What is Open Book Management?

Open Book Management was born in Springfield, Missouri, at Springfield Remanufacturing Company, also known as SRC.  This story is told ably by Jack Stack and Bo Burlingham in The Great Game of Business, which was where Zingerman’s came across the concept.  We’ll leave it to Jack to tell his own story – what is helpful to know is that SRC is a manufacturing company which was in dire financial straits, and rather than throwing their hands in the air and giving up, Jack and his colleagues banded together to figure out a different way to run the business more productively and get everyone involved in the success of SRC. 

When we talk about Open Book Management, it goes much deeper than simply sharing information or being transparent.  Being transparent is posting a balance sheet; open book means teaching people what the purpose of a balance sheet is for a business, how to read it – and importantly – what to do with the information they see on a balance sheet.

Originally titled Open Book Finance, the more modern name is Open Book Management, as we realized that while it’s firmly rooted in the financials of a business, Open Book is as much cultural as it is financial.

Open Book Management is a system in which everyone in the organization takes responsibility for the effective operation of the business, financial and otherwise.  It’s not a spectator sport – it’s a participative, everyone-is-on-the-team sport. Open Book is about running the business — learning how the whole organization works, about accountability, collaboration, and taking initiative.  

It’s about looking forward and working together to win.

It’s about understanding where each of us fits into the organization.

It’s more fun, it’s more interesting, and the bottom line is…

It just plain works better.

Open Book is about not sharing the key financial numbers for a business, it’s about expecting your team to know and take positive action based on those numbers.  In other words, it takes information that is typically in the hands of the owner, accountant, and maybe high-level managers, and puts it instead in the hands of those that can have the biggest immediate impact on the numbers, the front-line staff.

That’s not to say that Open Book is a panacea – it doesn’t solve all of a business’s problems.  Just because we’re all working together to win doesn’t mean that we don’t have set-backs, supply issues, employee turnover, or the same challenges of any other business.  What makes being in an Open Book business different is that overcoming the challenges is not only on the shoulders of the person at the top of an organization. Instead, you have many different minds working to solve a problem, thinking creatively from the depth of their own experience and knowledge- and often a solution comes from an unexpected source, which could be someone who wouldn’t even be in the room in a traditional-model business.

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Future blog posts in this series will continue on this topic, sharing why a business would use Open Book, how to determine if Open Book will work for your business/organization, tools for implementation, and more!

Next blog post coming up – Why practice Open Book?

In the meantime: curious to know more about Open Book Management? You might find these resources insightful:

[BLOG POST]: 4 Reasons to Consider Open Book Management
[WEBINAR]: All About Open Book 
[ARTICLE]: Ten Rules for Great Finance