My local business newspaper, The Springfield Business Journal, hosts a series of breakfast meetings starring entrepreneurial celebrities from our market area. The format is an informal question-and-answer session. Recently, Jack Stack, president of SRC Holdings Corp. (SRC), took the hot seat. SRC is comprised of more than 1,500 associates and dozens of companies.
I became a Jack Stack fan in the 1990s, when I devoured a copy of his groundbreaking book, The Great Game of Business. I had been practicing “open book management”; I just didn’t know that it was a thing, and that it had a name. Stack, and that book, set me on a sound path of financial transparency and management that has served me — and millions of others — very well.
So, I jumped at the chance to hear him speak. Stack is a humble guy and would probably cringe at being called a celebrity; he is a businessman. His down-to-earth approach to building companies reveals his brilliance and humanity. I was inspired to share some of his wisdom with you. Here is what I gleaned from his presentation:
• Don’t look for skilled people — build people. Stack doesn’t complain about a labor shortage. Instead, he recruits. SRC does a lot of experiential marketing with young people. It invites middle-schoolers to spend time with engineers, factory workers and forklift drivers. (Note that the forklift drivers are very popular as career models. Who doesn’t love a forklift demo?) The company participates in local charities and events, recently donating big money to the Convoy of Hope for a Hurricane Harvey support trip. It looks for creative ways to let people know that the SRC team is a positive force in its communities.
• Create business people, not just technicians or skilled laborers. SRC continuously trains its people. In addition to the skills team members need to do their jobs successfully, SRC requires that all employees learn business skills; it teaches everyone how to read and use financial reports and shares real financial data. This is one of the core concepts of The Great Game of Business:
• Know and teach the rules.
• Follow the action and keep score.
• Provide a stake in the outcome.
Stack and other investors originally purchased the Springfield Remanufacturing Co. from International Harvester. When he became the owner, he was knocked over by how much he didn’t know about actually running the business. He found it odd that people would trust him and his co-workers to manufacture complicated components, but not show them the score, or their impact on the company’s successes and failures. From the get go, solid financial and business skills training has been a part of their culture, as well as employee ownership — a stake in the outcome. SRC Holdings is the current version of the company that started with Springfield Remanufacturing Co.
• Offer life-long career opportunities. Back in the day, employees would stay at one job until retirement. The common belief these days is that those days are over. However, Stack has not given up on the idea that you can create lifelong careers. Of course, not every hire will embrace SRC’s company culture. Still, he believes that people will stick with an organization that provides challenging work, a respectful environment and a vibrant career path. He suggests that you can help people develop better work/life balance if they can settle into a career and commit to a company. Life is less stressful if you are not always looking for a new job.
• You can build a company to last. Stack shared that he and his employee/owners intend for SRC to last for at least 100 years. Over the years, there have been more than 60 companies under the SRC umbrella, all of which are employee-owned in some way.
Stack and his team continually and strategically assess the economy and business trends. They are financially conservative and take the long look. They determine which companies they will grow and which to divest. They maintain the cash reserves they need to fund the employee/owners who plan to retire and transition their stock to cash. And, they anticipate market downturns and structure their balance sheet to ride out the inevitable tough times. To do this, they buy and sell individual companies and real estate. If they predict a downturn that doesn’t materialize, then, good news, they are just that much more profitable. This approach helps keep every individual company relevant and lean.
However, they don’t have plans to sell the mothership company. SRC is designed to last 100+ years, even though some individual entities will not. This really hit me between the eyes. I love this approach; the empire continues, while the holdings may change.
• Don’t despair over the demise. Most of Stack’s businesses are tightly connected to industries dependent on internal combustion engines. SRC rebuilds engines, and many of its affiliated businesses are complementary OEM manufacturing entities.
However, Stack and his team understand that the end of the era is nearing. As new engine technology expands, the game changes. They must now consider how to retool their thinking and processes to capitalize on new opportunities and sources of energy. Stack trusts in the creativity and problem-solving capacity of his people. That’s the paradigm that keeps people and businesses from becoming dinosaurs.
• Don’t look for the government to fix business. SRC has been in business for 40 years, with Stack at the helm. As you may imagine, he has been asked by several presidents to participate as a cabinet member, or as a high-profile committee member. After interviewing for the positions, he has decided that he isn’t a good fit. And, it isn’t an issue of party. He shared that, in those capacities, White House executives are looking for spokespeople to profess the party policies, and are not necessarily interested in bold, creative ideas for actually fixing the problems.
Stack sees his patriotic place as a business leader. No matter who is in office, or what the politics are, the SRC team is committed to being successful. There is no blaming the economy or the administration. At SRC, they create a plan for good weather, and for the storm.
• Create a business of business people. Stack stays focused on the ultimate goal at SRC: to create a “business of business people” that thinks, acts and feels like owners. Stack’s a respected and revered leader. At SRC, they operate with systems and procedures and play a great game. So, Stack allows the people on his team to do their jobs. He says the SRC conglomerate of businesses is a result of encouraging team members to become business people. Once you do, they come up with ways to save money and make money; and before you know it, you are expanding.
Inspired? Me too. This approach lines up with our philosophy at ZOOM DRAIN, and with the best companies with whom I have been honored to work. It’s all about the people, people!