Stack's approach to quality control was no less dramatic. If, say, a transmission broke down in service, he would fly the hapless reassembler to the job site. One poor fellow spent a weekend repairing such a transmission in Kentucky, before the customer calmed down enough to let him go home. "I can tell you," says Stack, "when the guy gets back here, the work gets around fast that you don't ever want to experience that kind of pressure."
The effect of all this was soon apparent. Within four months, SRC had earned its reprieve. "Harvester was very happy," says Stack. "They left us alone and told us to keep going." At the end of nine months, the company recorded a profit of $250,000.
But encouraging as this start was, the Game was still quite primitive. There were no training programs, no financial controls, no systems for monitoring costs. As for the goals and rewards, they served to motivate people in a general way, but they were not targeted to SRC's specific business objectives, notably improved productivity.
Part of the problem, Stack realized, was that the plant operated under a system that measured labor, overhead, and materials by their actual costs, rather than their standard costs. As a result, he and his managers could not figure out what should be used (as opposed to what was used), nor could they accurately gauge their progress in using resources more efficiently.
So in February 1980, they organized a new cost department, which was given the task of taking SRC from an actual cost system to a standard cost system. This move -- critical to the quantitative analysis SRC adopted after the leveraged buyout -- sent a small army of engineers and accountants swarming over the shop floor. Measuring costs with the precision of diamond cutters, they were soon able to calculate, for example, the portion of the plant's heating and electrical expenses that should be allocated to a fuel-injection pump. When the cost commanders presented their findings to Stack, he nearly disappeared behind the mounds of data.
"Now I had all these numbers," Stack recalls, "and what was I going to do with them? Only the people could make them work. And how were they going to do that if they didn't know what the hell the numbers meant?" His solution was to educate the entire population, some 200 people.
Thus began SRC's Great Leap Forward. In the first three weeks of March 1980, groups of 10 to 15 employees rotated, during working hours, through a full range of business courses: production scheduling, purchasing, accounting, plant audit, standard cost, industrial engineering, inspection and warehousing, and so on. Most of the sessions, which lasted 1 or 2 hours, were taught by SRC supervisors, but occasionally outside instructors were brought in. All told, 96 hours of training were offered, involving more than 1,300 hours of student instruction and preparation.
The courses were immensely popular, and Stack was thrilled. He immediately set out to expand his list of "accountabilities," devising an intricate method of evaluating each manager's individual performance. The system seemed to be working well enough until two managers showed up in Stack's office one afternoon, each with a hand on the other's lapel. It turned out that one manager had reached his goal by cutting inventory -- a move that prevented the other from meeting one of his. "The whole thing blew up in my face," says Stack. "These guys wanted to duke it out right there in the office." With customary flair, Stack ended the experiment by gathering up all the rating sheets and setting them on fire in a small picnic area in back of the plant.
"It served its purpose though," says Gary Brown, manager of human resources, "because it showed us some of the dangers in statistics."
Despite this setback, the Great Leap Forward reached a splendid crescendo in October 1980, with an extravaganza billed as "Employee Awareness Day." The plant closed and reconvened in the ballroom of the local Hilton Inn. The employees lunched and suppered and listened to speakers. They also watched a documentary about Japanese business, which warned that -- unless the United States improved its productivity -- the next generation of Americans would be the first to experience a declining standard of living.
After the film, Stack stood up to speak. "Do you want this responsibility?" he asked. "Do you want to be the ones who started this decline? We've got to do something about it, don't we?" The audience rose as one, cheering and raising their arms, soldiers now in a great holy war. "I was standing there," says Wendall Wade, the engine disassembly supervisor, "and everyone was all around me, and I never knew working could be anything like this. It was great. It was simply great."
Little did any of them suspect how close they were to losing what they had just begun to build.
By February 1981, SRC could report that profits had climbed to $1.1 million, the highest in its history; return on sales had risen from .9% in 1979 to 8.0% in 1980; and productivity had increased 53%. The next month, Stack and six of his managers were called to a meeting at Harvester headquarters.Because of precarious economic conditions, they were told, SRC could not exceed 33% of its capacity for the next three years. "That was the handwriting on the wall," Stack says."If you're not going to increase your sales, you're just going to die."
The United States had entered a recession. Farm income had fallen sharply, creating severe overcapacity in International Harvester's largest operations -- the truck, agricultural equipment, and construction equipment divisions. The company was in trouble, meaning SRC was in trouble, too.
