Open Book Management: NOT Just
About Financial Transparency
Presenter: Rich Armstrong, President, The Great Game of Business
Moderator: Diane Stoneman, Director of Consulting & Training,
Winning Workplaces
© 2008 Winning Workplaces. May not be reproduced or distributed
without expressed written permission of Winning Workplaces.
About Winning Workplaces
• Founded 2001 by co-owners of Fel-Pro, an auto
manufacturer nationally recognized as leader for
progressive workplace practices.
• Nonprofit committed to helping small/midsize
organizations build healthy, innovative and
productive work environments.
• Triple bottom line: Business, People, Community.
About Winning Workplaces
Success Stories
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Top Small Workplaces
Recognition
 The Wall Street Journal collaboration
 2008 Winners announced Oct. 13;
profiled at WSJ.com/Entrepreneur
 2008 Top Small Workplaces
Benchmarking Report @
WinningWorkplaces.org
 2009 Top Small Workplaces underway
Top
SmallWorkplace
WorkplacesWinners
2008 Top
Small
ATA Engineering
Decagon Devices
Integrated Project Management
JA Frate
Jackson's Hardware
Jump Associates
King Arthur Flour Company
Landscape Forms
Lundberg Family Farms
New Belgium Brewing
Phenomenex
Rainforest Alliance
Resource Interactive
The Paducah Bank & Trust
The Redwoods Group
Who Practices Open Book Management?
• 14 out of 15 Top Small Workplace
winners practice open book
management
• 11 offer structured training around
financial literacy
Why do they do it?
• More committed employees add greater value
• Low turnover / greater retention (job satisfaction)
• Superior financial results
• Everyone working “smarter” toward same goal
• Employees with stake in outcome = accountability
• Helps firm weather tough, lean times
• Mgmt spends less time on the floor fixing problems
Today’s agenda
• Common Misconceptions
• Fundamentals of Open Book Management
• Getting Started
• Questions from audience
The Great Game of Business
Rich Armstrong, President
Beyond Open Book
Beyond Open Book
Every employee…
• is given the measures of business success and
taught to understand them
• has a direct stake in the company’s success
Beyond Open Book
Every employee…
• is given the measures of business success and
taught to understand them
• is expected and enabled to act on their
knowledge to improve performance
• has a direct stake in the company’s success
Background
• In 1983 – failing division, International Harvester Co.
• Today - 25 year employee owned company
• 320 Million in Sales
• 17 decentralized business units
• 10 cents per share to $234 per share (FY 2007)
• Great Game of Business – One of the most celebrated
approaches to Open-Book Management
PRINCIPLES
THINK
ACT
(Educate)
(Enable)
FEEL
(Engage)
PRACTICES
H.I.P.
STRATEGIC
SCOREBOARDS
H.I.P.
FINANCIAL
HUDDLES
BUSINESS LIT.
FORECASTING
INCENTIVES
OWNERSHIP
RECOGNITION
It’s a Process
Our Process…
1
FINANCIAL
SCOREBOARD
Share the
Big Picture
Our Approach…
1
FINANCIAL
SCOREBOARD
2
FOCUS ON THE
CRITICAL
NUMBER
Find a
Common Goal
Share the
Big Picture
Our Approach…
1
FINANCIAL
SCOREBOARD
2
3
FOCUS ON THE
CRITICAL
NUMBER
ACT ON THE
RIGHT DRIVERS
Find a
Common Goal
Create
Line-of-Sight
Share the
Big Picture
Our Approach…
1
FINANCIAL
SCOREBOARD
2
3
FOCUS ON THE
CRITICAL
NUMBER
ACT ON THE
RIGHT DRIVERS
FOLLOW THE ACTION
& KEEP SCORE
Find a
Common Goal
Create
Line-of-Sight
Hold Each Other
Accountable
Share the
Big Picture
4
Our Approach…
1
FINANCIAL
SCOREBOARD
2
3
FOCUS ON THE
CRITICAL
NUMBER
ACT ON THE
RIGHT DRIVERS
FOLLOW THE ACTION
& KEEP SCORE
Find a
Common Goal
Create
Line-of-Sight
Hold Each Other
Accountable
Share the
Big Picture
4
5
PROVIDE
A STAKE IN THE
OUTCOME
Reward &
Recognize
Our Approach…
1
6
FINANCIAL
SCOREBOARD
90 DAY
MINI-GAME CHALLENGE
2
3
FOCUS ON THE
CRITICAL
NUMBER
ACT ON THE
RIGHT DRIVERS
FOLLOW THE ACTION
& KEEP SCORE
Find a
Common Goal
Create
Line-of-Sight
Hold Each Other
Accountable
Share the
Big Picture
4
Jump Start
the Game
5
PROVIDE
A STAKE IN THE
OUTCOME
Reward &
Recognize
3
FOLLOW THE ACTION
& KEEP SCORE
KEEP SCORE
Department
Scorecard
Financial
Scoreboard
Financial Statements
Revenue
Workgroup
Scorecard
Sally’s
Scorecard
Purchase Variances
Product XYZ
Material Usage
Purchasing
Cost of Sales
Materials
Profit
Material Receipts
Purchase Variance
Cascading the Score
Line-of-Sight
3
FOLLOW THE ACTION
& KEEP SCORE
Hold Each Other
Accountable
KEEP SCORE
3
FOLLOW THE ACTION
& KEEP SCORE
FOLLOW THE ACTION
What’s a Huddle?
