The Great Game of Business – Chapter 7 section 1 (part 11 of 17)

Chapter 7 – Skip the Praise Give Us the Raise

There is no more powerful tool a manager can have than a good bonus program. … If a bonus program works, it can be an incredible motivator. It can get people producing at levels that make the cost of the program seem like peanuts, no matter how much you may have spent to set it up.

What a bonus program does is communicate goals in the most effective way possible – by putting a bounty on them. … When you do that, you get people’s attention very fast. … We call it “Skip the Praise – Give Us the Raise,” or STP-GUTR – pronounced Stop-Gooter. Here are some of the things we like about it:

  1. Stop-Gooter is our most effective educational program. We use it to teach people about business.

If the goal is to improve the debt-equity ratio, people learn about debt and equity and how they can affect both. … Whatever the goal, it gives people a big incentive to find out about some aspect of the accounting system, the company, and the competitive environment.

  1. The bonus program serves as a kind of insurance policy on the company and our jobs.

That’s because we use it to target our vulnerabilities. Every year, we figure out what is the greatest threat the company faces, and we get the entire workforce to go after it in the bonus program.

  1. The program brings us together as a team.

It ensures that everyone has the same priorities and that we all stay focused on the same goals. It eliminates mixed messages. … The bonus program forces the problem out into the open. Once it’s there, you can go to work on it. You can solve it.

  1. The program helps us identify a problem fast.

If we don’t achieve a goal, we find out very quickly why we missed it. … The bonus program forces the problem out into the open. Once it’s there, you can go to work on it. You can solve it.

  1. Stop-Gooter is the best tool we have for increasing the value of our stock.

We always set it up to guarantee that the stock value will rise substantially if we hit our targets – and will be protected even if we don’t. … “This Game is all about equity and job security.” Short-term incentives like bonuses are fine, but we want to make sure people never lose sight of the long-term payoffs.

  1. Most important, the bonus program provides the structure of the Game.

It sets the tempo. It keeps the action going week in, week out, all year long. It gives us a language , a way of communicating. It creates excitement, anticipation. … It makes sure that people stay involved, engaged, and on their toes. It is, in short, our most important motivator, which is its primary function.

Bootstrapping: the best reason for paying people with bonuses

I am a strong believer in operating a company, any company, as if its future were always on the line, as if something could happen at any moment to threaten its survival. Most companies do, in fact, follow that principle when they are starting up. … Bootstrapping is a mentality, a set of habits, a way of operating based on self-reliance, ingenuity, intelligence, and hard work. When you don’t bootstrap, you grow fat and sloppy. You get into the habit of buying solutions to your problems. You take the future for granted. … You let your costs rise, and you take your eye off the ball. You get caught up in a lot of issues that have nothing to do with making money and generating cash. The next thing you know, a competitor comes along and knocks you out of the box.

As I’ve said, there is only one sure way to protect jobs, and that is to be ruthless about costs. But least-cost companies face an unpleasant choice. If you want to come in below your competitors, you can (1) pay your people less or (2) make your product faster. That’s about it. No humane person enjoys making such a choice. Who wants to have a business that provides people with the lowest standard of living in the market, or that forces them to work so fast it’s unhealthy? Who wants a company that prevents people from taking care of their families and themselves, from leading a full and happy life? But what’s the alternative if you’re going to be competitive and stay in business?

A bonus system like ours offers a way around this dilemma. It allows the company to hold base salaries at a level that gives people a great deal of job security – that pretty much guarantees they’ll have work so long as they do a decent job. But if people do a better than decent job, if they can figure out ways to improve, the company shares with them whatever additional money they generate by paying them bonuses. The more they generate, the bigger the bonuses. It’s like getting a raise, maybe even a very substantial raise, over and above their regular salary, but in a way that doesn’t jeopardize their future employment. We know we can survive the tough economic periods. We may not pay bonuses in tough times, but we’ll keep going. We won’t lose jobs.

In effect, we’re creating a certain elasticity for the down-times. We don’t ever want to lay people off, and we don’t want to cut wages either. Most of the salary a working person earns goes to cover his or her fixed costs. … I don’t know of anything harder than having to cut basic living expenses.  We want people to be able to count on a certain level of income, but we also want to give them the opportunity to earn more. And they will earn a lot more as long as the company is in good shape and they are performing up to their capabilities.

 

The Great Game of Business – Chapter 6 section 2 (part 10 of 17)

How We Calculate Our Batting Average

Every business should have its own counterparts to the batting average. We have several. One of the best is the overhead absorption rate. This is the number people on the shop floor use to determine how much overhead they cover, or “absorb,” when they spend their time working “on prime,” that is, working on products. … When I talk to executives from other companies, they find this hard to swallow. They can’t believe that our hourly people know, or care, what they are doing to cover overhead. … If we don’t absorb all the overhead we have budgeted, we have to pay the difference out of profits, and that cuts into our bonuses, not to mention the value of our stock.

Tip #4: Find Sources That Can Help You Develop Standards

No matter what business you’re in, there are benchmarks and standards, and the chances are that someone has already calculated them. You can usually find them out by digging around. Suppose you have to buy workers’ compensation insurance for a new business. You need a way to measure safety. Well, the federal government has developed formulas for measuring safety, and the insurance companies use those formulas to set premiums. You can use the formulas as well to monitor your own safety in order to establish your own benchmarks. The better you do, the lower your insurance costs. Then you can use that to educate your people about their impact on overhead, to show them how they reduce overhead by improving safety.

How We Developed Standards on a New Product

When we decided to start remanufacturing automobile engines in 1985, the first thing we did was to look for the best automotive remanufacturer in the world. We talked to all the machine tool manufacturers, asking them, “Who remanufactures automobile engines faster than anybody else, and how fast do they do it?” Three or four sources told us, “Dealers in Minnesota. Ten hours per engine.” So then we had to find out what the Dealers did to make engines that fast – what equipment they had, what their overhead rates were, how much they paid their people, and so on.

We started by calling up Dealers. They had moved to another state. It turned out they had a strong union in the Minnesota plant. They were paying $14 an hour for assemblers. That told us right away why they had a ten-hour standard: it was the only way to compensate for their high direct labor costs. If they were paying that much for assembly, they had to come up with the most efficient processes for cutting down the number of hours they put into the engine block. That give us a tremendous advantage right off the bat. Our automotive assembly plant was in an area where the going rate was $4.50 an hour. We reason that if we could build an engine in ten hours with workers making $4.50 an hour, we could establish a solid foundation for the business. Over time, we were able to increase the labor rate to as much as $10 an hour and create a standard of living that people could live with.

