Angie Stocklin: How open-book management helped us successfully pivot

Have you heard of open-book management? It is an idea made famous by Jack Stack and outlined in his book “The Great Game of Business.” The overall idea is, once team members understand the rules, are empowered to drive change and are then rewarded for their performance, they begin to think, feel and act like owners.

After reading Stack’s book in 2011 and realizing how closely this aligned to our company’s core values, we traveled to Zingermann’s Deli in Michigan to learn how to implement this philosophy in our business.

Open-book management required several important changes to our work habits. First, all team members needed to complete and pass a Finance 101 class to ensure they would understand the new financial section of our all-company monthly meetings. Next, each department needed to create a scoreboard to track its most important metrics on a weekly basis, set annual metric goals, assign these metrics to individual team members and set up a weekly meeting to discuss the department’s progress. And finally, the leadership team needed to add a financial section to our all-company meetings, integrate this new philosophy into our company goals and objectives, and find a way to reward team members.

Major company transitions take time, and I won’t pretend this rollout was quick and painless, but open-book management soon became an integral part of our company culture and was an additional layer of activating our core values, such as, “Act like an owner.” The level of ownership created by empowering departments to take charge of their metrics was thrilling. We watched as departments identified and solved problems that drove positive results for the company, and we were thrilled with the increase in innovation company-wide.

The transparency created from sharing with our team all financial information—from gross revenue to cash—was simultaneously exciting and a little scary. As a leadership team, this format provided a platform for us to share our greatest successes and some of our biggest misses. We had to become good at honestly sharing facts and figures, without accidentally instilling fear in the team, and resisting the urge to sugarcoat the bad numbers by over-focusing on the good. It had always been our responsibility to understand the numbers and come up with a plan, but now we were doing all of this on full display of our team.

By 2012, the internet had changed dramatically, and our growth strategy of acquiring and rehabbing niche ecommerce properties was becoming more difficult. At the time, One Click’s growth strategy included adding additional ecommerce brands to our portfolio, while also growing each individual brand. We faced increased challenges from large corporations that started to build digital marketing strategies and teams, social media platforms were becoming more important, and consumers started to prefer interacting with brands instead of simply shopping a transactional ecommerce website. We knew it was time to rethink the future of One Click.

Through conversations with our team, lots of research and some individual soul-searching, we decided to transform One Click into an ecommerce eyewear company. This included an 18-month process of divesting our seven non-eyewear brands and creating a prescription eyewear brand from scratch, and I’m not sure we could have successfully navigated this process without a culture of open-book management.

Not only was our team used to hearing important financial and strategy updates from the leadership team on a regular basis at this point, team members were also comfortable in the position of empowerment and ownership. This allowed us to share thoughts and feelings with them and ask for their help in solidifying plans. It also allowed us to pass off ownership of certain aspects of the divestments—like gathering data, inventory audits and supplier introductions—when needed. And to empower team members to lead the rebranding process for our two remaining brands, Readers.com and SunglassWarehouse.com, while creating an entirely new brand, Felix + Iris.

We would not have been able to complete this transition without the support and assistance of our entire team. And while open-book management wasn’t the sole reason this transition was successful, it created the bones for our success. Our team members were able to see the financial impact of each divestment and how that money was used to create Felix + Iris and polish our other two brands. They also, without fear, watched our annual growth rate slow to almost 0%, because they understood how the loss of revenue from divested brands was an investment in our company’s future.

I am not sure if I’ll try my hand at entrepreneurship again, but if I do, I will gladly take the idea of open-book management along with me.•

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Stocklin is an angel investor and exited founder who currently teaches entrepreneurship at Purdue University.