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Introduction to Open-Book Management

The skepticism is real for the traditionalist. It usually starts with a feigned expression of acceptance, as if it’s understood and already practiced. It doesn’t take long for it to shift to a look of disbelief. Then comes resistance with disapproving speech patterns and heels dug in. It’s usually followed by complete and utter shut down; any further discussion is dismissed.

The catalyst for this reaction is the topic of Open-Book Management. There’s a divide on this subject. As with politics, there are two polar opinions. One camp either supports it or is intrigued enough to desire more information. The other field dismisses it, perhaps out of a need to maintain control, ignorance, or fear of the unknown.

Open-Book Management is a system where the business’s inner workings are laid bare for all employees to see. Sharing company financials and pertinent performance data is one of the hallmarks of this management style. The process also involves employees in helping craft the mission, identifying core values, and participating in shaping the business’s future.

This results in teams that are better informed, engaged, and have emotional ownership of not only of their immediate area of responsibility, but of the entire company. The added benefit is more productive and motivated employees that are fully vested in successfully moving the company forward. Companies perform better when employees care not just about their area of influence, but also about the overall success of the business.

Open-book is a different way of thinking, perhaps even radical for some. Its inventive, non-traditional approach transforms everyone on the team to think like an owner. A cliché used to promote interactive budgeting can be applied here as well. Tell me I forget, show me I remember, involve me I understand. Engaging your team in the journey removes some of the loneliness that accompanies an owner. It also elevates everyone, even the entry-level employee, to participate in the game of developing your business.

Adopting this change as a management style should not be taken lightly. This is not a hasty decision; it requires research and careful planning. The execution is equally as important as the decision to pursue it.

Start Slow

Take the time to research the pros and cons of such an endeavor. Reflect on what the outcomes could be for your organization and define what a preferred future would look like if you implemented an open-book concept in your business.

Jack Stack wrote a book with Bo Burlingham titled The Great Game of Businesswhich is an entertaining and informative read to help familiarize yourself with this discipline. Published over twenty-five years ago, it was a pioneer on Open-Book Management. Still current today, it’s considered one of the most important books to read on the subject.

Another must-read is Open-Book Management by John Case, a heralded expert on the subject. Case makes the case (pun intended) for embracing an open-book style and lays out the basics, the principles, and proper implementation methods.

Introducing the open-book concept to your company is more comfortable if the SEN guidelines for financial reporting are already in place. Tapping into the percentages from the reports is a safe way to introduce information to a team in a secure environment. This strategy makes implementation more palatable and eases some of the fears owners may experience early on.

Open-Book Management is not a new, novel idea. Companies large and small have tapped into it for a long time. It’s an entirely different approach for managing and running a company. It’s about involving everyone in the organization in a joint venture to move the numbers and the business in a successful, direction forward. Everyone learns how their role contributes to the numbers, where financial transparency reigns, and a powerful, competitive advantage is achieved.

— Dan Luck