HOW STANDARDS CAN BRING OUT THE BEST IN PEOPLE

Moral: You need standards to show people the real world. You can’t just go out there with wishes and goals. You need to give people a strategy to get there. You need to guide them. You have to show them the goal is attainable, and here’s how they can attain it. Unless you run into a situation that defies mathematics, like the fuel-injection pump problem. Then you’re going for a miracle. And sometimes people can produce miracles, but it helps if they’re well educated. I don’t think the people in the pump room could have pulled it off if they hadn’t already been trained on standards.

So that’s basically what we did. We found out who was the best, we set a ten-hour standard, and we went after it. We couldn’t make it, so we settled on twelve hours, and later knocked it down to eleven hours. We paid about $6.50 an hour, plus the bonus. Our salespeople say our prices are among the best in the industry. And we have all the business we can handle.

KEY POINT: Numbers are not a substitute for leadership. What’s important is how you use them.

Never get so far into the numbers that you leave out the human factor. Use the numbers as a tool to get people to contribute more, not less. If we use them to create an environment in which people don’t contribute, or can’t contribute, that’s worse than not using them at all.

Tip #5: Tell the Stories Behind the Numbers

Once you’ve developed some standards, what do you do with them? How do you use them? More important, how do you get other people to use them? How do you demystify the numbers? How do you turn them into tools that people can use – that they wantto use – to contribute more? In short, how do you educate people around the standards?

I have always found that the most effective way to do that is by telling stories. With standards, we can use the numbers to tell stories about what has been happening in the company and what we can do to change. WE can bring problems out into the open where they can be addressed – where they haveto be addressed. Once people understand a standard, they expect us to do something when we aren’t meeting it. They know that if we don’t, we won’t make money or we may run out of cash, which would be a story in its own right.

It’s a way of animating the numbers, bringing them to life. When you use the numbers to tell stories, you can educate people without threatening or intimidating them. You can show where the numbers came from and what they mean. You can illustrate in a way people understand that they do make a difference, they do control their own destinies. It’s their game.

Tip #6: Look for the Profit in Problems

Whenever you turn a loser into a winner, you get a double bang for your buck. Say you have a problem that’s costing you $500,000 a year and you figure out a solution that winds up earning you $500,000. You don’t have a $500,000 winner. You have a $1 million winner. When you can stop the bleeding and turn it into healing, you’re twice as well off as before.

The financial system sho­sws you where you can make more money just by telling you where you’re losing it.

The Seventh Higher Law Is: When You Raise the Bottom, the Top Rises

You really want people to solve their own problems. If the problem gets bad enough, you can always go in and tell people what to do. But all you’ll get is the routine. You won’t get any creativity. So you hope to don’t have to get to that point. It’s much better to have an environment­ in which people can come up with solutions themselves. Standards are tools for finding solutions.

Benchmarks Can Turn an Operation Around 

What turned people on was the challenge, the fun of the game, the fun of winning. Humor and laughter go a heck of a lot further than yelling and screaming and throwing tantrums. But you can’t set up a game like that if you don’t have standards.

KEY POINT: If you can’t get people beyond the day-to-day issues, if you can appeal to something they really want to do, they’ll blow by every obstacle. 

BEWARE ANY NUMBER THAT LOOKS TO GOOD TO BE TRUE – IT PROBABLY IS

Moral: Don’t accept any number until you understand where it came from and you know it’s real.

KEY POINT: Businesses always have problems. Numbers tell you where the problems are and how worried you should be.

The Great Game of Business – Chapter 6 section 1 (part 9 of 17)

Chapter 6 – Setting Standards

Numbers have gotten a bad reputation in some quarters: no surprise when you look at how they’ve been used. Most companies use them as punishment – as tools to supervise, intimidate, or control. They don’t use numbers as tools to build – to teach people to be more productive.

KEY POINT: The payoff comes from getting the people who create the numbers to understand the numbers. When that happens, the communications between the bottom and the top of the organization is just phenomenal.

You can’t generate that quality of communication just by dumping numbers on people, however. You have to make the numbers both comprehensible and interesting. … The trick is to be able to evaluate those numbers, to make sense out of them, to know what to do with them. For that, you need standards.

A standardis the number to shoot for in any particular category you are measuring. It may be a ratio. It may be a percentage. It may be an absolute number over a period of time. All that depends on the category. … Some standards are obviously more important than others, if only because some categories are going to have a bigger impact on your ability to make money and generate cash.

The number and variety of standards will vary from person to person and from job to job, but everyone in the company needs some way of measuring how he or she is doing on a daily, weekly, and monthly basis. … Anyone who really gets into the Great Game of Business will compile a substantial list over time. But don’t overdo it in the beginning. You can start playing the Game with a couple of standards – say, one related to sales and another to productivity – and build from there. The whole idea is to throw a spotlight on some part of the action. Standards make the Game faster and more fun. They allow you to determine easily and quickly how you are contributing to the process of making money and generating cash.

KEY POINT: Numbers like these are no more complicated, and need be no more intimidating, than the calculations millions of baseball fans do whenever they want to figure out their favorite hitter’s batting average or their favorite pitcher’s ERA.  

In business, however, people don’t do the calculations because they don’t understand the rules. Standards help you teach them. They allow you to show people the equivalent in your business of batting .400.

Numbers Make the Team

Most important, numbers like these help everyone play the samegame. People need to have some way of keeping score. … So how should you go about developing and implementing standards at your company? By choosing a category, picking a target, and going after it. Pretty much any target will do, as long as you can explain why it’s worth aiming for. … Setting standards is a team effort and an ongoing process. Encourage people to debate each one. Let them negotiate. Over time, you’ll get it right. Just start, stick with it, and learn from your mistakes. That said, here are some tips about setting and using standards from someone who has already made just about every mistake there is.

Tip #1: Do You Know Your Critical Number?

Every company has one. It is the number that, at any given time, is going to have the biggest impact on what you’re doing and where you want to go. Exactly what it is will depend on a variety of factors. … Whether you’re aware of it or not, it will make or break your company. It is the number you haveto do well on if you are going to succeed, or maybe even survive. So it’s vital that you identify it and come up with standards people can use to go after it.

The good news is that it’s generally pretty easy to track down your Critical Number, assuming you know your business reasonably well. Pay attention to what keeps you up at night. Better yet, ask your people what keepsthemup at night.

