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.