Simple way for motivation & skill development

Sunday, September 1, 2019

summary :-The Great Game of Business....

 Summary :-The Great Game of Business:-The Only Sensible Way to Run a Company


The Great Game of Business
Executive Summary
The Great Game of Busines is about the innovative open management system created in 1983 by Jack Stack and twelve business partners in order to save their jobs and the jobs of their employees. The traditional management techniques were failing them and they needed a way to motivate their employees as well as give them a stake in the outcome. They did this by purchasing a failing division of International Harvester for $9 million and starting SRC (Springfield Manufacturing Corporation). SRC followed three principles, which was the infrastructure to motivate their employees to become businesspeople and leaders. The first was to know and teach the Rules, second was to follow the action and keep score, and the third was to provide a stake in the outcome. The Great Game of Busines encompasses how SRC was able to achieve success as well as ten great lessons that all managers should take from this book. Jack Stack refers to these as The Higher Laws of Business. These ‘Higher Laws of Business’ are:

  • You get what you give,
  • Its easy to stop one guy, but its pretty hard to stop one hundred,
  • What goes around comes around,
  • You do what you gotta do,
  • You gotta wanna,
  • You can sometimes fool the fans, but you can never fool the players,
  • When you raise the bottom, the top rises,
  • When people set their own targets, they usually hit them
  • If nobody pays attention, people stop caring
  • Change begins at the top.

All of these ‘Higher Laws of Business’ entail what The Great Game of Business is all about and Jack Stack credits these laws as the reason that SRC was able to survive and has succeeded ever since. However he credits the first two higher laws as the basis for The Great Game of Business. He also references The Ultimate Higher Law “When you appeal to the highest level of thinking, you get the highest level of performance.” Stack also discusses the reason for playing the game and how the game is won as well as some of the myths of management. These five management myths, which he discusses in great detail, are: don’t tell people the truth- they’ll screw you, nice guys finish last, a manager’s job is to come up with answers, It’s a big mistake to promote people to quickly, and don’t worry about the big issues - just do your job. From here he examines how to share financial information with employees so that it can be used throughout the organization, which reflects the ideas behind some of the higher laws.

In Chapter 6 he discusses the significance of setting standards, which I found to be the most interesting chapter because of the explanations of overhead absorption, benchmarking, and supplier relations. All of these variables have a huge impact in the Great Game and with a good understanding of these concepts you can make huge strides in productivity, as well as cutting expenses. Chapter 7 is called Skip The Praise, Give Us The Raise; which deals primarily with the bonus programs SRC implemented as well as how to decide what kind of goals are suitable for a bonus program. Stack focuses on how a bonus program communicates goals effectively and therefore challenges the employees to identify problems quickly while working together as a team. Creating the game plan is the most difficult objective for a manager to undertake because it is the heart of the Great Game, however without a game plan the employees are simply completing tasks without goals, motivation, or any indication of company performance. From here Stack proceeds to his ninth ‘higher law’: If nobody pays attention, people stop caring. SRC stays aware of the status of the company by weekly staff meetings and keeping peoples attention focused on the well being of the company. Every meeting they review the projected monthly income statement and see how they are doing on these goals, allowing everyone to understand their part in the company. The Great Game of Business is possible because it allows employees to know the company inside and out while having a stake in the outcome. This appeals to their highest level of thinking, which results in the highest level of performance and that is why Jack Stack and SRC succeeded and continues to succeed today.

Can You Judge a Book by Its Cover?
The Ten Things Managers Need to Know from The Great Game of Busines

1. You Get What You Give – This higher law of business is what many managers seem to forget even though it is one of the simplest ways to achieve success. The reason that this concept alludes many managers is because they simply think that if they give a lot to a company it should succeed, however they ignore the importance of employees and how much more a company can ‘get’ when everyone ‘gives’; which leads us to the next higher law.

2. It’s easy to stop one guy, but its pretty hard to stop one hundred – One person can only do so much however with the help of co-workers there is no limit to how fast or how far a company can grow. This higher law emphasizes how dependent we are on each other especially our employees as well as how strong companies are because of this dependency if managed correctly.

