Small is Beautiful–and Profitable

In 1983, Jack Stack led a group of employees to buy-out a division of International Harvester, the Springfield Remanufacturing Company (SRC). But Stack and his associates where not just interested in building another business, but a new kind of business. It would be an employee-owned business, to be sure, and that was rare enough. But Stack wanted more. He wanted employees who had enough business knowledge to run the company themselves. Ownership was not enough; the employees had to be their own bosses. But to do that, they had to have business skills and access to the books. The key, he realized, was open-book management and business education. So the books, all of the books, were open to all of the employee-owners. Going beyond that, he established “The Great Game of Business,” a system of informal but continuous education, which raises all employees up and allows all of them to make informed judgments about the course of the business. Of the success of this system, Mr. Stack says, “We’ve had dozens of employees rise from the shop floor to top management positions, and they’re far better qualified than a lot of MBAs I see.”

Twenty years ago, the PBS Newshour ran a segment on SRC, and tonight they revisited the company to see how they were weathering the current economic storms. It is worth seeing this segment:

What Jack Stack and his colleagues are giving us is a practical lesson in The Principle of Gratuitousness, which Pope Benedict identified in his latest encyclical. Far from being a mere platitude, it is a practical principle of business, far more practical than most of what is taught at b-schools. Stack understands that the business is really about the people who are part of it, and to build the business, you must build the people, by ownership, by education, by trusting them to make good decisions.

In this day, when nothing seems to be working, we on the Front Porch need to be on the lookout for things that do work. And this works. As Jack Stack says:

When you open your books–really open them–you also open your mind, and neither your books nor your mind will be closed again

7 comments on this post.
  1. Russell Arben Fox:

    Brilliant and important. Thanks very much for sharing this, John.

  2. Steve Knepper:

    Thank you for sharing this. I’ve been reading some of John Seddon’s work recently, which is in much the same vein. I also work part-time at a private school, and I’ve been thinking a lot about what a teacher and staff owned, open book school might look like.

  3. D.W. Sabin:

    Perhaps this is what is meant by the snappy “Human Resources” signs

  4. B Paolo Franceschi:

    At last, a subsidiarity reality show. I’ve been waiting all my business life to hear about a company like this. Thank you for letting us know about this one,John. How many more of these may be out there? Check out this story about Bob’s Red Mill near my home of Portland, OR http://www.oregonlive.com/clackamascounty/index.ssf/2010/02/bobs_red_mill_natural_foods_ro.html

  5. Nathan P. Origer:

    From the Wikipedia entry on SRC:

    “President and CEO, Jack Stack has written two books, The Great Game of Business and A Stake in the Outcome, detailing the business and management techniques practiced and promoted by the company. The company was selected as one of the Top 100 Companies to Work for in America, and INC. magazine has said that SRC is one of the most competitive small companies in America.” [My italics.]

    Sounds like a winner to me.

  6. Nathan P. Origer:

    *My boldface, rather. Silly me. And I’m not even drunk.

  7. Greg:

    Saying that a comany is “employee-owned” is pretty vague, especially when ESOPs are the norm.

    Can you explain further? Distributism appears to be impractical at best. Have you ever tried to implement it?

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