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. Most of SRC’s new businesses are pushed out into the world with one or two revenue streams — just enough to cover overhead and generate some cash. They are expected to amplify that by diversifying their customer base and product lines as quickly as possible.
If the subsidiary businesses start to fail, it won’t take SRC workers by surprise. They’ll know well in advance, because they will have been tracking that failure, huddle by huddle, on the wall charts. Indeed, there’s a bittersweet awareness growing at SRC that their primary way of making money — selling rebuilt engines — may be shortlived. As truck and auto engines become more durable and diverse, it’s harder both to remanufacture engines (because used parts are scarcer) and to sell them. 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. Its managers recently sold the oil-cooler business back to SRC Heavy Duty. 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.S. and the rising interest in relatively non-polluting power generation around the world.
One immense but unexpected benefit of the “cluster of huts” model was the sudden boom in opportunity for senior people who have hit the top of their pay scale, feel bored, want to spread their wings, and have nowhere to go within SRC. “Now, they don’t have to live with the frustration,” Mr. Stack says. “They can start a new business. And the old business doesn’t have to find a way to pay them more; it can put someone younger in their place, pay them an amount commensurate with their skill, and give them a chance to make four or five years of raises. That should be enough time for them to figure out their next step.”
The SRC model ultimately represents a kind of throwback to preindustrial forms of capitalism, when business was intimately grounded in family and community. “Jack Stack is almost anti-American, because he’s committed to lifetime employment,” says Chuck Kremer, coauthor of Managing by the Numbers (a guide to IBM’s longstanding financial literacy methods and those of others). “Most people would tell you that’s not the way to be profitable. Stack’s created a system where it is. The only other company I know of that makes that commitment is Southwest Airlines.”
The open-book process seems naturally to engender among employees a sense of responsibility to each other. At several open-book businesses (including some not directly connected to SRC, such as Trinity Services in Chicago), staffers have created “cookie jar” funds to help their colleagues in trouble. Such a graceful ability to help others is a natural consequence of a culture in which people feel that they are building wealth together, instead of at one another’s expense
All the SRC companies also share a quality of earnestness, a devotion to the work and to their customers. “There are a lot of farmers out there who hang on to their farms by the skin of their teeth,” says Heavy Duty’s Mr. Loeber. “If they wait on our engine and miss the season, or if it fails on the wrong day, this guy may lose his farm. It is a really personal thing for us.”