Friday, January 19, 2007

LNB #033: Open Book Management

Watching the Barbara/Rosie/Donald dustup got me thinking: These are three very powerful and very rich businesspeople. Are they good examples of power in the business world.

I hope not.

There's an "old economy" way of viewing power which includes control of information (spin) and resources; domination of co-workers, peers or subordinates; and crushing the competition. But, I just don't think it's what people signed up for when they started their enterprises.

The success of Firefox browser has people quietly wondering how they can be so powerful -- and simply give away their key information (since the release of Firefox 2 and IE 7, PC Week still gives the nod to the Firefox product).

Can you be powerful and still give away information?

Like open source software, Open Book Management seeks to gain market share through the sharing of key data. Wikipedia, Audacity and other products are winning through a business model based on openness and generosity.

Keys to success in Open Book Management are these core principles:

  • Provide employees and key contributors with all the information they need to help the business be successful
    * Financial data
    * Profit data
    * Performance data
    * Cost of goods/services sold, etc.
  • Train these good people how to use and understand this information.
  • Give these people responsibility for the numbers under their control.
  • Provide these people with a financial stake in how the company performs.
Whole Foods CEO, John Mackay has been such an evangelist of Open Book Management that all 6,500 of his employees are considered "insiders" by the SEC (for stock trading purposes). In a Fast Company article (Final Word: "I No Longer Want to Work for Money"), Mackay sent a letter to his employees giving them the straight skinny on changes in executive compensation -- that the peeps in the C-Suites were getting a raise (to keep the headhunters from peeling off key talent) and that his direct comp was going to a buck per annum.

A quick reality check will clue you in on a key fact: the people who need to know what's happening in your business (partners, key resource partners, employees) don't and the people you don't want to know (competitors) do. My friend, Dierdra O'Rourke from Intelligent Office told me that she can sit in any Starbucks and listen to confidential information being shared openly.

Listen Now: 17 minutes, 26 seconds