means to build and grow a business because they are simply executing on the system we have in place. It’s nerve-racking because even though I might know better, I have to let them learn by making their own mistakes along the way—maybe stepping in only when they might be headed off a cliff.
WHAT’S NEW?
In this revised and expanded edition, we’ve tried to strengthen the original book by outlining the system and describing the implementation process better, and by providing an interactive “Get in the Game” guide, at the end of the book. Having the tools and resources web-based will allow us to keep the content dynamic and up to date. We’ve learned a lot over the past thirty years about how to help others weave the GGOB’s principles into their organizational DNA. The result is that there is this massive community of players out in the workplace along with lots of resources that you can tap into for help in starting to play the GGOB. You don’t have to tackle this alone.
The past thirty years have been a wild ride and I am truly humbled by all the hard work and sweat put forth by every SRC associate over that time. It reminds me that the second-biggest mistake I ever made, after writing a business book, was putting my picture on the cover of the original edition. Not only is that a tough thing to stomach (it’s like watching yourself age in the mirror), it also doesn’t give credit to everyone who helped the company reach the heights it has. That’s why I made sure my picture is not on the front cover of the new edition. And that’s why I’m dedicating this twentieth anniversary of The Great Game of Business to all the players out there, wherever you are. You truly have the gotta wanna. God bless.
—Jack Stack
DOES IT REALLY WORK OR IS IT JUST A BUNCH OF HYPE?
Boy, I wish we had a dollar for every time someone has asked us that question. Then I wish we had five dollars for every answer we’ve given. Let’s see—that would be a debit to “cash” and a credit to “other income.” Overhead, labor absorption, and materials would be unaffected, so we have raw profit going straight to the bottom line. Wonderful!!! Our stock value would be enhanced and our jobs even more secure than they are now. See, you’re already playing the Game and you’ve hardly begun the book.
Would it scare you if your employees thought like this? Would it scare you if you thought like this?
If you are skeptical about the Great Game of Business, welcome to the club. I myself was one of the biggest disbelievers in the beginning. There is a story later on in this book about an hourly worker, a young lady, whose introduction to the Game resulted in the elimination of her job as well as the demise of a product line. That young lady was me and I have been known to be less than quiet and mild-mannered when things don’t go the way I want. If you think SRC didn’t have their hands full teaching me the Game, think again!
Is it hype? As a converted disbeliever who has played the Game from hourly to the managerial ranks over the years, it is hype to the point to get you interested. After that, IT REALLY WORKS!
In fact, the Game touches everyone in a different way. There are many stories at SRC about what changed the disbelievers into believers, one by one. It would be difficult to find two people who were swayed by the same circumstances. And yet, overall, the Game serves to unite us as a corporation, sometimes against foes many times larger, allowing us to survive in this wild economy. At the same time, the Game gives us the means to challenge ourselves internally and create friendly competition between departments. Along the way, we even have fun, and there is laughter in the halls.
What does it take to play?
As we say at SRC—“You gotta wanna!”
Denise Bredfeldt, 1992
Former Director of Research and
transmission rebuilder, SRC
THE HIGHER LAWS OF BUSINESS
1. You Get What You Give.
2. It’s Easy to Stop One Guy, But It’s Pretty Hard to Stop 100.
3. What Goes Around Comes Around.
4. You Do What You Gotta Do.
5. You Gotta Wanna.
6. You Can Sometimes Fool the Fans, But You Can Never Fool the Players.
7. When You Raise the Bottom, the Top Rises.
8. When People Set Their Own Targets, They Usually Hit Them.
9. If Nobody Pays Attention, People Stop Caring.
10. Change Begins at the Top, or—as We Say in Missouri—Shit Rolls Downhill.
THE ULTIMATE HIGHER LAW
When you appeal to the
highest level of thinking,
you get the highest level
of performance.
WHY WE TEACH PEOPLE HOW TO MAKE MONEY
It’s amazing what you can come up with when you have no money, zero outside resources, and 119 people all depending on you for their jobs, their homes, even their prospects of dinner for the foreseeable future.
That’s pretty much the situation my twelve fellow managers and I faced in February 1983, our first month in business as an independent company. We were supervisors and managers at a little factory in Springfield, Missouri, that up until then had been owned by International Harvester. At the time Harvester was in big trouble, sinking faster than the Titanic, cutting loose operations like ours in a desperate attempt to stay afloat. When the company offered to sell us the factory, we jumped at the chance to save our jobs. It was like jumping into a leaky life raft in the middle of a hurricane. Our new company was loaded down with so much debt that the smallest wave could capsize us.
We were scared. We couldn’t rely on traditional ways of managing because they wouldn’t produce the kind of results we needed in time to save us. So we grabbed for something new, based on what we thought of as the higher laws of business.
