Put those three practices together and you have a style of management known generically as “open-book management.” Although Jack Stack doesn’t particularly like the phrase, he is the most famous practitioner of it, particularly in small-business circles. His own catchphrase for the technique is the “great game of business,” coined in the mid-1980s to convince SRC employees that business was, after all, just a game; and if they could learn the rules of baseball or basketball, they could learn this, too. At SRC, people speak seriously but lightly about the loss of a sale or the rise of a cost, as you might hear a baseball fan talk about the rise or decline of a favorite player. The Jack Stack guide to running a company, The Great Game of Business (coauthored with Bo Burlingham and published in 1992), has almost 200,000 copies in print
Mr. Stack and Mr. Burlingham are currently finishing a new book, called A Stake in the Outcome, slated for publication by Doubleday next March. It’s a memoir that describes the aftermath of SRC’s financial literacy efforts, which led the company as a whole, and Mr. Stack in particular, into 15 years of experiments with innovative new business launches. Many large companies are trying hard these days to incubate new businesses, looking for the proper combination of support, autonomy, and investment to propel new companies to profitability. Jack Stack claims to have found a natural way to develop such an incubator. He has started 39 new businesses since 1988, of which 22 are successful (the remainder have been sold, merged, or closed).
Almost as a side effect, he says, his system has naturally solved some of the most entrenched problems of entrepreneurial capitalism, such as the perennial need to raise “exit money” so key shareholders won’t bankrupt the company when they leave and cash in their shares. Or the difficult problem of finding new challenges for longtime employees and managers who get bored with their old positions and have nowhere in the company to go. Or the complacency that sets in at even the most entrepreneurial companies, blinding them to new opportunities. Or the biggest problem of all: Spreading the opportunity to build wealth beyond the executive class, to reach out to as much of the community as possible.
“I grew up in a lower-middle-class family that didn’t have a lot of money,” Mr. Stack said recently. “My parents worked extra jobs just to be able to fund Christmas. There was a lot of fear in my house. What we’re doing here in Springfield is showing people how to get through life without fear. Once people understand what it takes to be a businessperson, not just a cog in the system but somebody on the brighter side of capitalism, then their lives can change forever.
Author John Case, generally acknowledged as the most comprehensive chronicler of open-book management practice, says there are probably 1,000 companies practicing some form of “Great Game” or open-book management. Most of them are entrepreneurial small businesses, generally with 500 or fewer employees. A few nonprofits have embraced it, such as Trinity Services Inc., a Chicago-based agency that serves mentally and developmentally disabled people, whose staffers routinely track and analyze their records to improve service. A smattering of dot-com companies are flirting with open-book practice, although not always with the same reverence for wealth-building that Mr. Stack espouses. Recently, a young tech startup executive, grateful for an impromptu consultation with Mr. Stack, offered him some shares of stock in the company. Mr. Stack was outraged: “You’re trying to tip me,” he exclaimed, “with equity!