Warren Burros, 76, an SRC warehouse working supervisor who retired in 2006, says it took a while for Stack's ethos of openness and shared responsibility to take root. Some people, he remembers, used to speculate that all this "open-book jazz" was really just another swindle by the guys in suits, that there were really two sets of books: a bogus set for the workers and a real one for management. It took years of growing profits and employee-stock-ownership accounts--and no layoffs--for that skepticism to fade. Now a credit counselor with a Springfield mortgage company, Burros says it was a different feeling than he had ever had at work. "You were walking in sync with your boss," he says, "but you still knew he was the boss."
The goodwill came to count for a lot, especially in tough times. Late in 2008, for instance, SRC's automotive unit, which was remanufacturing car engines for General Motors and boat engines for Mercury Marine, was caught in the economic downdrafts of the financial crisis. But when orders from the two main customers dried up, the unit was able to shift resources into new efforts that had already been pitched by workers, including making natural gas pumping units and remanufacturing engines for the U.S. Postal Service. Because they knew and trusted the numbers, the workers didn't have to be convinced that something had to change; they volunteered to go to a four-day workweek so that no one would lose a job.
BY THE MID-'80S, journalists, academics and business owners began making the trip to Joann's Expressway Lounge, a now long-gone Springfield dive, where SRC folks congregated to drink and play pool and where Stack, a Miller Lite in his hand and a cigarette in his mouth (he's since quit smoking but not beer), held regular office hours. SRC eventually launched a small consulting unit to teach the Great Game method for a fee. Every year, hundreds of devotees and new converts come from around the country--and even the world--to meet under SRC's auspices to share experiences and renew the faith.
All of which suggests an obvious question: If the Great Game is such a good idea, why isn't everybody playing it? Rich Armstrong, president of SRC's Great Game consulting unit, counters that a lot of companies have adopted the Great Game or some aspects of it, including Whole Foods, Southwest Airlines and American Electric Power. Still, despite the passion of its fans, the idea has never really caught on with a wider audience.
For one thing, open book flies in the face of the traditional command-and-control culture that has dominated American industry, leaving most business leaders reluctant to try it unless they are desperate. For another, implementing open book is hard. "I think what it really boils down to is how willing are you to be completely vulnerable to your employees about much money you are making or, in our company's case, losing," says Michael Kiolbassa, 54, president of Kiolbassa Provisions, a San Antonio maker of sausage and other specialty meats. Kiolbassa is a satisfied customer of SRC's Great Game consulting unit, but he adds, "A lot of people say it's like dropping your pants."
Tellingly, Stack has even had trouble selling the concept to his own family. When his daughter, Meghan Chambers, launched a women's clothing store in Springfield in 2004, she refused to open her books, despite her father's pleas. Only when she ran into cash-flow problems a few years later and needed financial help from her father to survive did she agree to give it a shot. "I was carrying a lot of stress," she says. "I had weight loss and wasn't sleeping, and my dad finally looked at me and said, 'Why are you doing it all? Why are you taking it all home and not sharing it with everybody? You know they have ideas. You know they'll help you through this.' "
As soon as she started reviewing her books line by line with her employees, Chambers says, they started contributing money-saving ideas, and the business started to turn around: "The amount of stress that released from my shoulders and my body was pretty incredible once the clouds parted and everybody was on board."
Stack likes to tell a story of a friend in the fireworks business who visited his supplier in China. He asked to see the factory and was shown a group of huts spaced widely apart so that a fire in any one of them wouldn't cause the whole thing to blow up. The moral Stack drew from the story was to be constantly encouraging his people to build new huts. "We do start businesses all the time," he says. "When you teach people the financials, they get a pretty good idea of how to run a company." The strategy not only reduces risk but also keeps operating units small, making them more amenable to the Great Game approach and also making them easier to sell if SRC wants to raise cash.
Sometimes, SRC contains its risk while starting businesses by creating joint ventures, like the one with CNH. That deal generates $4.2 million a year for SRC. But the contract gives CNH an annual option to buy out SRC, and Stack believes that sooner or later CNH will use it.
Last year, six young SRC executives volunteered to take on the job of figuring out a way to replace the joint-venture revenue when it goes away--part of an ongoing strategic-planning effort to get the company's up-and-coming leaders working on SRC's big challenges. Another group of workers, for instance, looked at the self-insured company's rising health care costs. Their recommendation? "They told us to raise our premiums and reduce our deductible," Stack says.
The day after Election Day, over sandwiches and sodas from the local Schlotzsky's, the joint-venture group was looking to talk about a possible new line of business: rebuilding and reselling a vehicle often seen on work sites. A unit of SRC currently remanufactures engines and other components for the vehicle, which SRC isn't ready to disclose, for two corporate customers.
The possibility that got the SRC employees stoked is this: If we can make money remanufacturing components, couldn't we make even more money rebuilding the entire vehicle? There are currently more than a million of the vehicles at work in America. More to the point, Environmental Protection Association emission standards have jacked up the costs of new units. While a new one goes for more than $60,000, SRC might be able to sell a remanufactured one that would not have to comply with the latest emission regulations for $48,000. "We think it could be a $20 million business in a few years," says Ken Cook, a member of the project group and director of operations with SRC's Great Game.
First they've got to prove they can do the remanufacturing, which means budgeting enough money to buy some old vehicles to experiment on. They figure they'll need at least ten, plus money to hire a "wrench turner" to take them apart and to pay for the time of the engineers who will figure out which parts can be saved and which will need to be tossed. The group decided to ask for $200,000.
While the young men spoke, Stack ate his sandwich and listened, occasionally asking a question or tossing out a playful insult. He seemed to be making an effort not to dominate the meeting, but it was no use. The young guys kept asking, "What do you think, Jack?"
As it turned out, he loved the idea. Asked after the meeting what downsides he saw, he shook his head dismissively: "None."
The financial bar is relatively low for new businesses at SRC; they don't need to look like world-beaters as long as their fundamentals are solid. "In order for us to invest in a business," Stack says, "they have to be able to absorb their overhead and have cash flow, not necessarily make money. After they get up and running on their one product, they're asked to diversify."
The company has launched numerous businesses that have failed, but Stack has learned to take that in stride. The success of any one business is less important than the process of constantly looking for new opportunities.
"We start new businesses every year," he says. "This is fun."
About NewStream Enterprises (NSE) | NSE, a subsidiary of SRC Holdings Corporation, was formed in 1990 to provide customized supply chain management, such as kitting, packaging, light assembly, warehousing, distribution, and fulfillment, to the world’s leading On and Off Highway original equipment manufacturers (OEMs). It is an employee owned company which truly believes in the power of a workforce when each has a stake in outcome. NSE can manage all or any segment of your supply chain process. Our services are customized to fit your requirements. From materials management, to direct order fulfillment, NSE becomes a seamless extension of your business.