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 / Third Quarter 2001 / Issue 24(originally published by Booz & Company)


Jack Stack’s Story Is an Open Book

A small Ozarks manufacturer has a message for big companies: Open-book management can increase productivity and release entrepreneurial spirit.

“You’re my hero,” says John P. Stack, the CEO of the SRC Holdings Corporation. “You’re my superhero!”

Jack Stack is a charismatic 52-year-old man, alert and sharp with a toothy smile and a thick Chicago-Irish accent. He is talking on his cell phone to Steve Crowder, a managing director of one of the 22 semiautonomous industrial-equipment and business-service companies affiliated with SRC Holdings. The people in these companies are unusually sophisticated about the ins and outs of venture capital and entrepreneurialism, although their hometown of Springfield, Missouri, a small city on the edge of the Ozark Mountains, is not generally known for being a hotbed of innovative business activity.

“I’ve missed you,” continues Mr. Stack, who just got back from a two-week trip to Australia, to Mr. Crowder. “It’s nice to have a guy who can continually generate the earnings you’re doing. Then I found out you blew your plan away, you know? You should be running my job, the way you perform!”

To a casual observer, this might sound like a run-of-the-mill executive pep talk. But there’s a lot going on under the surface. The company that Steve Crowder runs — an engine remanufacturing company called ReGen Technologies — is a joint venture with Deere & Company, the manufacturer of John Deere farm equipment. Unlike any other Deere enterprise, but like all of the SRC businesses, ReGen makes its financial performance numbers freely available to employees and staff. Everyone, including visitors, knows exactly what the score is, because the company’s financial information is posted on mural-sized charts in the employee cafeteria. Staff members “huddle” — a word deliberately chosen to evoke game-playing strategy — at least weekly to talk about the financials and the strategies they suggest. They take the company’s growth and prosperity personally, in part because nearly all own shares in the holding company (or, in the case of a joint venture, in the smaller joint-venture firm), generally through employee stock ownership plans (ESOPs). And they are keenly aware that their retirement incomes depend, in part, on its ability to thrive.

As the visible center, enthusiastic booster, and acerbic schoolmaster of all this activity, Mr. Stack has found a way to reconcile two subcultures of American business whose partisans almost never see eye to eye. On one side are the financiers, who demand higher and higher productivity; on the other side are the nurturers of human capital, who coach people to continually achieve better performance by improving themselves. Mr. Stack is both.

Few CEOs, for instance, would be so uninhibited about telling a fellow executive that he is missed. At the same time, few would spend 20 minutes, as Mr. Stack did recently, dissecting in frustration the erroneous ways that most people make simple business calculations. (“If you want a gross margin on your product of 20 percent, how much do you have to mark it up? Nine out of 10 people would tell you 120. It’s really 125. That’s the kind of mistake that can cost a business millions,” Mr. Stack says.)

Life without Fear
Financial literacy — the systematic training of people at non-executive levels in the business impact of their decisions — has grown increasingly popular in recent years. As a dozen different forms of financial and accounting literacy movements (including the Balanced Scorecard) have discovered, setting targets and tracking the results tend to draw people’s attention to high-gain opportunities, much as rehashing a sports play tends to focus a team’s collective mind on its future improvement.

Another growing movement is employee ownership, the use of stock plans and bonuses to foster workplace commitment. Then there’s the newer and more controversial (but also growing) practice of deliberate disclosure: Making all (or nearly all) the financial and operational information in a business available upon demand to the people who work there.

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  1. H. Thomas Johnson and Anders Bröms, Profit Beyond Measure: Extraordinary Results Through Attention to Work and People,The Free Press, 2000
  2. Chuck Kremer, Ron Rizzuto, and John Case, Managing by the Numbers: A Commonsense Guide to Understanding and Using Your Company’s Financials, Cambridge, Perseus, 2000
  3. Jack Stack and Bo Burlingham, The Great Game of Business, Doubleday, 1992
  4. Jill Albrinck, Jennifer Hornery, David Kletter, and Gary Neilson, “Adventures in Corporate Venturing,” s+b, First Quarter 2001; Click here.
  5. Lucien Rhodes and Patricia Amend, “The Turnaround: How a Dying Division of International Harvester Became One of America’s Most Competitive Small Companies,” Inc., August 1986; Click here.
  6. The Great Game of Business:
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