Tip #2: Build a Standard Cost System

Sooner or later, your Critical Number will have to do with costs, and by then you’d better have a standard cost system in place. It’s the only way of making sure that your costs are in line with the marketplace, that they aren’t so high as to undermine your ability to compete. Remember, you can only make money in business by being the least-cost producer or by having something no one else has, and even in the second case you’d be foolish not to keep your costs down. To do that effectively, you must have a standard cost system that tells you what your costs should be in every aspect of your operation. Without it, you’re going to have a hard time getting your people involved in controlling costs, mainly because they won’t know what to do. In fact, they probably won’t believe you if you tell them the company’s costs are too high. And you’ll find it almost impossible to teach them how to follow the basic rules of business: make money and generate cash.

Most companies use what I would call an average cost system. They look at what they paid the year before and set that as the cost. Systems like that seldom are specific enough and never provide targets. … That kind of cost accounting is really an obstacle to improving productivity because it accepts and rewards inefficiency. If you are going to improve, you need to know how much you should be spending, not just how much you’ve spent in the past. That means going over every product, looking at every part, examining every process and operation, breaking each down into its individual components, and then coming up with standard costs for everything you do.

CHECKLIST FOR STANDARDIZING COSTS

  • Is anything going to happen in the next twelve months to affect these costs?
  • Am I overlooking any outside sources of information, such as industry groups or competitive wage surveys, that could assure me these costs are reasonable?
  • Am I purchasing supplies in the right quantities? Using the right suppliers? Checking other sources?
  • Is this specific operation really necessary? What would happen if I didn’t do it?
  • Have I created ways for people to contribute their ideas about reducing costs? Do people feel they are part of the process?
  • Most important, will people buy into these standards? Have I given them every opportunity to debate the standards? Do people think the standards are theirs? This is where ownership starts. Do people own these standards?

Tip #3: Look for the Reality Behind the Numbers

More than work, it takes creativity and imagination to develop good standards. There is a whole art to quantifying these things, and it’s one that’s worth learning because the more quantifiable something is, the more you can do with it. But before you can be an effective quantifier, you have to develop an eye for the reality behind the numbers. You have to learn how to recognize what the numbers really represent, what sort of behavior produces the numbers, and what people can do differently to change the numbers.

WARNING: DON’T ACCEPT ANY NUMBER AT FACE VALUE

Numbers are not magical, and they aren’t sacred. They are important only as cluse to the reality that produces them. To use numbers effectively, you have to strive constantly to understand that reality – to move from the abstract to the specific. Many a profitable company has gone out of business because people neglected to find out the reality behind the numbers on the bottom line. You can’t pay your creditors with money that’s tied up in stale inventory or uncollected receivables.

To develop useful standards, on the other hand, you almost have to reverse this process. You have to understand what really happens in the workplace, how people go about their jobs, and then come up with tools they can use to measure their individual contributions to the common goals. That involves moving from the specific to the abstract. The trick is to do it in a way that does not confuse people, or disorient them, or send them mixed messages. The best kind of standard is one that makes so much sense to becomes second nature.

 

The Great Game of Business – Chapter 5 section 2 (part 8 of 17)

Overcoming Your Fear of Disclosure

The Great Fear #1: What if your competitors get hold of your numbers?

The notion of opening up the company’s books strikes terror in the hearts of many CEOs, who shudder to think that the numbers might fall into the wrong hands – like their competitors’. I have to admit that, in the beginning, our numbers were so bad it didn’t matter whether or not our competitors saw them. Then, as we began teaching people the numbers, we could see our company get stronger, and so we worried less about our competitors because they weren’t strengthening themselves in the same way.

The Great Fear #2: Is it your competitors you fear – or your own employees?

Sad to say, a lot of companies hide their financials not because they’re afraid of their competitors, but because they’re afraid of their employees. They don’t think people will understand the numbers, and there’s some truth to that. If you don’t show employees how to use financial information as a tool to help the company, they might well use it as a weapon against the company. I still think you’re better off in the long run being open with financial information. When the numbers are hidden, people make assumptions, and they’re often crazy ones. Nine times out of ten, people think a company has a lot more money to spend on wages and salaries than it does. They’re trained to think big, and they don’t understand business. It’s amazing, for example, how many people confuse profit with sales.

The Great Fear #3: What do you reveal if your numbers are bad?

The CEO of a screen-printing company came up to me after I had given a speech to business group in California. “I love your message,” he said, “and I love the way your run your business, but I could never let my people see all our company’s numbers. They’d leave if they knew how bad we were really doing.” I said, “Does that mean you only show them good numbers?” He said, “Yeah, I show them good numbers to keep them motivated.” I said, “Do they trust you?” He said, “No.” … The truth is that you’ve got to give people the bad as well as the good. It’s the only way to build trust, and you must have trust, if only because you’re bound to make mistakes.

How to Be An Open-Book Manager

Sometimes I think what I’m really doing is conducting an orchestra. … I’m Lawrence Welk, going “ah-one and ah-two.” My job is to keep the rhythm going. I keep things on schedule, on time. That can be tricky because conditions are always changing. You need to be flexible, but you also need structure. What’s essential is to make sure that everybody is playing from the same scorecard. Our scorecard is a set of financial statements, notably the Income Statement and the Balance Sheet

We mix all kinds of metaphors in explaining those documents to people. I usually tell them that the balance sheet is the company’s thermometer. It lets you know whether you’re healthy or not. An Income Statement tells you how you got that way what you can do about it. … Don’t rely on the kind of financial statements provided by CPAs. Those statements are designed to give outsiders – investors, tax collectors, bankers – the information they want to know about a company. Employees need something a little different. The general form is the same, and the standards of accuracy should be just as high, but the detail has to be broken down in a way that sheds more light on what’s happening inside the company.

How you do that depends entirely on your business, but here are some general rules to follow:

  1. Start with the income Statement. It is the best tool you have for drawing people into the action of the game because it is constantly changing. As a result, it lends itself to demonstrating cause and effect. You can use it both to monitor the action as it unfolds and to show people their role in determining whether or not the company makes money.
  2. Highlight the categories where you spend the most money. Those are obviously the ones that are going to have the biggest impact on your company’s profitability, so you want to monitor them very closely.
  3. Break down categories into controllable elements. If labor is a variable expense, you want people to see it vary. If you use trucks in your business, people should know how much you’re spending there. In a sales organization, you’d keep a close eye on travel, entertainment, and other selling expenses; in a professional service firm, you’d probably want to break down billable hours. The whole idea is set up the income statement in a way that lets people observe the effects of what they do.
  4. Use the income statement to educate people about the balance sheet. While the action may center around the Income Statement, it is the Balance Sheet that tells you the real score – how secure jobs are, how much wealth has been created, where the company’s vulnerable. You ignore it at your peril. Once people get the hang of the Income Statement, moreover, it’s a fairly simple matter to show them how the changes there produce changes in the Balance Sheet. Use the same principle of breaking down large Balance Sheet Categories to illuminate cause and effect.