3. What Goes Around Comes Around – The third higher law is common sense just like all of the other laws but for some reason it is a common belief that people must ‘step on other people in order to get results’. Stack addresses this as one of the ‘Myths of Management’ and the reason that many people hate management, which results in good people refraining from management positions.

4. You Do What You Gotta Do – This higher law is what allowed SRC to come back from a failing corporation, all of the employees had their families depending on them and could not accept failure. They did whatever it took to achieve success. Stack refers to this as taking the hill; you gotta take the hill. Whenever people do not have the option of quitting they must be creative and facing a challenge generates a lot of creativity.

5. You Gotta Wanna – This higher law counteracts all of the myths of management, which is summed up as ‘The Big Lie’. The Big Lie is the belief that managers can force people to perform tasks that they are not motivated to do. Employees do not accomplish remarkable tasks unless they are sufficiently motivated and it is the manager or leadership’s job to provide this motivation.

6. You can sometimes fool the fans, but you can never fool the players - By fooling your employees you destroy the trust, respect, and motivation they have to participate in the game. The great game is not a gimmick and will never work if treated as one. Without honesty between co-workers there is no reason to believe in the company or the product.

7. When You Raise The Bottom, The Top Rises - This simply refers to the ability of people to solve their own problems and by doing so, they allow for the company to solve its problems. When employees work to meet standards it raises the expectations and goals for the rest of the company.

8. When People Set Their Own Targets, They Usually Hit Them - Self motivation is stronger than any incentive, even a bonus program because people are driven to satisfy themselves and prove that they can do whatever they set their mind to. This philosophy fits well in business but can also work in any situation.

9. If Nobody Pays Attention, People Stop Caring - Stack prevents this higher law from taking place by holding great huddles. These great huddles send the message that they care about the company and reinforce the effects of the employee’s efforts.

10. Change Begins At The Top - Without the consistent effort of management, change and innovation cannot take place. In order for the company and employees to improve they must first get the inspiration from management.

Full Summary of The Great Game of Busines
Introduction

Jack Stack begins The Great Game of Business with a bit of humorous advice to avoid writing a business book because of the lack of excitement and the pressure of having your reputation at risk. Stack and Bo Burlingham wrote the Great Game twenty years before with the intention of simply documenting the unlikely success they had operating their business Springfield Manufacturing Corp. (SRC). SRC remanufactured truck and automobile engines and were not much more than a classy garage shop. What made their company different was they did not conform to the traditional management strategies. They built a management strategy involving their associates in the operation of the company allowing them to change the outcome. The reason it is named The Great Game of Business is to make business seem less intimidating to employees and more approachable for people working on a shop floor. It is easy to relate business to a game because just like any game there are rules, winners, losers, score keeping, as well as elements of luck and talent. Building and growing a business is a competitive undertaking that employees tend to never have the opportunity to participate in. Stack gives the example of a guy who worked a drill press at International Harvester; his job was to drill a perfect hole and nothing more. This same employee went on to become a self made millionaire through intelligent real estate investments and they had him drilling holes everyday. This wasted opportunity gave Stack the guidance to develop a smarter way to run the company by exploiting the strengths of every employee in the company. As time went on, he gained more experience in running a company, which lead him to the realization that almost anyone could be a leader and even a businessperson. The Great Game is a way to give employees the confidence to do so by operating a system that is built on three principles. The first is to know and teach the rules of the game; everyone should be taught how to understand the measures of success and have access to these measures. The second is to follow the action and keep score; employees should be enabled to act and should act on their knowledge in order to improve performance. The third principle is: provide a stake in the outcome, by allowing every employee to have a direct stake in the outcome of a company whether it is successful or not, you are giving employees the ability to motivate themselves to have an effect of the company. You can play and succeed at The Great Game of Business if you can follow these principles and follow another crucial criteria for playing the game that is “you gotta wanna”.

