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"The Great Game of Business"

posted Oct 22, 2012, 12:00 PM by Too Good To Be New Les Landes and Jim Shaffer   [ updated Oct 22, 2012, 2:18 PM ]

The Great Game of Business
The Great Game of Business

By Jack Stack

 

Review by Jim Shaffer

 

When I want a client to experience a near perfect example of open, performance-based communication, I take them on a field trip to SRC Holdings in Springfield, Missouri.  They tell me they’re blown away.

 

Open communication takes on a different meaning there. Every person in every nook and cranny is making on-the-floor decisions based on their impact on the cash flow statement, income statement and balance sheet.

 

That’s life in an open book company. And that’s the story that SRC CEO Jack Stack tells in the classic, The Great Game of Business.

 

At SRC, the main job is to improve the financial numbers. It gets done by selling, designing, engineering, producing, maintaining and supporting products and services in the right amounts at the right times.

 

Take Johnny who I met the first time I visited SRC. Johnny cleans out old truck engines so they can be remanufactured to look and act like new again. When he was introduced to me I asked somewhat rhetorically, “How’s it going?”  His answer sounded like something I’d hear from an accountant. Johnny told me to within a penny or two how the company’s doing against its forecasts and what he and his colleagues have to do to make plan that day, that week and for the month.  Then he was glad to tell me exactly—to the penny—what all of that meant in terms of his pay, bonus and profit sharing. 

 

The “great game” started in 1983 when Stack and 12 other managers scraped together $100,000 in cash, borrowed $8.9 million and bought a failing division of International Harvester. That company has become SRC Holdings, a thriving company of 1,300 engaged employees operating 17 businesses in a variety of industries and producing well over $450 million in annual sales. It’s a company that has increased its value from 10 cents a share in 1983 to more than $240 today.

 

Stack opens The Great Game of Business with what he refers to as the Ultimate Higher Law: “When you appeal to the highest level of thinking, you get the highest level of performance.”

 

Then, throughout the book he addresses 10 higher laws that are core to the way SRC is run.

1. You get what you give.

2. It’s easy to stop one guy, but it's pretty hard to stop 100.

3. What goes around comes around.

4. You do what you gotta do.

5. You gotta wanna.

6. You can sometimes fool the fans, but you can never fool the players.

7. When you raise the bottom, the top rises.

8. When people set their own targets, they usually hit them.

9. If nobody pays attention, people stop caring.

10. As they say in Missouri: Shit rolls downhill. By which we mean change begins at the top.

Stack wants to do away with jobs. “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.”

 

He also believes that the only way to be secure is to make money and generate cash. Everything else, he says, is a means to the end.  The book lays out the infrastructure that perpetuates this people-centric, cash-flowing philosophy. 

 

§  Know and teach the rules: Every employee should be given the measures of business success and taught to understand them.

§  Follow the action and keep score: People should be expected and enabled to act on their knowledge to improve performance.

§  Provide a stake in the outcome: People should have a direct stake in the company’s success and risk of failure.

 

He then vividly describes how the great game is played and won. He talks about management myths, ways to share financial information so people can act on it, how to set standards, set up performance enhancing bonus plans, high involvement planning, huddles, scoreboards and creating real owners in every part of the business.

 

I’ve taken clients and young consultants to SRC so they could establish a new baseline for organizational openness and trust. At SRC, my guests see a near perfect way of managing information, involving people and producing results.  Being able to experience this culture and climate first hand helps them create similar visions when they return home. 

 

The very heart of the concept is about people trusting one another, pursuing a higher purpose and creating the security they need to keep making a positive difference.

"The Human Side of Enterprise"

posted Aug 14, 2012, 2:35 PM by Too Good To Be New Les Landes and Jim Shaffer   [ updated Aug 14, 2012, 2:38 PM ]

The Human Side of Enterprise by Douglas McGregor“The Human Side of Enterprise”

By Douglas McGregor  

Of all the concepts ever developed on management philosophy, few have gained the renown of Theory X and Theory Y.  Those two contrasting styles of management formed the foundation of Douglas McGregor’s business classic, The Human Side of Enterprise, published in 1960. 

