Oct 18, 2018
It’s 1983. The farm economy is wracked. International Harvester—one of the largest companies in the world—is failing. In Missouri, a dozen managers scraped together $100,000 in cash and borrowed an additional $8.9 million to buy the International Harvester plant they worked at. Today, that plant—which became SRC Holdings—has become one of the most successful companies in the country. To give some perspective: a 1983 investment of $1,000 in Warren Buffet’s Berkshire Hathaway would be worth about $170,000 today. $1,000 invested into SRC in 1983 would now be worth about $4.7 million. How did they do it? Exactly what did they do?
KNOWLEDGE IS POWER
These managers applied a powerful belief: the best, most efficient, most profitable way to operate an organization is to educate everyone on the business, give them a voice in saying how the company is run, and provide a stake in the financial outcome—good or bad. Leadership knew that the company had to have insane focus, they needed great decision making at every level, and the team needed to share in success. This led to the creation of a new kind of open-book management they called The Great Game of Business.
FINDING THE “ONE THING”
Key to their system is the alignment of activities every day across the organization with what is most important for the long-term health and success of the organization. This leads into the one specific element of The Great Game of Business I want to focus on this week—it’s what they called the Critical Number. In the film City Slickers with Billy Crystal and Jack Palance, Palance’s no-nonsense, wise-but-wisecracking character, Curly, noted: The key to success in life is finding your One Thing. Nothing else matters. Do that One Thing, and do it well. Everything else will fall into place. Here’s how that applies to The Great Game of Business:
A few years ago, Southwest Airlines knew there were a lot of things they had to do well to thrive in such a competitive industry—they needed to lower lease costs, increase the number of repeat customers...the list goes on. But leadership knew that having too many goals would make it difficult to create focus or impact, so they worked through all their key areas to look for the One Thing that would trump all the others. What they settled on was an operational number called “Ground Turnaround Time.” They knew that if they could lower the amount of time the plane was on the ground from 45 minutes to 30 minutes, all kinds of great results would follow. Faster turnaround meant needing fewer planes, fewer gate leases, lower labor costs and countless other benefits. They aligned the entire organization with this goal. They trained the ground crew, revamped boarding passes, made adjustments in the flight crews, and more. This centralizing goal of reduced turnaround time allowed the organization to focus on mastering the one thing that mattered most instead of doing a whole bunch of things that were only fairly important.
HOW DOES THIS APPLY TO MY OPERATION?
Unlike the companies in the above examples, most farms don’t have thousands or even hundreds of employees. However, in The Great Game of Business, no matter the size of the organization, the principles are the same: focus attention on what truly matters, coordinate activities, and track progress. Critical Numbers are going to be unique to each operation, and they might even change from year to year. It signifies what’s important to the business right now.
Analyze your own operation. Gather a team with good perspectives on the business and share views, open up dialogue around topics that arise, explore them candidly, and develop a list of potential key areas for improvement. Prioritize that shortlist, and turn the top challenge into a goal for the business in the coming season—with an actual target. Pull the whole team in by explaining what the goal is, why it’s important, how everyone can affect the number, and how progress will be tracked. Also, make sure you’re having regular meetings to give updates on the Critical Number.
Using the Critical Number approach forces us to dig into areas that really need improvement, gives us focus on what really matters, and creates efficiency of communication.
Thanks for listening! Email me questions & comments at firstname.lastname@example.org. Learn more about The Great Game of Business! Get the expanded & updated book at Amazon, or visit greatgame.com for all available products or to become a coach yourself. See you next week!