The Viroqua Food Cooperative is undergoing a fundamental shift in the way we run our business and it relies on all the heads in the room.
A year ago I traveled with two other members of the VFC Management team, Jan Rasikas and Eric Speck, to Zingerman’s Zing Train in Ann Arbor, Michigan. We participated in a three day training based on the principles of Open Book Management. This concept was developed and implemented by Jack Stack at SRC Holdings and expressed in his book The Great Game of Finance. Zingerman’s Delicatessen implemented these same practices in the 1990’s and by 2003 was a completely Open Book Business.
My assumption walking into the training was that we were going to learn about creative ways to understand balance sheets, read profit-loss statements, and interpret financial statements. I was pleasantly surprised to discover I was completely wrong.
Open Book Management is a system in which everyone in the organization takes responsibility for the effective operation of the business, financial and otherwise.
This means the business is not being run by a solitary lone figure sitting in an office pulling strings like a puppet master and issuing commands. It also means that our financial information isn’t kept under lock and key and analyzed only by the select few in the inner circle. Instead, the creative forces of all the individuals performing the work are empowered to understand how the business works, why it works and most importantly, what we can do to make things better.
Sounds good, even revolutionary, but is it really possible? If Zingerman’s is any indication of the kind of success that is possible then the answer is a resounding YES! Currently the Zingerman’s Community of Businesses is a 45 million dollar industry with the same small origins as our own dear Co-op.
How does Open Book Management work? It starts with principles we call
The Three Steps to Great Finance: Know and Teach the Rules, Keep Score and Share the Success.
Know and Teach the Rules
Every game has rules. If you don’t know the rules, it’s like sitting on the sidelines to a game of Punkin Chunkin or Bun Climbing (look it up, these are legitimate sports) and wondering what the point is. That’s why we have a Finance 101
Training for all staff that covers the 10 Rules of VFC Finance and our games. We are playing two games: Margin Minus Labor
(MML) and Net Income.
We report on the MML game every quarter and the Net Income at the end of the year. Understanding the rules is essential to creating success and winning brings great incentives!