Why We Teach People How To Make Money
In February of 1983 Jack Stack, 12 fellow managers, and 119 employees faced losing their jobs at a failing division of International Harvester. They were not entrepreneurs or savvy businesspeople; they were supervisors and managers of Springfield, Missouri. They could not really on traditional management and had the future of their associates jobs, and homes dependent on them. They needed something new and made the ten higher laws based on what they thought of as the Higher Laws of Business. The first higher law being you get what you give. This higher law of business is what many managers seem to forget even though it is one of the simplest ways to achieve success. The reason that this concept alludes many managers is because they simply think that if they give a lot to a company it should succeed, however they ignore the importance of employees and how much more a company can ‘get’ when everyone ‘gives’; which leads us to the next higher law. It’s easy to stop one guy, but it’s pretty hard to stop 100. One person can only do so much; however with the help of their co-workers, supervisors, and managers there is no limit to how fast or how far a company can grow. This higher law emphasizes how dependent we are on each other especially our employees as well as how strong companies are because of this dependency if managed correctly. The rest of this chapter goes into the basic rules of the game, the tools of the game, and how ignorance can kill a company. He explains why we play the game and the four main reasons; reason number one: we want to live up to our end of the bargain. The second reason is to do away with jobs. Getting rid of the employee mentality is the third reason. The fourth and last reason is to create and distribute wealth.

Myths Of Management
This chapter addresses the five myths of management that many people offer as advice on how to be an effective manager. Stack contests that in order to be a truly effective manager you must ignore all of these myths. The first myth is don’t tell people the truth – they’ll screw you. This particular myth is a little out dated however there are still plenty of companies that have a tendency to lie. In this particular case Stack is talking about the communication with their suppliers and the stocking of parts. By ignoring this myth and being honest with suppliers they began to rely on him more eventually leading to faster and more efficient delivery of supplies. A similar situation involving workers on the shop floor required the same honesty and eventually paid off. Within a year the shop floor went from rebuilding 100 engines a day to 300. Being honest and telling the truth establishes credibility, and is the only way to operate efficiently. Simply put lying and dishonesty is bad business. The second myth is that nice guys finish last; Stack explains that treating people badly causes you to lose power, though many people see it as the opposite. A manager can accomplish much more whenever people are on his side and are motivated to work for him. Which leads us to the third higher law: what goes around comes around. The third higher law is common sense just like all of the other laws but for some reason it is a common belief that people must ‘step on other people in order to get results’. Stack addresses this as one of the ‘Myths of Management’ and the reason that many people hate management, which results in good people refraining from management positions. Myth number three is the belief that a manager’s job is to come up with the answers. This goes against many of the concepts behind The Great Game; People depending on one another and cooperating is what allows the game to be successful while motivating people at the same time. From here Stack delves into the fourth higher law, you do what you gotta do. This higher law is what allowed SRC to come back from a failing corporation, all of the employees had their families depending on them and could not accept failure. They did whatever it took to achieve success. Stack refers to this as taking the hill; you gotta take the hill. Whenever people do not have the option of quitting they must be creative and facing a challenge generates a lot of creativity. Myth number four is the idea that it’s a big mistake to promote people too quickly. A large part of the reasoning behind this myth is the conception that people have to prove themselves in a particular area before they should move up. The problem with this is that most managers are not the highest performers and therefore may not be promoted quickly. This results in tunnel vision and innovative people becoming bored with their jobs. By promoting people that have potential and creativity, you allow for higher degrees of communication and accomplishments. The final myth is the illusion that people should not worry about the big issues and they should simply do their jobs. This is because it has become a common practice to only inform people of the required knowledge to do their job and withhold everything else. By limiting an employee’s ability to see the big picture you are limiting their motivation to innovate.