Above all, develop a set of financial statements that works for your particular business. If you have a chain of clothing stores, your internal statements will wind up looking very different from those you would develop if you had a travel agency. … But the process by which you would come up with your statements would not very much at all.

At SRC, we break out the various costs involved in the manufacturing operation. Typically, these costs would be lumped together in the Cost-of-Goods-Sold line on the income statement. That may be adequate for a banker, but it doesn’t tell us very much about what’s really going on in production, where most of our people work. We want them to see exactly what effect they are having on profits, so we break down the Cost-of-Goods-Sold line into its basic elements – material, labor, and overhead. Every week, the various departments forecast whether, and by how much, they are going to be over or under budget for the month. Then, after the month’s close, we produce a hundred-page set of financial statements showing exactly what happened where and how each person contributed.

Visitors sometimes find all this a little overwhelming. I tell them to bear in mind that we didn’t create this system overnight. It took us years to develop all the mechanisms we now have for keeping people up to date on the numbers, and we’re sill coming up with new ones. But we started out very simply. In the first year, your chief financial officer would put together a daily report like chicken scratch for the bank showing where our cash was, where our inventories were, where our receivables were, what we owed, and so on. That would be passed around the company. People got curious. They would come down to the front office in the morning and ask, “What do we owe today?” From there, the reporting system just grew and grew.

Employees wanted to see exactly where they fit into the process; … Their questions told us what information we should be reporting. Management’s role was to instill the desire to know. We did that by a variety of methods – through the bonus system, the weekly meetings, and all the other games we developed along the way.

The Great Game of Business – Chapter 5 section 1 (part 7 of 17)

Chapter 5 – Open-Book Management

The more people know about a company, the better that company will perform. This is an iron-clad rule. You will alwaysbe more successful in business by sharing information with the people you work with than by keeping them in the dark. … Don’t use information to intimidate, control, or manipulate people. Use it to teach people how to work together to achieve common goals and thereby gain control over their lives.

The Language Cure: how open-book management works

When I talk about open-book management, I’m referring to the practice of communicating with people via the numbers. This is a cornerstone of the Great Game of Business as we play it at SRC. I’m not saying … it’s a cure-all … people aren’t going to believethe numbers if you haven’t established some credibility and begun to foster a sense of mutual respect and trust. And people aren’t going to act onthe numbers if they’ve never had the experience of winning, if they think of themselves as losers, if they walk around with sand in their eyes. And people aren’t going to care about the number if you haven’t given them a sense of the Big Picture by educating them about how the company works, where they fit in, and why it all matters.

Start with the basics. Once you’ve laid the right foundation, then it’s essential to teach peope the numbers, because numbers are the language of business, and you can’t understand business, let alone play the Game, if you don’t speak the language.

Take the Emotions Out of the Business

I am second to none in believing that business ought to be people oriented. But no company serves its people well be elevating emotions over numbers. That’s one of the things I like most about open-book management: it takes the emotions out of the business, or at least out of the decision-making process.

Let people evaluate the situation for themselves. Don’t do it for them with rah-rah squads. You can communicate more clearly with numbers. If I tell people one plus one is two, that message gets through without distortion. The challenge is to get people to appreciate what I really mean by one plus one is two.

And when you have bad news to deliver, the numbers are crucial. It’s hard to share bad news. … So the person who is supposed to deliver the news tends to put it in the best possible light, which often undercuts the message. … So somehow you want to send the message clearly without getting people down. You can do that with numbers.

Magic Number: why open-book management works 

There are only two ways to make money in business. One is to be the least-cost producer; the other is to have something nobody else has. … If you have the lowest costs in the market, you can undersell the competition and still earn a profit. By the same token, you don’t have to worry too much about losing business to competitors who charge less. If your costsare lower, a price war is going to hurt them more than you.

On the other hand, it’s always nice to have to come up with an edge that customers can’t get anywhere else. Maybe it’s quality, maybe it’s a particular service, maybe it’s a unique product, maybe it’s a brand name. As long as you’re the only one who has it – and customers want it – you can charge a premium for it.

The best way to control costs is to enlist everyone in the effort. That means providing people with the tools that allow them to make the right decisions. … Those tools are our magic numbers. Every business has them. Specifically, they are the numbers that tell you whether or not your costs are lower than your competitors’. To know what your costs should be, you have to find out what your competitors’ costs are – what their labor rates are, how fast they make their product, what fringe benefits they offer, what other incentives they provide, what they pay for material, what their debt levels are, and so on. Only then can you determine what you must do to be the least-cost producer.

Of course, when you’re striving for lower costs, you can also try to come up with additional services – services that nobody else has. … The idea is to offer something that allows you to charge a little more. In most businesses, however, you’re not going to be able to charge a lot more. So you can never stop trying to be the least-cost producer.

Improvements Come in Fractions; Only Surprises Come in Whole Percentages

The best argument for open-book management is this: the more educated your workforce is about the company, the more capable it is of doing the little things required to get better.

Business is a game of fractions. If you look at the income statements of corporations today, you’ll see that very few of them have pretax margins above 5 percent. So a 1 percent improvement in profitability is very, very significant, but it takes time to achieve it. Surprises, on the other hand, pack a bigger punch. … nobody hates surprises more than the manipulative control freaks who practice old-fashioned, secretive, need-to-know management. That way of operating virtually guarantees a steady stream of surprises, because people don’t have the tools they need to forecast and project, to live up to their commitments.

The Sixth Higher Law Is: You Can Sometimes Fool the Fans, But You Can Never Fool the Players.

 

The Great Game of Business – Chapter 4 (part 6 of 17)

Chapter 4 – The Big Picture

Nowadays we start teaching people the Game as soon as they come to work at SRC. We plunge right into the financial statements. Once people understand the numbers, oncey they see how the Game works, once they get it, business makes all the sense in the world. It puts everything they do in perspective. It makes them understand why they’re here. It shows them what theyir contribution is and why it matters.

