It’s time for a new kind of small business management.

“A company performs best when its people see themselves as partners in the business.” – John Case

For over 100 years, an industrial model has been the norm in large and small business management styles. From factories to multinationals to public service to small business, this model has permeated what we think of as the way to run a successful business.

Once upon a time, that may have true: bring many people together, give them very narrow job descriptions, keep the line moving, install a manager to keep people’s noses to the grindstone, produce more, create greater profits for the company. Grow grow grow, faster faster faster.

During the last century, many a variation has emerged: Total Quality Management, Kaizen (continuous improvement), Lean, Six Sigma, ISO9000, Zero Defects, even High Performance. All of this, along with the Labor Movement, was an effort to improve upon or even humanize the industrial model.

However, there has been a sticking point. Employees, for the most part, only care enough about the profits of the company to maintain their jobs. Why should they care? “If the rich owners want to get richer, we will react by protecting ourselves as workers.”

As an owner, your frustration with your uncommitted employees and their view of you as a “fat cat” is nothing short of mind-boggling. And so the industrial cycle repeats itself.

Welcome the 21st century

(and a new small business management style)

We are no longer beholden to our geographic location. Business works at the speed of a nanosecond. Customers have millions of choices at their fingertips. The world’s resources are changed. Young workers are demanding flexibility. Labor unions are big business. What small business management style are you going to use to survive all of this? Open the books.

Employees and employers are adversarial because employers learn about business and employees are in the dark. Employers often wonder why their words fall short. It is because in the old style of small business management they are speaking a different language than their employees. Those employees can only hear the tone and gestures of the words. They have to guess if those words and intentions are benevolent or not. Sometimes they guess wrong. Knowledge and clear communication are indeed power.

When I first went into business, I didn’t have a small business management plan. I didn’t know I was going to run an open book company. I was learning every day, as fast as I could, what it meant to be a business owner.  It just made sense to me. I knew in my gut that if I could teach even a fraction of what I was learning, we’d all be smarter. My team would be smart. I would benefit. They would benefit. We would be happier. We would all be pushing in the same direction.

I did what I advise every business owner to do: open the darn books. Teach what it is to be in business. Everyone in your business should understand profit, revenue, and cost of goods. Everyone should understand expenses, payroll, and margins. This is the new small business management style that works.

John Case writes a beautiful chapter in Open-Book Management in which he asks, “What are you afraid of?”

Are you afraid that you will prove what employees are already thinking? You are a fat cat? Or your competitors will use the information against you? How is that? I promise that you have only to gain when everyone is on the same page, when they understand what they are doing, how they personally impact your company, and that they are valued by being smart enough to learn what you did. Imagination is always more wild than the truth.

That’s why transparency in small business management works. It supports the truth.

We are powerfully inspired by the idea that we – entrepreneurs – can lead the charge in the Business 2.0 Revolution. Not just jobs, but great jobs. Not just businesses but enduring stewards for this millennium. Come be a part of the change.

Build an Open Book Company

  • Step one:    Know the numbers
  • Step two:    Teach the numbers
  • Step Three:    Identify Critical Numbers
  • Step Four:    Keep Score
  • Step Five:    Develop Compensation Plans
  • Step Six : Develop a Culture of Learning
  • Step Eight: Design Your Transparent Company