The Feeling Of A Winner
In order for people to get involved in the Great Game they must want to learn and participate in the business. Stack says that in order to do this there are two conditions that have to be met. The first is, management must have credibility; and the second is employees need to have fire in their eyes. Just like any game you have to create a team, and then games and goals for the team to take part in. From here Stack details some lesson they learned for games and goals essential for creating a team. Choose games that build a team because business is a team sport. Avoid divisive games, you want games that are divisive and promote teamwork. Being positive and building confidence can go a long way. Focusing on the negative is a routine mistake that almost all managers fall in to and is counteractive to the responsibilities’ of a manager. It is a manager’s job to build confidence and he can do that by accentuating the positive. Celebrate every win no matter how small it may be. By focusing on records and continually trying to outperform them you can involve workers in the game. It has to be a game otherwise you are separating people and preventing cooperation. Stack refers to two managers that he gave separate accountabilities and because he made them very specific, they overlapped into both managers’ duties. This initiated conflict between the two managers due to the lack of teamwork and inability to see these accountabilities as guidelines but instead as minimum requirements. You have to give everyone the same set of goals. When people have the same objectives they must work together in order to succeed. By doing this you are turning success into a group effort so everyone can win together. The last lesson is do not use goals to tell people everything you want from them. You should only have 2 or 3 goals over a year but each goal should entail multiple tasks leading up to the accomplishment of the goal. This shifts the focus from one menial task to the fulfillment of an all-encompassing goal.

The Big Picture
Employees don’t know how a company runs and nor do they care because they can’t see the big picture without the help of management. It is a manager’s job to find ways to motivate their employees because motivation is what the big picture is all about. Many of the problems in business, stem from people not being shown how they fit into the big picture. Giving people a reason for working and a purpose is crucial to showing them the big picture. When you show them the big picture you are defining winning the Great Game. So to recap, the steps so far are: create a small series of wins, Give people a sense of the big picture, and teach the numbers. However we are always looking for wins regardless of size, and continually reminding employees of the big picture. There are a few different ways to go about it and the first is to give everyone a course in your business. Stack did this by shutting down the plant and having an “Employee Awareness Day” where everyone cooperated in learning and understanding how everybody’s job affected the company as a whole. Marketing your products to your employees and not just your customers is crucial to making them believe in the products and to promoting teamwork. Moving people around is a great way to give them a different perspective of not only their jobs but all of the jobs in a company. They find more respect for their various co-workers and also become more adapt at seeing the big picture. Draw a picture, what Stack means by this is find a way to engage people by representing the company in various ways such as graphs and charts. Turn any form of measurement into a picture, whether it be net profits, sales per customer or any other business measurement. Stack then goes on to advise you should go beyond quality, and the danger of mixed messages.

Open-Book Management
The purpose of open book management is to share information with employees in order to get better performance and achieve more success. The more people know about a company, the more involved they become. He discusses the language cure, and how open book management works. The practice of communicating with people via the numbers is what open book management is all about. In order to succeed with open book you need to take the emotions out of the business. He is not saying that there should not be celebrations and excitement, but it should not take the place of the numbers. The next requirement for open book management is a set of magic numbers, by this he means the focus on being the least cost producer. This allows a advantage over the competition which makes it easier to compete and earn a profit even in difficult situations. This brings us to the sixth higher law: you can sometimes fool the fans, but you can never fool the players. By fooling your employees you destroy the trust, respect, and motivation they have to participate in the game. The great game is not a gimmick and will never work if treated as one. Without honesty between co-workers there is no reason to believe in the company or the product. Depending on your company there are many different ways to share what is happening in the company with your employees, but Stack gives four general rules to follow. Start with the income statement, highlight the categories where you spend the most money, break down categories into controllable elements, then use the income statement to educate people about the balance sheet.

Setting Standards
A great payoff occurs whenever you can get the people who create the numbers to understand the numbers. When this is accomplished there is invaluable communication between all parts of an organization. This allows for the setting of standards, which are the numbers an organization must shoot for in order to accomplish specific goals. Stack list some of his tips for setting standards. The first is: know your critical number which is the highest impact number in a particular area. The second is to build a standard cost system. Third is to look for the reality behind the numbers. The fourth tip is to find sources that can help you develop standards. Fifth is to tell the stories behind the numbers and the last is tip is to look for the profit in problems. Following these three tips will help you to set standards and know what these standards do for your business. The end of this chapter brings us to the seventh higher law. When you raise the bottom, the top rises. This simply refers to the ability of people to solve their own problems and by doing so, they allow for the company to solve its problems. When employees work to meet standards it raises the expectations and goals for the rest of the company.