But you may want to start a little more gradually, as we did in the early years. It’s a lot easier to teach people about making money and generating cash if they know what the company does and how they affect its performance. Paint the Big Picture for them. Tell them why you’re in business using terms they already understand. Then the numbers will make sense when you get to them. You’ll be able to demonstrate how they can serve as tools to stay connected to the Big Picture on a daily basis, to keep everybody focused on common goals. And that, after all, is the main reason the numbers are important: they constantly lead you back to the Big Picture.

Most of the problems we have in business today are a direct result of our failure to show people how they fit into the Big Picture. KEY POINT: The Big Picture is all about motivation. It’s giving people the reason for doing the job, the purpose of working. If you’re going to play a game, you have to understand what it means to win. When you show people the Big Picture, you define winning.

 So these are the steps so far:

  1. Create a series of small wins
  2. Give people a sense of the Big Picture
  3. Teach the numbers

That’s the rough sequence, at any rate. The truth is that we are always looking for more wins of any size, and we never stop reminding people about the Big Picture. You shouldn’t either. Here are some ways to go about it.

*Give Everyone a Course in Your Business

Sometimes you have to make a dramatic statement to get people to step back, see how everything fits together, and think about the broader purpose of what they’re doing. … So, one day in October 1980, we shut the plant down and had everybody show up instead at the Hilton Inn across town, where they participated in what we called Employee Awareness Day. It began with workshops run by the different department heads. People divided up into small groups that went from room to room. They learned what each department did, and how it fit in with what the other departmetns were doing. The head of engineering explained how his department made it possible for us to take on new products and keep up with technology. The materials department put on a skit dramatizing what would happen if inventory got out of control.

*Market Your Products to Your Employees

Just because you spend a lot of time, effort, and money telling customers about your products, don’t assume your employees understand those products. The chances are that most of them know about only one small part of the process. They can’t possibly see the Big Picture if they don’t understand what your company does – what products or services it delivers to customers, how it helps customers solve theirproblems and take care of their need. The answer is to spend some of your marketing budget on your own employees.

The company was spending millions of dollars on ads, posters, brochures, and other material designed to get customers to believe in our products, but we weren’t using any of it to generate pride in our own people. So we went to the sales and marketing people and asked them to help us out. … That marketing campaign helped us to turn the entire operation around. It got people thinking like members of a team, which is crucial on an assembly line.

The lesson was: market to the people who are producing the goods. In fact, you should sell your people beforeyou try to sell the customer. It doesn’t do any good to go out there an sell an empty product. You want to sell a product that has life in it – that has people in it.

*Move People Around

People Express Airlines used to have a practice it called “cross-utilization,” whereby employees would get experience in different parts of the business. The flight attendants would spend time handling baggage, for example, and the accountants would work in customer service. It was, in fact, an effective technique for getting people to look beyond their specialties and get a direct, firsthand sense of the Big Picture.

*Draw a Picture

Don’t just tell people about the Big Picture, show it to them. Put it in the form of charts and graphs. Use them to decorate the walls. Anything that can be measured can be turned into a picture – net profits, retail sales, sales per customer, output per week or per day or per minute, energy use, scrap, you name it. And those pictures can be very dramatic. At one point, we had a graph in the cafeteria that went right off the paper, all the way up to the ceiling. It was about overhead costs, and it sure got people’s attention.

But the most effective pictures we have aren’t charts at all. But the most effective pictures we have aren’t charts at all. They are the stock certificates we distribute every year, as a way of giving people physical evidence of their equity in the company and how they have increased their holdings in the past twelve months. The certificates look real enough, although they have no intrinsic value: normally, an Employee Stock Ownership Plan doesn’t issue stock certificates, just an annual statement. We do this strictly because we want people to see the Big Picture. It’s a way of reminding people to see the Big Picture. It’s a way of reminding people how we measure success. We’re saying “In this company, you get equity. When you play the Great Game of Business, that’s the measurement of success.”

*Get Incentives from the Six-Year-Olds

A company is just a means to an end, and the end lies outside the four walls of the business. So the real Big Picture, the one that matters most to people, reaches beyond their paycheck out into the community. We put a lot of emphasis on community programs – Adopt-a-School, the Christmas drive for homeless children the United Way, the Special Olympics, the Red Cross. We have a hard time saying no to anybody. For us, it’s all part of the Big Picture.

Go Beyond Quality

Educating people about the Big Picture runs counter to a lot of ideas that become popular in the 1970s and ‘80s – notably the quality movement. Back then I found that people who were into quality didn’t care about anything else. One of my closest colleagues at SRC thought it was a big waste of time to teach people about the different parts of the business. “Why should a manufacturing guy like me care what the marketing people are doing?” he’d say. “All I care is that they do their job right. If I do my job right, and marking does its job right, and all the other people do their jobs rights, we’ll have a successful business. I don’t have to know how the marketers go about promoting sales. What matters is quality. You get quality by making sure people pay attention to details, not by telling them how the company works.”

The argument sounds logical enough, but it’s wrong. I knew from experience it was wrong. I had seen companies run that way, and they usually had terrible quality, not to mention a host of other problems. When people focus on their narrow specialties, the different departments go to war. They don’t function as the parts of one company. They act more like competing factions. It becomes very hard to make money or do anything else very well. Quality isn’t better. It’s worse.

The Danger of Mixed Messages 

When you don’t teach people the Big Picture, you run a constant risk of sending people mixed messages. I know one Fortune 500 company president who sent out word he wanted to improve customer service, so people began building up inventories at the product distribution centers. What he didn’t tell them was that he was being evaluated according to return on assets – that is, net income as a percentage of total assets. As the inventories grew, so did the company’s total assets, and the further the president was from earning his bonus. In the last quarter of the year, he suddenly ordered his people to stop all deliveries so that he could meet his goal. It was a disaster. Fourteen hundred suppliers were shut off without any warning. Literally hundreds of thousands of jobs were put on the line. The happened because the president sent the wrong message. He said we wanted better customer service when he really wanted a better return on assets. He didn’t tell people the Big Picture and everyone was screwed and demoralized.

Compensation systems are the primary way that companies send mixed messages. But they may also do it with their performance evaluations, particularly if they use Management by Objective. People can get very confused. They develop tunnel vision. They don’t see the effects of their actions. Say you tell a person she’s being evaluated on inventory turnover, and she drives the inventory down to nothing. So what happens? Your inventory carrying costs are very low, but the production people can’t operate their machines efficiently, so manufacturing costs go through the roof. That’s why you need to get everyone to focus on the Big Picture.

