The COO at one of my clients suggested this as a good read with applicability to accounting firms and
I agree. In fact let me say up front that I reckon every accounting firm leader could benefit from reading this book. Jack Stack’s ideas were seen as new and radical by many at the time but now I reckon we would see them as just a common sense, smart way to lead a business.
The book revolves around Jack Stack taking over a failing division of International Harvester, based in Springfield Missouri. He went from an employee to owner and used what were seen as unconventional measures at the time to turn the division around and become a successful independent company. Since then it has morphed into 31 businesses and continues to be considered a great success story. His businesses are focused on manufacturing and yet the principles I believe translate really well to professional services.
I’ve summarised the concept of the Great Game of Business in the table below.
Improve business results and the lives of the people who drive those results.
Creating “business of business people” who think, act and feel like owners.
Know and Teach the Rules
Every employee is given the measures of business success and taught to understand them
- Employees learn the language of business
- There is “open book” management
- There is high involvement planning
- There is focus on the “critical number”
- When the critical number has been correctly identified, targeted and tied to a reward, the rules of the game have been set
Follow the Action and Keep the Score
Every employee is expected and enabled to act on their knowledge to improve performance
- Following the action is done through a series of regular team huddles that provide the rhythm of communication to ensure everyone is involved and engaged in moving the business forward
- Keep score to simply and consistently inform the players if they are winning or losing and who is accountable
- Use regular forward forecasting
Provide a Stake in the Outcome
Every employee has a direct stake in the company’s success and risk of failure
- Link the success of the business to significant reward, recognition and ownership in the outcome
- Play “mini games” to create change, correct weaknesses or pursue an opportunity – with a team goal, scoreboard and reward for winning
- Ideally give team members ownership in the business
I’ll comment on a few of the key concepts and leave you to read about the others.
- Open book management
- High involvements planning
- Critical number
- Regular forward forecasting
- Give the team members ownership
Open book management
My understanding is that Jack Stack wasn’t the first person to use this term but he is probably the person most associated with it. I’ve taken a quote directly from the Great Game of Business website to help explain this more:
What Is Open-Book Management?
Open-book management (OBM) is the business practice of creating transparency by sharing financial information with employees. This includes financial education for your employees and showing them how their production influences the company’s finances. It is an easy-to-learn and fun management system intended to be a discipline that is developed over time, rather than being a one-time fix.
The idea behind this concept is that when employees gain a better understanding of how the organization is run, they become empowered by this knowledge and it gives them “a dog in the fight,” so to speak. This is because people will fight for whatever they’ve helped to create.
Employees are also more engaged because they’re naturally curious about how their workplace contributions correlate to a company’s success. Employees often see their share of the work in isolation, never knowing how it directly ties to how much they are helping (or hurting) their employer.
When this information is unknown, people will assume that their hard work is enabling the company to make a great deal of money, of which they see little. As owners and managers, we know this isn’t the case.
Is Open-Book Management Effective?
Open-book management at its most effective far outperforms the simple definition of “sharing financial information with employees”. Open-book isn’t just about opening your financials to your company, it’s about responsibility, ownership, results, and growth; all of these things can come together to move the needle forward in your organization. With proper training and knowledge, all levels of your business start to act and engage just like owners or leaders.
Fully engage with your employees by teaching them the workings of your business and the financial literacy needed to understand your books. With this knowledge, everyone begins to be able to make decisions that impact the business on a daily basis, everyone gains a stake in the outcome. The heart of The Game is very simple: We believe the best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in how it’s run and a stake in the financial outcome—good or bad. Our ultimate goal is to create a “business of business people” who think, act and feel like owners.
In the book Jack Stack talks about some of the fears around opening up the books and rebuts them. These fears include competitors seeing your numbers, employees seeing them and how they might react. I’ll let you read the book to see how he addresses these! He also makes the point that there are some things you want to have in place prior, such as management being seen as credible and having fostered a sense of mutual respect and trust.