Skip The Praise – Give Us The Raise
The message behind this chapter is pretty obvious; Stack reinforces the importance of bonus programs and other monetary challenges. He uses this as an educational program with the objective of teaching people about business. The bonus program serves as an insurance policy for the company and jobs. By educating people and calling for them to become more involved in the business you are insuring an invested interest in the company by every employee. This in turn brings everyone together as a team because to accomplish the required standards there must be teamwork. This program also helps to identify problems faster because people are more attentive to issues and how to solve these issues. Stack credits this program as the most effective tool for increasing the value of stock. The bonus program is what provides the structure of the game, and is necessary for the success of the game. Bootstrapping is another idea that Stack firmly believes in but not just for the start of a company.

Coming Up With The Game Plan
The fifth higher law is what coming up with the game plan is dependent upon. You gotta wanna, this higher law counteracts all of the myths of management, which is summed up as ‘The Big Lie’. The Big Lie is the belief that managers can force people to perform tasks that they are not motivated to do. Employees do not accomplish remarkable tasks unless they are sufficiently motivated and it is the manager or leadership’s job to provide this motivation. Otherwise all of the effort ant time spent coming up with a game plan is simply wasted. Without the desire to participate and win in the Great Game there is no chance for success, just like in any game. You must be motivated to be a part of the team and not be self-centered. There are four phases required in coming up with a game plan. First, determine what your sales are likely to be in the coming year. Second, figure out what it’s going to cost to produce these sales and how much cash you can expect to generate as a result. Third, decide what you want to do with the cash and the final phase is to choose your bonus goals for the year. The annual game plan Stack has created consist of eight documents. The income statement, balance sheet, cash-flow analysis, sales and marketing plan, capital plan, inventory plan, organization charts, and a compensation plan. Each of these plans are dependent on one another in order to work with the game plan. Stack then moves on to the eighth higher law of business. When people set their own targets, they usually hit them. Self motivation is stronger than any incentive, even a bonus program because people are driven to satisfy themselves and prove that they can do whatever they set their mind to. This philosophy fits well in business but can also work in any situation.

The Great Huddle
This brings us to chapter nine as well as the ninth higher law of business: If nobody pays attention, people stop caring. Stack prevents this higher law from taking place by holding great huddles. These great huddles send the message that they care about the company and reinforce effects of the employee’s efforts. He discusses their use of scorecards and how every employee utilizes them to track and maintain an interest in the position of the company.

A Company of Owners
This chapter goes into the detail of company ownership within SRC, as well as many other forms of company ownership programs such as Employee Stock Ownership Programs, special offerings, and internal trading. He firmly believes in company ownership by employees and shows this by putting and end to the four main cases against equity sharing. The first is that employees do not appreciate stock and the opportunities it holds, the second is that a company should allow for the employees to invest the money themselves even if it is not with the company. As stack explains this is counterproductive to the point of equity sharing, because people have an invested interest in the company they are more likely to perform at higher levels. The third case is that equity sharing divides the company. Some people have this idea because equity can go to people’s heads and cause them to think that they are more important and separate from the other workers. However in most cases this has more to do with the individual rather than the employees throughout the company.

The Highest Level of Thinking
Stack does not go into as much elaborate detail or even provide many answers in this chapter compared to the rest of the book. He primarily discusses the issue of health care and how difficult it is for a company to make the decision on how to address this issue. However it does become more interesting and useful as he reaches the tenth higher law of business, which is: Change begins at the top. Without the consistent effort of management, change and innovation cannot take place. In order for the company and employees to improve they must first get the inspiration from management.

The Ultimate Higher Law: A Message To Middle Managers
This chapter finishes the book by describing the additional higher law of management, which Jack Stack refers to as, The Ultimate Higher Law. This ultimate higher law is founded on the idea that whenever you appeal to the highest level of thinking, you get the highest level of performance. This is what the combination of all the other laws leads up to and tries to accomplish. It is the main reason for playing the game. This creates an environment where people can be creative and actively participate in the running of the business.

You can buy book here
,

No comments:

Post a Comment