The Great Game of Business – Chapter 3 (part 5 of 17)

Chapter 3 – The Feeling of a Winner 

How do you start the Great Game of Business? By creating a series of small wins – by showing people how it feels to be a winner. Believe me, that’s one of the rarest feelings in business today.

You can’t just walk into any company or any factory and start teaching people how to read financial statements. … there are at least two conditions that haveto exist before people are ready to learn about business – about making money and generating cash, about using numbers to follow the action and keep score:

  1. Management has to have credibility
  2. Employees have to have some fire in their eyes

Pride Before Ownership. For people to feel like winners, they must have pride in themselves and what they do. There is no winning without pride, just as there is no ownership without pride. Pride is all about caring. It is the sense of pleasure or satisfaction you take in what you do, or what you have. If you don’t care, you’re not going to do what is necessary to be a winner or an owner. So pride has to come first.

Creating a Team. Winning is not just a matter of pride, of course. It is also a habit. Unfortunately, losing can get to be a habit as well. When people are in the habit of losing, you won’t see fire in their eyes, only sand. If you want to light the fire, you have to begin by creating wins and celebrating wins – by making a big deal out of the little victories and then building on the little victories to achieve bigger victories. It’s a way of putting fun in the workplace – literally. We throw parties and hold celebrations at the drop of a hat. What we’re really doing is creating a team.

That is, of course, one of the major purposes behind the Great Game of Business. In the early days, however, we couldn’t set up games around the financial statements, because people didn’t understand them and would have been intimidated by them. So we came up with other games, simple games, games we knew people could win. That way, we could begin to create the habit of winning. Every win would give us something to celebrate and allow us to start fires. Along the way, we learned some lessons about the kind of games and goals that worked best:

  1. Business is a team sport – choose games that build a team. You can set up all kinds of games in a company. Avoid the ones that are divisive. The best games are those that promote teamwork and togetherness, that create a spirit of cooperation.

At the same time as you’re fostering team spirit, you can also be using the games to build credibility. One of the first issues I went after, for example, was safety. … Safety is basic. It’s the first thing that can turn people against you. It can undermine everything else you try to do. … So I took on each issue, and I made it very personal. … That really got through to people.

We organized a safety committee and set a goal of 100,000 hours without an accident. We put up four-foot-high scorekeeping thermometers all over the place, and we filled them in every two thousand hours we advanced closer to the goal. As the weeks went by, the drama began to build. On the afternoon when we hit the goal, we closed the plant down for a beer bust. We played the theme song from Rockyover the public address system while members of the safety committee marched around, handing out fire extinguishers. There was a parade of forklift trucks decorated in crepe paper. People stood around and cheered.

  1. Be positive, build confidence. Manager have a bad habit of focusing on the negative. I’ve seen statistics showing how managers tend to react quickly to anything that goes wrong and overlook everything that goes right. … This is a serious weakness. One of a manager’s main responsibilities is to build confidence in an organization. To do that, you have to accentuate the positive. If you accentuate the negative, it eats away at the organization. It becomes a demotivator, and management is all about getting people motivated. A manager who doesn’t motivate isn’t doing his or her job. You can’t motivate if you’re continually focusing on the negative.
  2. Celebrate every win. Records are important, no matter how insignificant they may seem, because you can celebrate whenever you break one. Every record represents an opportunity for management to compliment people, to make them feel good, and to build confidence and self-esteem. People may be feeling depressed, bored or whatever. If you don’t celebrate, you’ve missed the chance to cheer them up. … You can also use records to change the mind-set of an organization, to get people to take responsibility for themselves.

Once the games get going, people stop pushing their problems up to management. If you’re caught up in a game, there’s no time to push problems up. You want to go out and solve the problems by yourself. Otherwise, you’ll get behind, and you won’t win. So the game get people to focus on solving the present problems, which leaves the mangers free to think about the future problems – and that’s how a manager stays in control. If you focus on future problems, you eliminate surprises. You deliver consistency. You have a very happy work environment.

  1. It’s got to be a game. You can go too far in trying to light the fire in people’s eyes. If you do, you’ll find that people stop having fun and start getting scared. Then you have to pull back fast. … The mistake I’d made was to think people would look at these accountabilities as guidelines, as opportunities to help the company and help themselves at the same time. That was naïve. In fact, individual evaluations inspire fear in a lot of people.

The point is that it’s got to be a game. I hadn’t realized the fear I was building into the system. When you think about it, the fear came out of being alone. Security comes from being with other people. There’s a lot to be said for knowing that everybody’s in the same boat with you, that you aren’t on an island, that you don’t have to do it all on your own.

  1. Give everyone the same set of goals. Don’t send people mixed messages. Let them all have the same objectives, and make sure they have to work together to achieve them. Turn success into a group effort. That way, they can win together.
  2. Don’t use goals to tell people everything you want them to do. Too many goals are useless. You should only have two, or at most, three goals over the course of the year. What’s important is to make sure each goal encompasses five or six things. In other words, choose a goal that people can only meet if they do five or six things right. It goes back to the lesson I learned at Melrose Park when we had the deadline on the Russian tractors: you don’t have to tell people to get the parts in on time if you get them to concentrate on getting the tractors out.

Feeding the Desire to Play the Game and Win. Much of what we did back in the early years we still do today. We haven’t had an open house in a while, but we have picnics all the time. We also set aside special days when people bring their kids into the factory. We do it for the same reason we had an open house back then: to build pride and self-esteem. We have more games going outside the company than ever. There are the bass fishing tournaments, the Corporate Cup relays, the golf league, the softball team, the bowling competitions. It amazes me to see all the events our people participate in under the SRC banner.

We definitely encourage the managers to take part in these competitions. It’s another way of knocking down walls. No matter how hard you try to be open, people are intimidated by the title, the door, the desk – all the symbols of power. Those are barriers you have to break down, and these outside competitions offer a way to do it.

The Great Game of Business – Chapter 2 section 2 (part 4 of 17)

Chapter 2 (cont’d)

Myth #5: Don’t Worry About the Big Issues – Just Do Your Job. Like most American companies, International Harvester operated on the principle that everybody should focus on doing the specific job he or she was assigned. The corollary was that you should only give people the information required to do their specific jobs; everything else should be treated as some kind of corporate secret. Somehow it had become common wisdom that this was a good way to run a business – in fact, the only right way to run a business. That is the biggest myth of all.

