To some extent, Stack realized, they all were victims of their environment, even the 13 managers. "All of us came from huge corporations," Stack says. "There was still this mentality that we had an endless supply of cash. Probably half the people here didn't realize that this was it--that there was no turning back."
So now Stack had to revamp the Great Game of Business to conform with SRC's new reality as a freestanding corporation. "We had to set up a game," he says, "where we couldn't make a $10,000 mistake--or at least where we would know how to correct it right away. And we had to do this without establishing a dictatorship. Systems don't run companies, people do."
The solution, he decided, lay in the income statement. It could be a versatile tool, he thought; it could emphasize the urgency of SRC's position, transcend individual preoccupations, and measure performance. Once he set up the ESOP, moreover, the income statement could be used to encourage employee participation as well.
But the use of income statements would also require a much higher level of business sophistication. Again, Stack attacked the problem with mass education. SRC's managers and supervisors attended a series of in-house courses on income statement construction and analysis. Then supervisors returned to the shop floor and held abbreviated versions for the hourly employees in their departments. "And then they began to see," says Stack. "Their scope was no longer one of emotional protection of fiefdoms. It became one of logic and sequence. You can't live like a king. Most kings inherit their wealth. We had to scratch ours out. We had no time to lose. If we stumbled once, it was all over. So what we had to do is go by the numbers."
Thus did Jack Stack repair the rift between quantitative management and people-oriented enterprise, thereby solving the puzzle that had baffled so many for so long.
* * *
There is an ironic story about Stack, one that he tells with some amusement. It seems that, in the summer of 1968, when he was 19, Stack and a bunch of his pals from suburban Elmhurst, Ill., piled into four or five cars and headed for Chicago to sample the commotion surrounding the Democratic National Convention. Grant Park was Stack's favorite haunt. There he would jostle his way to a spot up front, close enough to her full blast the rants and raves of assorted political activists railing against the profiteers of corporate America.
Stack shared their resentment of corporate profit, but that was not why he had come. The engine of history, usually so distant and remote, had sopped near home that summer, and for once a kid from the suburbs could get close enough to feel its heat. Of course, he had his own opinions about Vietnam and politics, but they were often swamped in a churning sea of more conventional teenage concerns. He had no expectations then of making any meaningful contribution to the disposition of weighty national issues.
So today, leaning on his pool cue here in JoAnn's Expressway Lounge, Stack must find it endlessly curious how fate has worked its will on him, bringing him, in its own good time, to this point where his accomplishments illuminate a subject of persistent national interest--namely, the way people live and work in corporations.
He has time to ponder such questions these days, if only because SRC seems healthier than ever. Last year, it signed a new contract to remanufacture diesel engines for General Motors, allowing it to diversify into yet another market. The deal also promises to add $75 million to SRC's top line over the life of the agreement. To accommodate the increasing volume, SRC has opened two new plants.
So much has happened so fast that even Stack sometimes worries about the dream turning a little sour. In a recent edition of the company's newsletter, he pledged himself to shoring up the retained-earnings account against the "off chance that the company runs into hard times." No, there is no specific reason. He is just the type to fret that, with so much going right, something is surely about to go wrong.
Perhaps his caution is reasonable. Paradoxically, SRC now must face the challenge of its own success. During the past few years, the company has been a close-knit family, whose daily life in the home could be easily influenced. Now, with new plants, more people, and more business, the company has to see if its management philosophy can accommodate a substantially larger, and probably less personal, enterprise. Some, like materials manager Dave LaHay, already feel the strain. "If I see one more person at the copier that I don't know," he says, "I'm going to freak out."
But here in JoAnn's, such vague and nameless threats could hardly seem more distant or more irrelevant. Pam Smith has just stunned the crowd with an account of a recent Frozen Carp Throwing Contest to benefit the visually impaired youth of southwestern Missouri. She explains how she herself came up a winner by pitching a 10-pound specimen of the frozen fish a full 21 feet. And Steve Choate has just sunk three balls with one shot--a feat that has set him to whooping and gyrating. And Jack Stack, leaning on his pool cue, must find it endlessly curious how fate has worked its will.
