The Open-Book Revolution

A special report adapted from Case's book, 'Open-Book Management,' featuring many facets of this technique.

More and more CEOs have discovered what was missing from all the past decade's management cures -- and have invented a new way of running a company that overturns a hundred years of managerial thinking. The new system gets every employee to think and act like a businessperson -- to compete -- and it gets astonishing results. It's called open-book management, and this is how it works

Poke your head into enough companies these days and you come away with a sense that American businesspeople are earnestly, diligently, maybe even desperately searching for a new way to run their companies.

Even traditionalists -- if there are any left -- will recognize the buzzwords. Total quality management! Teams! Empowerment! Reengineering! The old top-down, chain-of-command style of management is out; today's boss is supposed to walk around, involve the troops, and encourage participation. Gone, too, is the notion that employees are no more than tiny cogs in a machine. Workers are now supposed to take on big responsibilities -- to solve problems, cut costs, and reduce defects. The language of business reflects the new ideas. Trendy companies don't have employees, they have associates. They don't have managers, they have coaches.

All this experimentation and exploration should come as no surprise. The old way of running a business was born a century ago, and it's showing its age. (See "Ending the Hundred Years' War," page 8.) And there's no comparison between today's white-hot global competition and the stable markets of even 20 years ago. In the past, businesses needed people who would show up for work every morning and do what they were told. Now they really do need employees who work smart as well as hard -- and who are looking out for the company, not just for themselves.

Trouble is, the best-known of the new managerial methods have a pretty spotty record.

Quality efforts, for example, often improve quality. They don't always improve the business. At Varian Associates Inc., a maker of scientific equipment, employees got so obsessed with quality-related measures that they quit returning customers' phone calls. "All of the quality-based charts went up and to the right," a Varian vice-president confesses. "But everything else went down."

Reengineering can help companies cut costs -- except that it's usually seen as a euphemism for layoffs, with predictable effects on morale and productivity. "Reengineering is in trouble," admits one of the consultants who coined the phrase.

Teamwork and empowerment programs have their success stories -- so long as you catch them before they fade away. "We used to do a lot with teams," one small-company chief executive told me sheepishly. "We should probably get back to that."

Meanwhile, people who think about these things for a living argue that even after a decade and a half of experimentation, something is still missing. A new paradigm. A central organizing idea. "The fundamental principles of a new managerial paradigm are far from clear," observes David H. Freedman in Harvard Business Review. Rosabeth Moss Kanter, one of the nation's best-known business thinkers, agrees. Each of the "management buzzwords and fads of the last decade," she argues, is like "a way station" on the road to a comprehensive rethinking of the business organization.

But what the pundits haven't yet caught sight of is the growing number of companies that have been getting a lot farther down that road. I recently spent 18 months visiting many of those companies, and what they're coming up with seems to me to be as close to a new paradigm or a comprehensive rethinking of management as we're likely to get.

They're calling it open-book management.

The beauty of open-book management is that it really works. It helps companies compete in today's mercurial marketplace by getting everybody on the payroll thinking and acting like a businessperson, an owner, rather than like a traditional hired hand.

The open-book companies are all over the map, in every kind of industry and business situation. Bob Frey, owner of a small Cincinnati packaging manufacturer called Cin-Made, turned his business around with open-book principles. So did Bob Argabright, manager of Chesapeake Packaging's big corrugated-box plant in Baltimore. Manco, an immensely successful consumer-products distributor headquartered near Cleveland, has built the open-book approach into its operations for years. Acumen International, a small but growing personnel-assessment company in San Rafael, Calif., adopted it just last year.

The best-known practitioner of the new approach is Springfield Remanufacturing Corp. (SRC), in Springfield, Mo., which calls its system the Great Game of Business. SRC's Great Game has spawned hundreds of emulators -- who now gather once a year to swap stories and tips about implementing the open-book approach. (The third of the annual get-togethers is coming up in September.) Every month, another 30 to 35 companies send representatives to Springfield (at $950 a pop) for a two-day seminar on SRC's system.

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