If you want to make things happen, you have to get people toraise their sights, not lower them. The broader the picture you give people, the fewer obstacles they see in their path. People need big goals. If they have big goals, they blow right by the little obstacles.

I learned that all in one of my first management experiences. I’d been put in charge of getting parts into the factory, and I began going to weekly management meetings, where I started hearing some of the company’s secrets. At the time, we had a big contract to make tractors for the Russians. The secret was that we were in trouble on it. The Russians had negotiated a penalty clause whereby they could harge us for every day we went beyond the deadline of October 31. By October 1, we were still 800 tractors short of the goal, and nobody knew where we could get the parts needed to fill the order in time. The other managers said, “Keep it to yourself. This is real serious. Heads are going to roll. You just focus on getting us the parts. We’ll take care of the tractors.”

None of this made sense to me. For one thing, I didn’t understand why we should focus on getting parts in the door when the real goal was to get tractors outthe door. And I certainly couldn’t see the point of keeping it all a secret. So I put up a big sign outside my office saying, OUR GOAL: 800 TRACTORS, and I told people the whole story. Everybody thought I was crazy. We were shipping 5 or 6 tractors a day, and there were only twenty working days until the deadline. At that rate, we were going to be short by about 700 tractors. To reach the goal, we had to average 40 tractors a day. We got out 7 tractors on the first day, 3 on the second, and people shook their heads. But when we looked closer at the problem, we began to see ways to improve the daily score. We discovered, for example, that some of the parts weren’t making it to assembly – they came in and sat on the dock. The showed us it wasn’t enough to get parts to the factory. We had to push them through the door and out onto the shop floor. We also figured out that a lot of tractors were just missing a few key parts. If we targeted those parts, we could dramatically increase shipments.

It was a case of taking a big problem and dividing it into a series of little problems, which is the best way to solve any problem. But at the same time we kept the Big Picture in front of everyone’s eyes. And it worked.

Suddenly, our daily total jumped to 55 tractors, and people got turned on. They were amazing. This was a factory where you never went outside your department, where you needed a pass to go to someone else’s area, but we had guys doing scheduling, production control, assembly, testing, shipping, the whole nine yards. They’d come into the factory after hours and crawl over the tractors, figuring out exactly what parts were needed and how many tractors were short those particular parts. Then we’d go out on the shop floor and talk to the supervisors and the hourly people. We’d get them to schedule their time as efficiently as possible and made sure we covered them.

The numbers kept going up. When we hit 300 tractors, everybody took notice. We put up bar charts – showing exactly what parts we needed, where they were coming from, and how that was going to affect shipments. People could see the whole picture. They could see all the different pieces and how – if this fell in and that fell in – we just might pull it off. They began to believe, and let me tell you, there’s nothing like it when people believe, when they think they really can do something everyone said was impossible. Individualism goes out the window. The team takes over. Nobody lets anybody down.

By the last week in October the pressure was intense. The executives would come down and watch what we were doing. With five days left, I put up a sign saying we’d shipped 662 tractors, and the place went wild. Would we make it? Would we just miss? By this point, everybody was involved. Assembly was going crazy. People couldn’t wait to get the latest score. We worked right up to the deadline of October 31. On Halloween , the last sign went up outside my office window: 808 TRACTORS SHIPPED.

What a celebration we had! We put balloons all around the sign. We had a party. There were pizzas all around. Nobody could believe that we’d beaten the Russians out of their penalty clause. It was great, just great.

That experience taught me a big lesson. I saw these guys get hungry. I saw them push and accomplish things they never thought were possible. I saw satisfaction on a daily basis. I mean, they didn’t know they were working! I thought, My God, if I can get people pumped up, want to come to work every day, what an edge that is! That’s what nobody else is doing. Suppose I could run the right numbers, so that a guy wakes up in the morning and says, “Man, I feel terrible, but I really want to go in there and see what happened.” That’s the whole secret to increasing productivity.

And I learned something else as well. The experience absolutely convinced me that secrecy is baloney. I decided that, from then on, I was going to give my people everything I got. Eventually that grew into the whole idea of teaching people how to make money.

The Fifth Higher Law Is:You Gotta Wanna

When you think about it, all these myths have one thing in common, what you might call the Big Lie. That is the notion that you can manage effectively by forcing people to do things they really don’t want to do.

It is just not true. People only get beyond work when their motivation is coming from inside. That higher law – you gotta wanna – says it all. If people don’t want to do something, its’ not going to get done. Whatever goal you’re talking about – owning your own company, being the best, building 800 tractors in a month. If you don’t want it inside of you, it ain’t gonna happen.

Management is all about instilling that desire to win. It’s about instilling self-esteem and pride, that special glow you get when you know you’re a winner. Nobody has to tell you. You just feel it. You know it.

The Great Game of Business – Chapter 2 section 1 (part 3 of 17)

Chapter 2 – Myths of Management

You may wonder if it’s possible to play the Great Game of Business anywhere – in a division of a giant conglomerate, say, or in a factory with a dominant union, or in a company that doesn’t share equity with employees or have an intelligent bonus system. In fact, the Game started in a place exactly like that, in a very small department at the huge International Harvester plant in Melrose Park, Illinois. It was there that I learned most of what I know about managing and everything I’ve tried to forget about leadership. … The practice of management, I discovered, is filled with myths that are guaranteed to screw up any factory or company as badly as Melrose Park was in those days.

Myth #1: Don’t Tell People the Truth – They’ll Screw You. Being honest with people was unheard of at Melrose Park and at most other companies in the 1970s. The whole mentality was, Cover your ass. … We established credibility, and you only build credibility by telling the truth. You simply can’t operate unless people believe you and believe one another. That taught me an important lesson: lying and dishonesty are bad business.

Myth #2: Nice Guys Finish Last. When you flaunt what you’ve got, when you intimidate, when you treat people badly, you lose power.

The Third Higher Law Is:What Goes Around Comes Around

Whenever I see someone take advantage of other people, whenever I see a boss acting like an S.O.B., I know his days are numbered.

Myth #3: A Manager’s Job Is to Come Up with Answers. It’s very common for managers, especially new managers, to think they’re supposed to have solutions for any problems that arise on their watch. That kind of thinking can get you into deep trouble. For one thing, it sets you up to fail because no one has all the answers. For another, it undermines your credibility because everyone knowsthat on one has all the answers. It also isolates you from people. … At the same time, they’re failing managers, because they aren’t doing what every good manager has to do: build confidence in other people.

