Business

OBM is the New Black: How Open Book Management Puts You Back In The Black

OBM was pioneered by Jack Stack in The Great Game of Business. In 1983, he transformed a failing division of International Harvester into Springfield Remanufacturing Company (SRC)—one of the most successful and competitive companies in America—with nothing more than a few good managers, a little bit of cash, a lot of gumption and yes, Open Book Management. Our approach to OBM was adapted from the work done at SRC, which Jack Stack writes about in the excellent book he co-wrote with Bo Burlingham, The Great Game of Business. We’ve been using OBM for over fifteen years now and have our own unique take on Jack and Bo’s teachings.

But what is Open Book Management? The fundamental idea behind Open Book Management is that one of the keys to a successful business is to have employees who think and act like owners. For employees to behave like owners, they must have access to and an understanding of key financial information about the business. When financial information is shared with everyone, not just the owners and accountants, then everyone becomes responsible for and contributes to the financial success of the company.

It seems like a pretty simple idea but it’s not an easy one to implement or live, because we’re not just talking about giving everyone access to reams of accounting data here — we’re talking about teaching employees how a business runs and then involving them in running it. As Ari says, “open book is a participative sport!”

The great thing about OBM is that when you take the time and effort to implement it, and implement it well (with data and education), it is extremely rewarding. Not only does it result in financial success, it results in employees who are much more engaged and inspired because they see the larger impact and context of their day-to-day work.

In the spirit of Open Book, I’d like to tell you about an interesting phenomenon we saw at ZingTrain in 2011. ZingTrain teaches a 2-day seminar on Open Book Management here in Ann Arbor. It’s called Fun, Flavorful Finance. We love teaching the seminar. And after they’ve come to the seminar, we love to help our clients implement OBM because we truly believe in it. Not to mention the fact that it’s powerful and rewarding to be part of such a positive transformation. Anyway, in 2011, sales of the Fun, Flavorful Finance seminar went through the roof, with just about twice as many attendees in 2011 as in 2010! OBM is the new black! Or, in a struggling economy, more and more folks around the country are realizing that OBM is the way to stay in the black. Or get back in the black.

And now you know the secret too. And can use it for your financial success.

If you’re interested in learning more about Open Book Management, contact me at gauriatzingermansdotcom and I’ll send you two essays that Ari wrote that go more in depth about Open Book Management, why it’s good to implement it in your business, and how to get it going.