 

Few books of its kind have had the impact and staying power of McGregor’s work.  Warren Bennis, the famed consultant, author and business professor from the University of Southern California wrote this about the book’s timeless significance in the forward for the 25th anniversary edition of The Human Side of Enterprise in 1985:

 

“… (T)his book, more than any other on management changed an entire concept on organizational man, and replaced it with a new paradigm that stresses human potentials, emphasizes human growth and elevates the human role in industrial society … All of the themes in … The Human Side of Enterprise … are reflected in virtually every book written on management today.”

 

Revolutionary for its day, here’s how McGregor described the difference in the two contrasting management styles. 

 

Theory X is based on the assumption that “the average human being has an inherent dislike of work and will avoid it if he can,” according to McGregor.  If you accept that assumption, “most people must be coerced, controlled, directed, threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.”

 

Theory Y is based on a more promising and powerful view of human nature.  McGregor said, “The expenditure of physical and mental efforts in work is as natural as play or rest … and under the proper conditions employees not only accept, but seek responsibility.”  He challenged the conventional wisdom of the day with another assumption underlying Theory Y: “The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population.”  Theory Y is also at the heart of what is referred to now as “servant leadership,” a more empowering management style that fuels many of today’s high performance organizations.

 

Beyond the elegant insights at the heart of his management philosophy, McGregor also offers specific direction on how Theory Y should be applied in practice.  He called it “management by integration and self-control,” covering topics such as performance appraisal, administration of salaries and promotions, job descriptions, gain-sharing, staff-line collaboration, supervisor coaching of employees, management development and more.  Remarkably, the guidance on even the most tactical topics seems fresh and on target yet today.

 

An obvious question about McGregor’s ideas is this.  If Theory Y is such an obviously superior management method, why isn’t it the dominant approach by now?  At least two noteworthy reasons have been offered over the years:

  • First, mixed messages continue to be conveyed in our management training with respect to the prevailing assumptions about human nature.  
  • Second, organizations are still struggling with two competing aspects of human behavior highlighted by McGregor – the emphasis on individual influence and respect on the one hand, and the reliance on authority and control on the other. 

McGregor himself acknowledged that Theory Y wasn’t the ultimate answer.  As he said in the conclusion of his book, “It is not important that management accept the assumptions of Theory Y.  These are one man’s interpretations of current social science knowledge, and they will be modified – possibly supplanted – by new knowledge within a short time.  It IS important (though) that management abandon limiting assumptions like those of Theory X.”

 

Whatever the reason so many organizations continue to fall short of tapping the full measure of employee potential, The Human Side of Enterprise remains a beacon of insight that helps light the path to a saner and more successful way to optimize human performance in the workplace.

Written by Les Landes

In Search of Excellence

posted Jul 16, 2012, 12:12 PM by Too Good To Be New Les Landes and Jim Shaffer   [ updated Jul 16, 2012, 12:16 PM ]

In Search of Excellence

"In Search of Excellence"

By Tom Peters and Robert Waterman

No “Best Business Books Ever” list would be complete without In Search of Excellence.

Written by former McKinsey consultants Tom Peters and Bob Waterman and published in 1982, it was never intended to be a book. 

The authors were assigned to do a project on organization, structure and people. Peters travelled the world piecing together what he could about people and teams and their impact on organizations.  The study became a 700 slide deck. It was boiled down to eight attributes of excellent companies. In their book they featured 43 companies that met the authors’ standards of excellence.   

 Search has had its detractors, largely because not all of the 43 companies continued to do well.  But the point of the book isn’t that companies who do well today will always do well. It’s that if you do well at the eight attributes, you will do better than those who don’t.

Another point was that excellent companies were, above all, brilliant at the basics. Isn’t this true in every endeavor—entertainment, sports, backyard grilling? Strategy is 10 percent of the game, but get the basics right and you’re 90 percent there. Success is mostly about execution.

The third point, and it’s the reason we selected Search for “To Good to Be New,” is that companies still are struggling to get these basic attributes right. Thirty years later In Search of Excellence is relevant!

Here are the attributes. 

A bias for action. Although excellent companies may be analytical in their approach to decision making, they’re not paralyzed by it. In excellent companies the standard operating procedure is "Do it, fix it, try it." Promote organizational fluidity through management by wandering around, fast decision making, breaking problems down into manageable chunks, busting the bureaucracy and communicating intensely.  

“The nature and uses of communication in the excellent companies are remarkably different from those in their non-excellent peers,” the authors wrote. “The excellent companies are a vast network of informal, open communication.”

