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.