(And How to Stop)
An epidemic is sweeping corporate America. It is an indiscriminate disease, afflicting managers and workers from companies large and small, in every corner of the marketplace. It is all the more insidious because it is so difficult to diagnose. Its effects seldom show up in the income statement or on the balance sheet. Indeed, the disease is often most pernicious in companies that are, to all outward appearances, successful.
For lack of a better term, let's call it stress.
I'm not referring here to the professional burn-out we all experience from time to time. Two weeks on a Tibetan trek will not alleviate the malady I'm talking about, if only because it appears to stem not from individual behavior but from something happening in business itself:
Â· The chief financial officer of a Fortune 100 company describes it as "the feeling you get when you just plain run out of new ideas" to improve performance. "We've tried every new management technique available," he says, "and nothing works for long. After the novelty wears off, we're back where we started."
Â· The owner of a very small company says he's been shocked by the realization that his five-person business "has become incredibly complex. Nothing seems simple anymore. Even the most basic tasks seem much more complicated and labor-intensive."
Â· The founder of an apparently successful Inc. 500 company talks about a vague sense that "something isn't right" at work. "The pace is so dizzying it takes me hours to come down at night," he says. "This is my third business, and something's changed."
And sooner or later, almost everyone I talk to gets to the part about "working twice as hard for the same results," quickly adding that the condition is, of course, temporary and will no doubt pass as the economy improves.
I doubt it. During a roundtable I moderated recently, an economist was asked by a member of the audience whether he thought most small businesses were prepared to take advantage of the coming economic upturn. "I'm afraid that's the wrong question," the economist said. "The question you should be asking yourselves now is whether you're prepared for the coming downturn." There was an audible groan from the audience.
Of course, the economist is right. It may feel like a recession, but most of the country is actually several years into a recovery. Money is cheap. The inflation rate is low. Economic conditions simply aren't going to get much better. So if we can't blame the business cycle for the stress, where is it coming from?
I suspect it has a lot to do with another phenomenon: the growing complexity of business. There really are no simple businesses anymore. Thanks to technological change, the globalization of markets and information, and the rise in regulation, even the smallest businesses have become enormously complicated operations. And as complexity has increased, so have the time and energy required to manage a company's internal functions. I'm talking about all those activities that must happen before you can actually sell something to somebody -- planning, forecasting, reforecasting, recruiting, interviewing, supervising, administering, organizing, screening, meeting, researching, complying with government regulations, and so on. If business begins with a sale, we are spending a lot more time getting ready for business and a lot less time actually doing it.
All this obviously has enormous consequences for everyone who works. Line employees and middle managers are forced to focus more and more narrowly on their specific parts of the business process. As a result, they feel increasingly isolated, insecure, and unsure of how -- or even whether -- they are contributing to the well-being of the business as a whole. Even worse off are the people at the top, who are being run ragged as they try to integrate all the internal activities while operating in an ever more competitive external environment -- which itself is changing at a breathtaking rate.
It strikes me that what we have here is a classic design problem. I say that as the son of a mechanical engineer. Like most engineers, my father tends to view the world in terms of systems. A business is a system; so is a bicycle. When I was a kid and my bike broke, he'd fix it, all the while talking to me about stress and friction. Stress, he'd explain, involves the application of greater and greater force to achieve the same output. It is the product of friction among the moving parts of a system. Sometimes the friction is caused by a broken or defective part. In other cases, the problem lies in the system's design. A poor design builds friction into the system, creating a constant source of stress. You can't solve a design problem by replacing parts or making incremental changes, nor can you go on forever applying greater and greater force. If you try, the stress will eventually become so great that the system will freeze up on you.
And that, I'm afraid, is exactly where many companies are headed.
What prompts these musings is a modest-enough event: the publication of the paperback edition of The Great Game of Business, by Jack Stack, president and chief executive officer of the Springfield Remanufacturing Corp. (SRC), with Bo Burlingham, editor-at-large (and former executive editor) of this magazine (Currency/Doubleday, 1994, $15). The hardcover edition appeared back in 1992. Since then, I've talked with many people who say it influenced them more than any business book they'd ever read. Some joined the 1,600 businesspeople who have traveled to southwestern Missouri to visit SRC over the past three years, not to mention the 500 companies that have sent representatives to SRC's two-day seminars on the Great Game of Business. So what's the attraction?
I don't think it's just the company or even the story of its remarkable turnaround. The real attraction, and the theme of the book, is a revolutionary approach to business that's been adopted by a small but rapidly growing band of companies in a wide variety of industries. That approach is based on the simple premise that making money is the responsibility of everyone in the organization, not just the people at the top. The corollary is that the company has a responsibility to make sure everyone understands how the business makes money and how it can make more in the future. That involves providing people with complete financial information and teaching them what it means and how to use it. In most cases it also involves giving everyone a direct stake in the financial results, for better or worse.
Now, either you like this system, or you don't. Employees who want to put in their eight hours and let the boss worry about the health of the business don't last long when a company starts playing the Game. Neither do managers who want to keep financial information to themselves. But for everyone else, the effects are profound.
Done right, the sharing of financial information can literally transform a company. It forces people throughout an organization to look beyond their jobs and their departments, and to see how they contribute -- and how other people are counting on them to contribute -- to the overall success of the company. Many of them begin to understand for the first time how all the pieces of the business fit together. The task of integrating the various functions no longer falls exclusively to a handful of people at the top. Rather, it becomes the work of the entire organization -- its most important work.
In the process a curious thing happens to the stress levels in the organization. They go way, way down. Even the dullest job in the business becomes meaningful, part of the adventure. Rather than feeling isolated, employees and middle managers feel the sense of safety and belonging that comes from being part of a team. As for the top managers, they have more time to focus on the marketplace.
Make no mistake: the Great Game of Business is still in its infancy. Nevertheless, it looks to me like the beginning of a solution to the design problem that I believe lies at the root of the current epidemic of stress. If you are one of the afflicted, you might want to check it out. It may be the only cure in town.* * *
I want to get rid of the living dead. I can't stand going into factories and businesses and seeing these faceless people standing around. They don't look healthy and they don't act healthy, and they're a big problem for corporate America. I'm talking about the people who are there because it's a job, whose attitude is, "I have to be here, but I don't have to like it. I'll do it for my family, not for myself." What have we done to create those types of environments? We should be able to tell this person, "It's your obligation to be happy. Find somewhere to be happy."
-- From The Great Game of Business, by Jack Stack, with Bo Burlingham* * *
The Magic of the Multiple
Many companies right now are trading publicly at 25 or 30 times their annual earnings. That's amazing when you think about it. Every dollar in your hand is suddenly worth $30; an extra $100,000 on the bottom line gets you an additional $3 million from investors.
Equity can provide the greatest expansion of wealth most people will ever see. It's like hitting an oil field. I can't think of any other game that offers the same odds and a comparable payoff, and I've played a lot of games. I've put money on just about every event you can bet on. This is the best deal around, hands down, because you can influence the results. You can pretty much determine whether or not you win.
-- Adapted from The Great Game of Business, by Jack Stack, with Bo Burlingham