 Close to the customer. These companies learn from the people they serve. They provide unparalleled quality, service, and reliability—things that work and last. They succeed in differentiating. “The good news from the excellent companies is the extent to which and the intensity with which the customer intrudes into every nook and cranny of the business,” Peters and Waterman wrote. “All business success rests on something labeled a sale, which at least momentarily weds company and customer.” This is the foundation of Lean today—an obsessive focus on the customer.

Autonomy and entrepreneurship.  Innovative companies foster many leaders and many innovators throughout the organization. “They are a hive of champions. They’re a loose network of laboratories and cubbyholes populated by feverish inventors and dauntless entrepreneurs who let their imaginations fly in all directions." They encourage practical risk taking and support good tries. They follow Fletcher Byrom's ninth commandment: "Make sure you generate a reasonable number of mistakes."

Productivity through people. The excellent companies treat the rank and file as the root source of quality and productivity gain. They do not foster we/they labor attitudes or regard capital investment as the fundamental source of efficiency improvement.  “Thomas J. Watson, Jr., said of his company, ‘IBM's philosophy is largely contained in three simple beliefs. I want to begin with what I think is the most important: our respect for the individual.’”  This is a very simple concept but very difficult for most leaders to do well over the long run.

 Hands-on, value driven. This philosophy guides everyday practice - management showing its commitment. It was within this attribute that Peters and Waterman focused on the importance of linking people to a greater, nobler sense of purpose and on adopting a clear set of values that would in turn drive success—including financial success.

Stick to the knitting. Stay with the business that you know. Never acquire a business you don't know how to run. “We are almost apologetic for subjecting the reader to this onslaught of often arcane analysis. But with merger mania as prevalent as it is, it seems worthwhile to illustrate rather exhaustively the almost total absence of any rigorous support for very diversified business combinations.” That was 30 years ago.

 Simple form, lean staff.  Some of the best companies have a small number of people at their headquarters. The authors said along with bigness comes complexity. And most big companies respond to complexity in kind, by designing complex systems and structures. Then they hire more staff to keep track of all this complexity, and that’s where the mistake begins.

“Our favorite candidate for the wrong kind of complex response is the matrix organization structure,” the authors wrote.   You hear that, pharma?

 Simultaneous loose-tight properties. The excellent companies are both centralized and decentralized. For the most part they push autonomy down to the shop floor or product development team. On the other hand, they are fanatic centralists around the few core values they hold dear. In one of his later books, Tom Peters referred to this concept as guided autonomy.

 

 Review Written by Jim Shaffer, Leader, Jim Shaffer Group

Communicating for Productivity

posted May 8, 2012, 11:35 AM by Too Good To Be New Les Landes and Jim Shaffer   [ updated May 8, 2012, 2:21 PM ]

"Communicating for Productivity"
 
Communicating for Productivity
by Roger D'Aprix
 
Thirty years ago this year, Roger D’Aprix’s book, Communicating for Productivity, went onto the store shelves.  I read it shortly before Roger and I met for dinner in Washington, DC. At that time I was a consultant in the Washington Office of Towers Perrin, the consulting firm now known as Towers Watson.   Roger had just joined the firm.
That dinner was the beginning of a friendship that exists yet today.  It’s a friendship based on shared values about people and the role they can play in helping to achieve a greater life purpose – for both themselves and the organizations where they work. It’s about fairness, civility, common sense, honesty and the golden rule.

Early in the book, Roger wrote: “It is not difficult to understand why there are monumental employee morale and employee communication problems in practically all work organizations. Our collective dependence on organizations for a livelihood, our increasing expectations of the satisfaction work can provide, management's tendency to invoke the corporate credo when questioned or criticized, and a divine-right faith in the obligation of people in positions of authority to dole out punishment all combine  to defeat our efforts to improve management practice and organizational understanding.”

Addressing that mess was precisely what Communicating for Productivity was about.   In the last issue of “To Good to Be New,” I reviewed Edwards Deming’s Out of the Crisis, published in 1982.  If that book defined modern management, as I believe it did, Roger’s Communicating for Productivity, published in the same year, defined the way people in organizations need to treat each other. 

As with all of Roger’s books, Communicating for Productivity is both foundational and instructive. It’s foundational in that it offers context and perspective—the “why” behind the actions we need to take to create more open and, hence, productive workplaces.
It’s instructive in that Roger provides the “what,” that’s needed to build those kinds of organizations.

