A few years ago, I learned about Open Book Management and its wonderful benefits to organizations no matter the size, industry, and complexity.
If you google it, Wikipedia will say that the basis of open-book management is that the information received by employees should not only help them do their jobs effectively, but help them understand how the company is doing as a whole.
According to Case, "a company performs best when its people see themselves as partners in the business rather than as hired hands" (Case,1998 as cited in Pascarella, 1998). The technique is to give employees all relevant financial information about the company so they can make better decisions as workers. This information includes, but is not limited to, revenue, profit, cost of goods, cash flow and expenses.
In July, I had the pleasure of interviewing Shawn Plummer, the President/CEO of Food for the Hungry Canada based out of the Fraser Valley in British Columbia. FH Canada is one of the rare nonprofits that had tried and successfully benefited from the open book approach. It drove accountability, clarity, strategic focus, and innovation into their organization.
The transcript below is from Shawn’s own words describing their journey.
About FH Canada
FH Canada is a part of the global organization where the Canadian office is one of the affiliates. FH Canada operates in 8 countries: Cambodia, Bangladesh, Haiti, Guatemala, Ethiopia, Uganda, Burundi, and Rwanda.
FH Canada aims to graduate communities out of poverty one community at a time. We operate with an asset-based management approach, exploring what assets exist in the community and together, with local community leaders and families, determine where the gaps are. 95% are national staff with very few expats.
As for our strategy, community-owned development plans are set by local leaders. As for our exit strategy, within 10 years, if we collectively feel that the vision and targets have been reached and a sustainable plan is in place, we will exit from the community and celebrate together at the time of “graduation”. There is a commitment to mutual transformation between the communities being served and the Canadian partners (whether churches, investors, business partners, and other supporting partners).
I was hired in 2010 to work on partnership development, for 8 years in fundraising, donor relations, and child sponsor acquisition. I became the President/CEO in late 2017.
There were some issues in the organization back in 2010 that needed to be addressed.
We lacked a strong brand so the whole practice of evaluating who we are, who is our audience, who is our market in Canada was stemming from that weakness. Ben Hoogendorn, the former President thought of hiring an executive coach to help our senior leadership team implement the Rockefeller Habits and then his successor, Bernie Willock, initiated the open book management process. This was sold to the Board and then changes slowly happened.
Origins of Open Book Management for FH Canada
Before, our strategic plan was for 3 years and 15 pages long that no one read. The coach guided us through a process that proved to be beneficial. There were two books that provided the inspiration: 1) Scaling up: practicing the Rockefeller Habits by Vernie Harnish, and 2) The Great Game of Business by Jack Stack. Scaling Up provided the 4 strategic elements: people, strategy, execution, and cash.
The result was a one-page Strategic Plan. It has driven clarity, focus and being able to say No! to a lot of things that do not align with the plan.
Bernie took on and implemented the open data management process because he had been doing that in his company before joining FH Canada. Before, only a few people were looking at the numbers. The rest of our leadership team weren’t always clear as to our annual targets, how to effectively monitor/track them, and that included cash management.
Our meeting rhythms have changed too. At the start of each month we set monthly projections for revenue and expenses. Each member of our team has a budget and expense line to watch. We analyze our Profit & Loss (P&L) weekly so we have a good idea where our cash is at when we look at our month end actuals.
The cultural shift was having a staff name beside each revenue and expense line and adding a layer of accountability. Being responsible for monitoring the numbers and knowing why those numbers rise or fall is another thing so we look at trends. Now, staff have a voice at the table and can challenge the expenses or challenge the return on investment when we’re considering new opportunities.
We started having fun keeping score and we’ve made huge progress as a team over the past 3 years.!
Results /impact in the field and your partners/stakeholders
the results are clear: One of our big goals is to always increase the % that we can get to the field in the 8 countries that we partner with.
There is a huge improvement in knowing where our cash is going and watching the number closely, anticipating needs and planning for contingencies.
This involves greater clarity, focus, and has improved our communication and service to our partners. Our partners are very involved in the process. There are more frank discussions about monitoring and evaluation because we know where we are at.
I thought we could roll out open book management much quicker than we did but we needed training in the beginning and it took us over a year to get things integrated.
It was a big cultural shift-having your name with a revenue target + expense line and it was daunting in the beginning. First, it felt like a competition but later one, it drove us to be better teammates. It made us look to where the growth opportunities are.
