Open Book Management Might Sound Scary

At StickerGiant, we run our business using a system called Open Book Management. We learned it from the fine folks at Zingerman’s in Ann Arbor, Michigan in 2012. When I was first introduced to the concept, I'll admit, I had some fear about turning over my business in such a way. In addition to this philosophy of running our business we have implemented a system called the Entrepreneurial Operating System (EOS) by Gino Wickman. Open Book is how we keep score, and EOS is how we leverage the data to give the employees and management team a structure to make positive change. That early fear has turned into confidence: in my team and in my business. The system of Open Book Management states that the entire staff—yes, everybody— participates in planning, reporting, and managing the Key Performance Indicators (KPIs) we use to run the business and make decisions. Everyone in the organization is involved and responsible for the financial success of the company. The best book on the topic is The Great Game of Business by Jack Stack and Bo Burlingham. I suggest this as a first read for everyone interested in learning the basics.

How We Run Open Book at StickerGiant

First, we start with the 3 rules of Great Finance:

1. Know and Teach the Rules: every employee should be given the measures of business success and taught to understand them
2. Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
3. Provide a Stake in the Outcome: Every employee should have a direct stake in the company's success-and in the risk of failure

Implementing Open Book Management

This process is fairly involved and takes time to implement. We’ve been doing this for seven years and we’re still tweaking it and it is always evolving with the business, but on a very basic level, here is what Open Book looks like at StickerGiant:

1. We meet once per week as a full staff of 50 employees for a Huddle, to share our financial dashboard and tell the stories behind the numbers.
2. We try to spend 20% of the time discussing what happened, and 80% talking about ways to improve the weekly results.
3. Each “line” is owned by an employee that actively lives in the associated category of reporting within their daily role. This creates active engagement that helps each line owner translate the story behind the numbers to the Team.
4. To anticipate financial goals, we plan and forecast the numbers as a group.
5. If our team exceeds the plan, then a portion what’s made above the plan is shared equally by employees.
6. The company teaches us the story behind the revenue, expenses, profits, inventory, and receivables so that we learn how to value and affect their impact on the growth of the company.

How Employees Benefit from, and Contribute to, Open Book

1. It's comforting to know the numbers behind what it takes to operate and grow a successful company and how those numbers translate into benefits for individuals and co-workers.
2. It’s incredibly freeing to feel empowered to collect data that will improve systems for everyone without having to wait for a manager to tell you it’s alright.
3. Open Book also helps the staff better appreciate the people behind the company that sacrifice their time, resources, and talent to contribute in favor of the greater good.

If you want to learn more about how we do this at StickerGiant, read my other article: 4 Steps to Designing an Effective Open Book Scorecard and learn about Key Performance Indicators (KPIs).

Ready to learn more and take on Open Book?

Contact me (John Fischer, CEO at StickerGiant). I love to answer questions and help other businesses implement Open Book Management. Come visit one of our huddles to see it in action.