You all learn faster when you teach each other. … Aside from sharing problems, they taught me about the importance of managing with the downside in mind, of having contingencies and trap doors. Because failure is part of the process. You can’t succeed if you don’t fail sometimes. But if you’re not prepared for failure, it’s going to take you by surprise and knock you for a loop. … The secret is to make contingency planning a habit of mind. It was a habit I developed as I moved up the ladder and found the problems kept getting harder. I would teach people everything I knew, and it wouldn’t be enough, so together we’d have to come up with one more trick.

That was critical because the people in the factory were depending on us. When you have the responsibility to take care of other people, you do whatever it takes to get the job done.

The Fourth Higher Law Is: You Do What You Gotta Do

You drop everything else. You stay night and day on that one thing. You figure out how to motivate, push, sneak, threaten, do whatever is necessary because people’s livlihoods are at stake. Take the hill. You gotta take the hill. … You do that, not by coming up with the answers yourself, but by generating a level of creativity that allows the answers to come out.

Myth #4: It’s a Big Mistake to Promote People Too Quickly. The common wisdom is that people should prove themselves before they get promoted. I always promoted people as fast as I could. … Tunnel vision is a big problem in business. When people spend all their time in one function, they see every issue from a single perspective. … that makes it harder to accomplish anything. I got around this obstacle by getting my people jobs in other departments. In effect, I instituted a program of cross-training for the people I worked with. … As a result, my department could function better. We had our own support system consisting of erstwhile colleagues who understood our point of view and could give us help when we needed it.

 

The Great Game of Business – Chapter 1 (part 2 of 17)

Chapter 1 – Why We Teach People How To Make Money

It’s amazing what you can come up with when you have no money, zero outside resources, and 119 people all depending on youfor their jobs, their homes, even their prospects of dinner for the foreseeable future.

That’s pretty much the situation my twelve fellow managers and I faced in February 1983, our first month in business as an independent company. We were supervisors and managers at a little factory in Springfield, Missouri, that up until then had been owned by International Harvester. At the time, Harvester was in big trouble, sinking faster than the Titanic, cutting loose operations like ours in a desperate attempt to stay afloat. When the company offered to sell us the factory, we jumped at the chance to save our jobs. It was like jumping into a leaky life raft in the middle of a hurricane. Our new company was loaded down with so much debt that the smallest wave could capsize us.

We were scared. We couldn’t rely on traditional ways of managing because they wouldn’t produce the kind of results we needed in time to save us. So we grabbed for something new, based on what we thought of as the higher laws of business.

The First Higher Law Is: You Get What You Give.

The Second Higher Law Is:It’s Easy to Stop One Guy, But It’s Pretty Hard to Stop 100

I don’t know where I learned these laws. You don’t hear about them in school. You pick them up on the street. But I know they are real laws of business, and they are the reason why we survived and have been successful ever since. It was out of these laws that we created the Great Game of Business. These two higher laws sum up our success; they emphasize how thoroughly dependent we are on one another – and how strong we are because of it.

I am often asked to say exactly what the Great Game of Business is. I have to admit I find this hard to do. It is not a system. It is not a methodology. It is not a philosophy, or an attitude, or a set of techniques. It is all those things and more. It is a whole different way of running a company and of thinking about how a company should be run. What lies at the heart of the Game is a very simple proposition:

The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run anda stake in the financial outcome, good or bad.

Guided by this proposition, we turn business into a game that everybody in the company can play. … As a result, hourly workers who had been with the Springfield Remanufacturing Corp. (SRC) from the beginning had holdings in the Employee Stock Ownership Plan (ESOP) worth as much as $35,000 per person. That was almost the price of a home in Springfield in 1991.

 

The Basic Rules of the Game 

People who run companies know that there are really only two critical factors in business. One is to make money and the other is to generate cash. As long as you do those two things, your company is going to be okay, even if you make mistakes along the way, as you inevitably will.

The only way to be secure is to make money and generate cash. Everything else is a means to that end.

Those simple rules apply to every business. And yet, at most companies, people are never told that the survival of the company depends on doing those two things. People are told what told in in an eight-hour workday, but no one ever shows them how they fit into the bigger picture. … Most important, no one tells people how to make money and generate cash. Nine times out of ten, employees don’t even know the difference between the two.

 

The Basic Tools of the Game

When people come to work at SRC, we tell them that 70 percent of the job is disassembly or whatever, and 30 percent of the job is learning. What they learn is how to make money, how to make a profit. We offer them sessions with the accounting staff, tutoring with supervisors and foremen, instructional sheets, and so on. We teach them about after-tax profits, retained earnings, equity, cash flow, everything. … Then we provide a lot of reinforcement. Once a week, for example, supervisors hold meetings throughout the company to go over the updated financial statements.

 

Why We Play the Game

 Reason #1 for Playing the Game: We Want to Live Up to Our End of the Employment Bargain. Everything we do is based on a common understanding that job security is paramount – that we are creating a place for people to work not just this year or five years from now, but of the next fifty years and beyond. We owe it to one another to keep the company alive.

Reason #2 for Playing the Game: We Want to Do Away with Jobs. How often have you heard this: “All we ask you is to do the job, nothing more.” Well, I don’t want people just to do a job. I want them to have a purpose in what the hell they’re doing. I want them to be going somewhere. I want them to be excited about getting up in the morning, to look forward to what they’re going to do that day.

Reason #3 for Playing the Game: We Want to Ged Rid of the Employee Mentality.The big payoff to us for playing the Game is that we become a more educated, more flexible organization. We can respond instantaneously to changes in the market. We can turn on a dime for a customer if we have to. We can respond to a problem in the length of time it takes to place a phone call. … We can do all that because we have a company filled with people who not only areowners, but who also thinkand actlike owners, not employees. That’s an important distinction. … Ownership is not a set of legal rights. It’s a state of mind. You can’t give people that state of mind in one fell swoop. You can only nurture it through a process of education.

Reason #4 for Playing the Game: We Want to Create and Distribute Wealth. What’s really going on is that companies are getting rid of people and replacing them with machines. … What machines can’t do is figure out how to make money. Only people can do that. If you have people who know how to make money, you’ll win every time. … But to get people to that point, you have to educate them. You have to teach them why it’s important to make money and generate cash, and then you have to figure out a way to keep them focused on doing those two simple things.