Encyclopedia of Leadership

4.6

OPEN-BOOK LEADERSHIP: DEVELOPING

ENTREPRENEURIAL THINKING

Inspired by Jack Stack.

Although the ideas behind open-book management had been around for years, Jack Stack took

them to new levels in his book, The Great Game of Business.“The more people know about a

company, the better a company will perform. This is an ironclad rule,” says Stack. Open-book

refers to sharing corporate and business-unit information—financial, production, quality—and

any other information that would help employees adopt a more entrepreneurial and business-

thinking orientation. This tool contains guidelines for adopting open-book management.

Open-book management is designed to assist and encourage employees to act like owners.

It does this by:

1. giving employees the corporate, financial, and production information they need;


2. teaching employees how to understand and use this information; and


3. providing employees with a financial stake in the company’s performance.
   It is possible to underinform or overinform employees. If you provide too much informa-

tion, employees drown in the details. If you provide too little, employees can’t develop a full

understanding of the business. Either way, employees are disempowered. You need to provide

employees with critical information only; that is, information that will help them to better

understand your business, to take calculated risks, to make intelligent business decisions, and

to feel that they are trusted and valued and play a meaningful role within the organization.

SECTION 4 TOOLS FORDESIGNINGPRODUCTIVEPROCESSES ANDORGANIZATIONS 121

strategy and direction, business climate, share price, competition, customers’ businesses and needs,

overall business success measures, trends

balance sheets, income sheets, assets, cash flow, expense accounting, taxation, net present value,

cost of materials, labor costs, project financials, business unit financials, overhead, standard costs

volume, rate, cost per unit, materials costing, production goals (and why), quality measures

profit and loss, investment financing, cost of goals, production costs, overhead costs,

competitors’ information, sales and marketing information

revenue, volume, rate, cost of sales, competitors’ pricing, markups, customer service

indicators, marketing and sales strategies, sales forecasts

safety, lost-time accidents, attendance, environmental, union agreements

what is available, how they work, how they balance interdependencies with individual rewards,

their size and why

Big picture

Financial

Production

Business unit/

project

Sales/

marketing

Organizational

Bonus/reward

programs

The range of business information that your

employees might benefit from knowing

Information (Note: Select and provide employees with the critical numbers only.)