My experience has been that many firms have a pretty high level of numbers communication with their team members. By that I mean there is reasonable reporting on a regular basis around:
- Productivity (assuming time sheets are being done)
- Workflow / job completion
I don’t see or hear of a lot of firms reporting down to a net profit level, but there are certainly some that do. Under open book reporting as part of the Great Game of Business Jack Stack would like to see that happen with information shared on gross profit, some of the key expenses and net profit, with team members being able to understand which they can impact.
For many firms a great start would be to report to all team members at least monthly on the six items above. And preferably both on a whole of firm basis and on a team by team basis. Accounting firms employ smart people and I believe they want to understand how the business works and how they can contribute to its success.
High involvement planning
I’ve long been an advocate of involving your whole team in some way in business planning. In some firms I work with that takes the form of surveys on key things to feed into one or more planning days that may typically involve directors and managers. One of my clients insists that every team member participates in a planning day each year so they can influence what the next year or more will look like. Jack Stack takes this even further as noted in this quote from the Great Game of Business website:
High-Involvement Planning (HIP)™, as the name suggests, is a business planning process that involves the entire organization. Individuals throughout the company meet to present data, discuss strengths, weakness, opportunities, and threats, assess the competition, review customer insights, and evaluate progress toward benchmarks in order to develop growth and contingency plans that get company-wide buy-in.
HIP establishes company-wide buy-in while allowing you to master business planning and strategy.
At the heart of this planning lies the concept of forward forecasting. Forward forecasting happens when companies use their knowledge about the history of the business and the latest information on what’s happening with their customers and in the marketplace to help predict future financial outcomes.
The purpose of this specialized process is to take the planning process out of the boardroom and put it into the hands of the people who have to actually execute those strategies.
Keeping involvement high turns planning into a company-wide, collaborative engagement focused on discovering answers and elevating the organization’s growth trajectory. When employees help design and implement changes, they become more engaged and fight to see those changes succeed. Without this engagement, strategic business planning often has minimal results.
Again I quote from the Great Game of Business website:
Your company’s Critical Number is the one metric, either operational or financial, that represents a weakness or vulnerability that, if not addressed and corrected, will negatively impact the overall performance and long-term security of the business.
This Critical Number is what represents winning for your organization.
It serves as a common and clearly defined goal that directs employee focus and demonstrates progress and success. It’s a vital part of business management and achieving company growth.
Source: Critical Number™ (greatgame.com)
In addition to the critical number there will likely be a small, carefully selected set of numbers which if you could make positive changes to them would lead to business success. This ties into the well known saying “what gets measured gets managed.”
Regular forward forecasting
In Jack Stack’s businesses this means weekly forecasting of the key measures on a team by team basis. He recognises that it is time consuming and particularly in a small business may be challenging. I don’t see a huge amount of this going on in firms frankly. So here are some tips taken from the Great Game of Business website to help you:
Steps for Producing a Financial Forecast
- Determine the purpose of the forecast and its potential impact. Consider how it will be used, the degree of accuracy required, factors that will come into play, and the time and effort that will be invested into creating the forecast.
- Choose your forecast time frame.
- Establish a method for producing the forecast.
- Schedule team Huddles for gathering and analyzing data. A forecasting Huddle process that looks two or three months ahead is ideal.
- Document the forecast and monitor the results. Use the results of the forecast to project cash from operations that can then become a critical element in a forward-looking cash flow report.
- Repeat based on your forecasting time frame and analyze the effectiveness of your efforts.
Financial forecasting encourages employees to think about the future and how improvement in the execution of their daily tasks can have a positive impact on results. It helps people throughout the organization focus on a common goal.
In one of the firms I was the CEO of, we were pretty good at this in respect of fees, which is what we saw as the critical number. Each month team members were very clear about the goal for the month and could link this to the completion of specific jobs. If some expected jobs did not go to plan it was common for team members to find other jobs knowing that if completed and billed they would allow the target to be achieved.
I encourage you to read the book and take ideas from it to increase the level of business literacy and engagement in your team to take a bigger role in driving results.
You can find the book on Amazon / Kindle here.