In the book, Roger draws on experiences he had at Xerox and elsewhere to explain the distinction between proactive and reactive communication models.

The reactive model creates mayhem.  It “tends to give us additional pieces to add to the puzzle, while doing little to help us complete the puzzle,” Roger wrote.

The proactive model provides managers the discipline they need to help people improve personal and team performance. In the proactive mode, communication is deliberate and thoughtful.

“There are significant advantages for management in the proactive approach to communication,” Roger wrote. “For one, communication becomes a planned process rather than an afterthought or an attempt to explain what went wrong or to defend why something was done.”

Thirty years later, many organizations still struggle to extricate themselves from the reactive approach which today Roger often refers to as the journalistic model—reporting on events rather than driving events. The reactive model is a very inefficient way to run a business.  It saps energy, causes confusion and hurts organizational performance.
Communicating for Productivity introduced us to the need for leaders to create communication assumptions that, like credos, should guide our beliefs about people and communication and the practical day-to-day implications of those beliefs.  He introduced the concept of managing both the “say” communication and the “do” communication through what is formally said, actions that are taken and policies that are enforced. He introduced these notions at a time when organizational communication was pretty much a top down tell-them-what-they-need-to-know-process.
 
Perhaps the most enduring contribution Roger made with Communicating for Productivity was his discussion about information people need to perform well. This later led to the “Six Questions” that every communication practitioner should have been introduced to early in their careers:
  • What’s my job?  (Job Responsibilities)
  • How am I doing? (Performance feedback)
  • Does anyone care? (Individual Needs)
  • How are we doing? (Team Objectives and Results)
  • What’s our vision, mission and values (Vision, Mission and Values)
  • How can I help? (Engagement)
In his later book Communicating for Change, published in 1996, Roger explained the relationship of the first five questions to the sixth question, How can I help? 
“Where large doses of this kind of leadership are commonplace, you will inevitably hear people ask the most important question they can in any organization: How can I help?”
 
Roger wrote in Communicating for Change:  “Interestingly, that question is a gift that the worker can either give freely or withhold begrudgingly. It is a response to high-quality leadership. It cannot be forced from someone against their will. It cannot be cajoled or threatened out of any body. It can only be offered by someone who is willing to offer it.”
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 Written by Jim Shaffer, Leader, Jim Shaffer Group

"Out of the Crisis"

posted Mar 16, 2012, 8:08 AM by Too Good To Be New Les Landes and Jim Shaffer   [ updated May 8, 2012, 11:38 AM ]

"Out of the Crisis"

Out of the Crisis, W. Edwards Deming
By W. Edwards Deming

Edwards Deming has been described as the Mozart of quality, the Shakespeare of business consulting and the Michelangelo of management science. I’m not one for hyperbole, but this description fits Deming like a well-tailored suit.   He engineered the rise of Japanese quality and competitiveness after World War II, and he was the thought leader behind the core concepts of lean six sigma.

Deming’s Out of the Crisis, published 26 years ago, still reads like a contemporary guide to the way organizations should be led. Many of today’s management initiatives reflect his ideas, whether it’s excellence, reinvention, systems thinking, process management or continuous improvement. 
 
Deming laid out his thinking in 14 points. They are all relevant today, but here are some highlights.

Leadership

Deming was the first vocal proponent of driving out fear in the workplace and shifting the role of leaders to what’s commonly called servant leadership. Instead of command and control leadership styles, he advocated one that “helps people and gadgets to do a better job.”  

Quality

Deming was a zealot on building quality into the product versus inspecting it out at the end of the production line. I consulted to General Motors when engine blocks coming off the assembly line could vary in weight by as much as 200 pounds. Defects were corrected after the car was built, causing huge amounts of costly rework.   Later, I consulted to Toyota’s Georgetown, Kentucky factory. They built cars right the first time, minimizing inspection at the end of the line .  

Deming also emphasized continuous improvement. “Improve constantly and forever the systems of production and service,” he wrote. The widely used Plan, Do, Check, Act process was his creation.

Cost

Deming advised companies to stop awarding business to suppliers based only on cost, and he advocated building long term trusting relationships with a single supplier. That’s why Southwest Airlines purchases only 737 airplanes from Boeing.  It saves money in many ways. There’s only one training curriculum for pilots, flight crews and maintenance people. Parts inventories are kept simple. 