Hold Each Other
Accountable
• Evaluate Game Conditions
• Check the Score
• Plan the Next Play
•
(manage deviations)
• Get Fired Up

T he
Scoreboards

ACTIONS
PRE HUDDLE
Mid-Level
Management
Operational Scoreboard
Front-Line
Supervisors &
Employees
Review Departmental & Workgroup
Scorecards
Daily/Weekly
15 to 30 min.
Creates a Financial Opinion from Operational Performance
Shares Numbers and Information up through the Company
MAIN HUDDLE
Financial Scoreboard
Review Financial / Critical Number
Scoreboard & Bonus Plan
Top Leadership
Mid-Level
Management
Wednesday
40 to 50 min.
Creates a Big Picture Financial Outlook
Shares Numbers and Information across the Company
POST HUDDLE
All Employees
Financial Scoreboard
IDEAS
Share & Discuss Financial Outlook
& Bonus Plan
Daily/Weekly
15 to 30 min.
Creates Ideas and Action Plans for Improvement
Shares Numbers and Information down through the Company
3
FOLLOW THE ACTION
& KEEP SCORE
KEEP SCORE
Rolling Forecast
Hold Each Other
Accountable
3
FOLLOW THE ACTION
& KEEP SCORE
FOLLOW THE ACTION
Forward Looking
Hold Each Other
Accountable
• It’s our early warning system - Alerts everyone
to opportunities and emerging challenges
• Line-of-sight, Cause-and-Effect
• Sustains commitment
• Ability to forecast accurately is an indication of
how well employees understand their numbers
1
6
FINANCIAL
SCOREBOARD
90 DAY
MINI-GAME CHALLENGE
2
3
FOCUS ON THE
CRITICAL
NUMBER
ACT ON THE
RIGHT DRIVERS
4
FOLLOW THE ACTION
& KEEP SCORE
5
PROVIDE
A STAKE IN THE
OUTCOME
Mini-Game
A short-term rapid improvement challenge designed
to correct a weakness or pursue an opportunity
within the company.
Intensity
Period
Max /
Plateau
“New” Normal
120%
110%
100%
The
MiniGame™
Effect
90%
80%
70%
Mar Apr May Jun
MiniGame Challenge
Jul Aug Sep Oct Nov
Baseline Performance
90 DAY
MINI-GAME CHALLENGE
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Choose the Game – The Right Drivers
Defined the Target (Stretch Goal)
Estimate the Benefit
Identify the players
Determine the timeframe
Develop a theme
Design the scoreboard
Choose the reward
Play the Game
Celebrate the Win
90 DAY
MINI-GAME CHALLENGE
Driver Derby
• The Game:
A restaurant food &
equipment distributor
needed to dispose of
$50,000 in excess inventory
• The Target:
75% reduction
• The Players:
Delivery truck drivers
• The Timeframe: 90 days
90 DAY
MINI-GAME CHALLENGE
Driver Derby
• The Theme:
Driver Derby – Horse Race
• Scoreboard:
The delivery truck
• The Reward:
Management washed each of
the driver’s delivery trucks and
personal vehicle
90 DAY
MINI-GAME CHALLENGE
ALTERNATIVES TO CASH
• Lottery tickets
• Rewards should…
• FOOD!!!
• Time off
• Movie tickets
• Sporting events
– Be motivating
– Be memorable
– Reflect the effort and quality • FUNNY MONEY
• Trophies
of the teams performance
• Gift certificates
• Trips
• Car wash
• BOSS BETS
• FAMILY AFFAIRS
Go Beyond Open Book
It’s a Process
Questions?
Rich Armstrong
The Great Game of Business
rarmstrong@ggob.com
Direct Line 417.829.8222
greatgame.com
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Thank You!
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