Before and After

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He wasn't ready yet, that's all. What the situation wanted was more time. Time for Henkelman to face up to the fact -- through the slow accumulation of failure, humiliation, and pain -- that "this ain't living." Time to discover, if not a cure, then at least a means to help himself, a way out, which he later found in a 12-step program for substance abusers. Time, finally, for an alternative to present itself, a way to fill the void, if ever he could bring himself not to get wasted anymore . . . something else.

He found it at work, during the late winter of 1991, in the tantalizing promise of open-book management. "Here's a really good reason to not do this," he remembers thinking. "There's opportunities here."

* * *

Before things could get better, they had to get worse. Henkelman had back surgery in August 1990 and missed three months of work. In early November his wife threw him out of the house. They'd been married less than three years, and there were no kids, but that didn't make it any easier for him. The plan had been to straighten his life out by starting a family -- a big family, like the one he'd grown up in -- but the plan had failed. Henkelman was looking into the abyss.

Meanwhile, up on the hill, Jim Sandstrom, Rick Hartsock, and the rest were coming to terms with their own sad set of facts. The company was hemorrhaging cash, losing money for the third year out of the last five -- years during which the company's aggregate income would be a negative number. The situation was dire and called for a radical fix. Sharing numbers, giving up power, letting other people make important decisions about your business: those are not easy things to do. Unless, as Hartsock puts it, "it was do that or die. We didn't have any choice. We were gonna go broke."

So began, in January 1991, Sandstrom Products' experiment in open-book management. Henkelman was skeptical at first. He'd seen so many management fads come and go over the years. "What are they after?" he remembers wondering. "What do they really want?" But what struck Henkelman early on about open-book management was the focus on results, not process -- the simple but radical idea that "we'll tell you what we want, and you guys figure out how to do it." It spoke of trust and respect, which Henkelman craved.

Like many other open-book companies, Sandstrom divided its workforce into teams. Actually, the word team is misleading, if only because it implies competition. The teams exist to divide up the work, but no team operates in a vacuum, and every team has the same goal: to maximize profits. On the third Thursday of every month, Hartsock and vice-president of finance Jim Morrison host a companywide meeting to go over the numbers. If the profits are there, everybody gets a gain-sharing check; if not, then the teams know what they have to do.

Henkelman signed up for three teams right away: plant equipment, process control, and merit pay. The first real test was a proposal by the plant-equipment team to buy a new $18,000 forklift. There was a meeting in the conference room next to the lab -- foreign ground for the managers who had come down from the hill. The team members made a compelling argument. The forklift they were using was more than 20 years old. It was unreliable and unsafe. (A month before, it had caught on fire.) And the data they'd assembled comparing the cost with the anticipated productivity gains made it plain that a new forklift would soon pay for itself. Still, the corporate triumvirate -- Sandstrom, Hartsock, and Morrison -- reacted badly. As in "jaws hit chests," says Henkelman.

After the team finished its presentation, Jim Sandstrom spoke. He stressed a key point that the team members were still learning: resources were finite. While it might make sense to spend $18,000 on a new forklift, it might make even more sense to spend the same amount on, say, research and development, which after all was the lifeblood of the business. The management had to think about those things; so did everybody else now that the books were open. The message was clear: you can't always get what you want.

Listening, Henkelman squirmed. The big question in his mind coming into the meeting had been, "Is this gonna fly or not?" Not the forklift -- that wasn't the issue. If the company had other, more pressing needs, so be it; common goals had to outweigh parochial ones in the pursuit of profit, Henkelman understood that. But he had to know that the process was more than just a tease; that if a team did its homework and made its case, the management could be moved. That wasn't clear to him yet. After the meeting, as he filed out of the room with the other plant workers and headed back up the stairs to his platform, he felt a tremendous letdown. "It was like, 'God, what are they trying to do now? This is the same old story."

So it was both a surprise and a lift to learn a few days later that a new forklift was indeed on its way. "That definitely boosted some spirits -- in my own case, for sure," says Henkelman. "Because it was like, 'This didn't fall apart.' It gave me the idea that we can make a difference. It made me feel that we weren't doing all this work for nothing."

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