THE FIRST HIGHER LAW IS:
You Get What You Give.
THE SECOND HIGHER LAW IS:
It’s Easy to Stop One Guy, But It’s Pretty Hard to Stop 100.
I don’t know where I learned these laws. You don’t hear about them in school. You pick them up on the street. But I know they are real laws of business, and they are the reason why we survived and have been successful ever since. It was out of these laws that we created the Great Game of Business. These two higher laws sum up our success; they emphasize how thoroughly dependent we are on one another—and how strong we are because of it.
I am often asked to say exactly what the Great Game of Business is. I have to admit I find this hard to do. It is not a system. It is not a methodology. It is not a philosophy, or an attitude, or a set of techniques. It is all those things and more. It is a whole different way of running a company and of thinking about how a company should be run. 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.
Guided by this proposition, we turn business into a game that everybody in the company can play. It’s fun, but it’s more: it’s a way of tapping into the universal desire to win, of making that desire a powerful competitive force. Winning the Great Game of Business has the greatest reward: constant improvement of your life and your livelihood. You only get that reward, however, by playing together as a team, and by building a dynamic company.
Playing and winning the Game worked for us in a big way. From 1983 to 1986, our sales grew more than 30 percent per year, while we went from a loss of $60,488 in our first year to pretax earnings of $2.7 million (7 percent of sales) in our fourth year. We never laid off a single person, not even when we lost a contract representing 40 percent of our business for a whole year. By 1991, we had annual sales of more than $70 million, and our workforce had increased to about 650 people from the original 119. But the most impressive number was the value of our stock, worth 10 cents a share at the time of the buyout and by 1991 worth $18.30, an increase of 18,200 percent in nine years. As a result, hourly workers who had been with the Springfield Remanufacturing Corp. (SRC) from the beginning had holdings in the Employee Stock Ownership Plan (ESOP) worth as much as $35,000 per person. That was almost the price of a home in Springfield in 1991.
We didn’t do this by riding some hot technology or glamorous industry. Remanufacturing is a tough, loud, dirty business. Our people work with plugs in their ears and leave the factory every day covered in grease. What SRC remanufactures are engines and engine components. We take worn-out engines from cars, bulldozers, eighteen-wheelers, and we rebuild them—saving the parts that are in good shape, fixing those that are damaged, and replacing the ones beyond repair. But in some ways engines are incidental to what we do. Our real business is education. We teach people about business. We give them the knowledge that allows them to go out and play the Game.
the basic rules of the gamePeople who run companies know that there are really only two critical factors in business. One is to make money and the other is to generate cash. As long as you do those two things, your company is going to be okay, even if you make mistakes along the way, as you inevitably will. I’m not saying safety is not a major issue, or quality is not a major issue, or delivery and customer service are not major issues. They are all major issues, but they are part of the process. They are not end results or even conditions of survival. In business, you can have great customer service and fail. You can have a terrific safety record and fail. You can have the best quality in your industry and fail.
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. People are told what to do in an eight-hour workday, but no one ever shows them how they fit into a bigger picture. No one explains how one person’s actions affects another’s, how each department depends on the others, what impact they all have on the company as a whole. Most important, no one tells people how to make money and generate cash. Nine times out of ten, employees don’t even know the difference between the two.
At SRC, we teach everybody those rules, and then we build on that simple knowledge and take people all the way to the complexity of ownership. We constantly strive to paint the Big Picture for the people out on the factory floor. We try to take ignorance out of the workplace and force people to get involved, not with threats and intimidation but with education. In the process, we are trying to close one of the biggest gaps in American business—the gap between workers and managers. We’re developing a system that allows everyone to get together and work toward the same goals. To do that, you have to knock down the barriers that separate people, that keep people from coming together as a team.
which creates frustration. I really think the two are one and the same. In most companies, there are three levels of ignorance:
1. The ignorance of top management assumes that people down the ladder are incapable of understanding its problems and responsibilities.
2. The ignorance of the people on the shop floor usually means they have no idea why managers do what they do and chalk up every mistake in the company to a combination of greed and stupidity.
3. The ignorance of the middle managers means they are constantly torn between the demands of top management and those of the workforce. They really have the most difficult role in the company because they have to please two masters. If they side with their people, they’re against top management. If they side with top management, they’re in conflict with the workforce. Consequently, they can never please themselves.
What lies at the root of all this is a basic ignorance about business. Most people who work in companies don’t understand business at all. They have all kinds of misconceptions. They think profit is a dirty word. They think the owners just slip it into their bank accounts at night. They have no idea that more than 40 percent of business profits goes to taxes. They’ve never heard of retained earnings. They can’t conceive how a company might be earning a profit and yet have no cash to pay its bills, or how it might be generating cash and yet be operating at a loss.