Collaboration

Purposeful collaboration contributes to better and faster new product development, quality, service cost. Deming’s Point #9 shouts: “Break down barriers between departments. People in research, design, sales, and production must work as a team to foresee problems of production and in the way a product and service will be used.” 
 
IBM owes its immense success today in part to focusing on creating a portfolio of integrated products and services out of a company that previously was highly segmented by function, business unit and geography.

Communication

How many companies right this minute have a favorite program like Project Success, Competitive Advantage or whatever. The beginning of the decline of any initiative starts when it’s named. That’s when it becomes a program that falls outside the normal way work gets done. In Point 10, Deming counseled to “eliminate slogans, exhortations, and targets for the work force…” “Such exhortations only create adversarial relationships,” and contribute to low quality and low productivity. 
 
His larger statement about slogans was that quality and productivity problems are mainly systems problems, not people problems.  If you exhort people to improve without improving the systems you merely frustrate the living hell out of them.
If you want a hundred more great ideas for running your business right now, read Out of the Crisis
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Written by Jim Shaffer, Leader, Jim Shaffer Group
 

"Sharing Information with Employees"

posted Feb 3, 2012, 9:29 AM by Too Good To Be New Les Landes and Jim Shaffer   [ updated Mar 19, 2012, 6:19 AM ]

Sharing Information with Employees
"Sharing Information with Employees"
by Alexander R. Heron

The year was 1940.  A group of more than 150 people known then as industrial relations specialists gathered in Burlington, Vermont to discuss a subject that had lingered on the fringes of conversations about their profession in the past.  The topic was employee communication. 

Coming out of that conference, Alexander Heron later took on the task of writing what has been touted as the first book on how to communicate with employees.  Remarkable for its day when it was first published in 1942, Heron’s treatise still rings true with freshness and insight. 

In both content and style, the book is a virtual “declaration of inter-dependence” between managers and workers. Starting with his title, Heron displays a sensitivity for the communication process that eludes many practitioners yet today.  As Paul Eliel of Stanford University wrote in the book’s Foreword, “… the problem, as Mr. Heron so graphically points out … is not how to convey information but how to share it … Conveying is mechanical; sharing is personal.” 

Not surprisingly, some of the ideas and language appear a bit dated.  Others, though, are highly contemporary – like these little pearls:
“The first element [in sharing information] … is the understanding by employees that facts about the enterprise are not being concealed from them.  The knowledge that they can get the information they want is more important than any actual information that can be given to them.”

“The program should be a continuous one, a method of conduct rather than a campaign … it must not become an institution apart from the actual work or operation of the enterprise.”
Heron contrasts largely ineffective types of management “willingness” to share information (reluctant, paternalistic and propagandist) with what he viewed as the essential approach. He called it the “aggressive willingness” to share, which he described as “practical because honestly and wisely followed through, it will induce a constructive co-operation which cannot be bought or forced.” 

One thing that sets this book apart and puts it on a higher plane is how it looks at employee communication within the broader context of society and economics. Heron’s historical insights on how the industrial revolution distanced workers from the “fruits of their labor” are particularly thoughtful, almost poignant. He also offers guidance on how to counter that effect through “understanding units” that bear a striking resemblance to today’s work cells and natural work groups.

Heron is both strident and eloquent on the topic of status and stature in the workplace:
"The American idea has no place for a class predestined to be wage earners incapable of understanding a world beyond the workbench, no place for a class which is denied the opportunity to reason its conclusions on facts which it helps to create, no place for a class which is happier because ignorant of anything beyond the daily task.  And those whose sense of superiority leads them to believe in either the necessity or the desirability of such classes are themselves enemies of the American idea or ignorant of its genius.”

Try to top that one.

The book has been out of print for several decades, but copies can still be found through various book selling websites.  It can also be read online through GoogleBooks.

Alexander R. Heron – Background
•    Vice President and Director of Industrial Relations, Crown Zellerbach Corporation
•    Director of Industrial Relations, Rayonier, Incorporated
•    Consulting Professor, Graduate School of Business, Stanford University
•    Colonel, U.S. Army and Chief of Civilian Personnel

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Written by Les Landes, President, Landes & Associates

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