top of page
You're a big believer in open book management, can you elaborate a little on what that is and how it benefits small business?
"It's based on the principal that people support what they help create."
One way or another, every entrepreneur learns there are two things they have to do to stay in business: make money and generate cash. The whole point of business planning is to deepen your understanding of how your business can do these two things.
Yet often, once a company has gotten established, many of its employees will not understand how its business model works. They may not know how the company is really doing, or how the actions they take on the job every day affect performance. They may not know the business plan because (assuming it exists) they had no hand in creating it. Gallup has found that employee engagement in the US has been mired around 30-40 percent for ages. One of the biggest reasons is that people don�t know what is expected of them on the job.
The system of open-book I am trained in (called The Great Game of Business, after Jack Stack and Bo Burlingham�s 1992 book), seeks to change that. It's based on the principal that people support what they help create.
Companies that play the Great Game of Business use the idea of business as a game to teach everyone how to think like a business owner. It's based on four principles:
- A critical number: one big metric that everyone needs to understand and keep an eye on;
- Knowing and teaching the rules of the game: Open-book companies share thing financials and teach people how to understand them. Employees at open-book companies are often very financially literate.
- Following the action and keeping score: Open-book companies also teach people how to forecast the company�s future performance, and work together to exceed that forecast. They do this using very colorful, fun improvement activities called "minigames," which are designed and led by teams of employees.
- Finally, open-book companies reward people with a stake in the outcome, usually a kind of gain-sharing based on how the entire company performs.
As a result, once they�ve mastered the system, Great Game companies are often more profitable but also less stressful to run. Because you go from a command-and-control approach, to one based in self-management rooted in teamwork.
By the way, open-book companies also tend to have great employee engagement. As it turns out, when you share the numbers & wealth, make decisions in teams, and show people why their jobs matter, people tend to like working for you! This is actually why I got into open-book in the first place. I used to work at a foundation whose mission was to identify & promote business practices that improve the lives of working people. Open-book management is the single most powerful approach I found while I worked there.
What is the most common mistake you see small businesses make and what should they do about it?
"many founders struggle to understand the fundamentals of their own businesses:"
Well, one frequent mistake I've seen is founders not taking the time themselves to learn the basics of finance. In particular, because they're usually not bookkeepers, many founders struggle to understand the fundamentals of their own businesses: how much money they're making on each transaction, where their expenses are going, and the difference between making a profit and generating cash.It's understandable, and struggling with finance is nothing to be ashamed of. Finance is hard! It is detail-oriented and involves some abstract, difficult language. It is in many ways a language in itself, and one that is built more on exclusion than inclusion. There is some comfort, though, in realizing that the challenging part of finance is the language itself, not the numbers. You usually don't need any math more complex than addition & subtraction, with the occasional multiplication & division. You don't need calculus, you don't even need algebra. But you do need to learn a new language. Many Start:ME entrepreneurs have had to do that before, and so go into learning the language of business with a valuable edge.One thing I teach my own clients is that if you can read a box score of a sporting event, or a sheet of music, you can read a financial statement. All three of them are ways of using numbers to tell a story about activities people do together.
What is your favorite moment from Start:ME the past two years?
"What's really wonderful, though, is how many participants of past years are both still in business and clearly thriving"
I don't know if I have a single favorite moment, though I always enjoy Neighborhood Night and have had several memorable conversations with mentees. What's really wonderful, though, is how many participants of past years are both still in business and clearly thriving. It's particularly exciting to see Start:ME entrepreneurs getting involved in other Atlanta civic groups & programs, like Majeda and Malek of Syriana Cuisine doing the Chow Club back in January. And just going to various events and stores here in Clarkston, it's easy to see what a deep imprint this program has already made on the community. As Start:ME spreads to more and more communities, it's clear that impact will grow exponentially over time.
bottom of page