Deliverables: Open Book Management

(initially published on Escape from Averageness® in October 2014 as the fifth in a six-part series;  updated and republished here as part of our latest retrospective, “Still Above Average: The Best of Escape from Averageness®, 2009-2021”)

Building a Savvy, Motivated, Mutually-Accountable Homebuilding Team

For more than a quarter century, SAI has worked with homebuilding companies committed to improving their operating performance and resulting business outcomes.  We advise them that the key to success lies in getting the job done – viewing the issue, sustaining the effort, and obtaining results – in three critical dimensions we call discipline, context, and perspective.

Discipline:  Focusing the business model on delivering exceptional levels of the distinctive value demanded by a narrow segment of homebuyers.  Perspective:  Viewing everything that matters through the lens of the natural, horizontal, process-centered manner in which work is performed and value is created on behalf of homebuyers and other stakeholders.  Context Transmitting an underlying business logic and transparency to everyone on the team.

Creating that context – that underlying logic and transparency – is what Open Book Management is about.

Open Book Management flows from the work that Jack Stack did in the 1980’s as the CEO at Springfield Remanufacturing Corporation, in order to rescue the former International Harvester (Navistar) division from certain bankruptcy.  Following a last-ditch, 99% leveraged employee buyout, Stack chose to open the company’s books and make it everyone’s business to improve performance.

Stack recounted the effort in two books (The Great Game of Business and A Stake in the Outcome);  shortly afterward, John Case reported on open-book thinking in other industries and companies (Open Book Management and The Open Book Experience), including insight into how Steve Wilson developed the basics of OBM-inspired team-based performance compensation at Mid-States Technical Staffing Services (The Bucket Bonus Plan).

At SAI, we are specific in our application of the principles of Open Book Management.

  1. We push our clients towards transparency (openness) and candor (the courage to tell and hear the truth) in the internal disclosure of operating and financial data, in meetings specifically for that purpose, and through the use of dashboards and heads-up displays.
  1. We push our clients towards imparting business literacy (understanding) to everyone, so that they understand the business of homebuilding, not just homebuilding as a business; we do it through the linked teaching of business and production principles.
  1. We push our clients towards a team-based approach to performance compensation, via an inclusive, self-funding, progressively-weighted milestone plan based on achieving targeted performance above a baseline in a specific business outcome; it is precisely the type of performance compensation plan we would expect to participate in, under a results-based approach to delivering consulting services.

The essential deliverable of Open Book Management is a savvy, mutually-accountable, motivated homebuilding team.

Next:  Deliverables:  Results-Based Consulting:  Continuous Improvement, Urgency, and Results

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