FH Canada have brought more partnerships-more accountability, greater clarity and focus and a clear BHAG (Big, Hairy, Audacious Goal) of graduating 150 communities out of poverty by 2029.
How can you encourage other nonprofits to be more open and accountable?
I would encourage them to read the two books that influenced our current business practices.
Consider using an executive coach to help build a strategic plan for your organization.
They need to operate as a business - people, strategy, execution, cash. There is reason enough to do this because of the distrust between nonprofits and business.
It was painful in the beginning but it reaped many dividends. Once employees understood, they can make predictions and they can bring questions and answers to the management team. Other nonprofits can see this as an investment worth their time and energy.
Nonprofits have to have a motivated CEO and management team plus a supportive board that encourages this type of intentional strategic planning. There has to be a deep desire for change within the organization and a willingness to do the hard work to get to a place of sustainability.
I married a farmer. I have no idea about farming three years ago, but now, I can apply almost most of the farming lessons to management solutions and techniques that so-called gurus out there would envy!
1. You can’t hurry farming.
It has its seasons of planting, harvesting and in between all other supports that you do to ensure that the crops are growing healthy, not prone to diseases, pests, and other hazards.
You can’t hurry success, love, and business deals. They have their cycles and seasonality. To this end, you have to look at the long-term viability and ask yourself, will this give me a return of investment in the next 5, 10, 15 years.
2. There is no substitute for great weather.
While there are hail, storm, floods, pests, and other weather disasters that befall farming, with enough sunshine, wind, rain, harvesting is a delightful experience! My grandma has sat in a combine with my grandpa for more than 50 years until they can’t farm anymore! This is a tradition in farming communities. Young and old alike cherish this moment once a year.
You have to bring in the right amount of discipline, focus, persistence, and opportunism to every business opportunity. The batting average is 10% or less. The rest is part of growing up and being resilient to failures and momentary setbacks. Celebrate all the milestones and happy events dutifully.
3. Negative self-talk doesn’t work.
There is too much on the line when they have not completed harvest yet. Any delay could mean a rotting unproductive, unsellable yield. Farmers are stressed out to the core. Negative self-talk in a pressure cooker environment will only yield to more negativity to the already volatile and stressful situation. It drains away those precious energies you need to tackle problems with level-headedness.
Instead of negative self-talk, be positive about the situation. Leave your rose-colored glasses, be realistic, and get to Plan B, C, or D. The moment you build contingencies to your decision-making, understand the risks factors, you will feel more confident to take the next action.
4. Farming is all about inputs, not anymore!
For the last 100 years, we saw great revolutions in the agricultural sector. In the last 20 years, there are more technologies and innovation in the industry that you can imagine. Newer editions of expensive tractors, rising price of arable land, and the stringent policies on quota system have discouraged a lot of people from farming. The cost of fuel, fertilizers, and other support inputs have become cost-prohibitive. More and more farmers are grouping their farms to the community to benefit from scale and leverage pooled resources.
What are you doing in your business to adapt to a changing environment? You didn’t need horses when the tractors came along. So this is true for other industries where changing practices, technology, and priorities have shifted consumer demand to other services, products, and techniques. Is your industry being driven away by cut-throat competition, stiffer regulations, or dying consumer attention? It is time to know what is hitting you before it is too late.
There is more to say that just creating criteria a for the CEO successor. It is not just about tabbing an heir apparent that has similar skills set, knowledge base, and leadership style as the predecessor.
A few thoughts on this matter.
Don't get a carbon copy. Carbon copies are weak and it rarely works according to Peter Drucker. I would say that carbon copies are bad copies. They seldom really capture the essence of the original.
For the Selection Committee, it is important to keep mind that same profiles could be counterproductive given that the business environment is constantly changing. What works before with that CEO may not work for the new CEO with the same survival skills and traits.
Where is the company going in the next 10 years, what skills set, knowledge base and leadership style would work? One that can leverage past achievements and successes to work for the next growth level of the company is crucial.
That person should have a clear and demonstrated track record of innovation-orientation. Amidst the overrated appeal of disruption innovation, an innovation-orientation is much needed, in all types of industries, sectors, and markets.
The global marketplace is evolving at such a rapid pace, leaving losers on the trail. That person should have an advanced knowledge of global trends and movements in the marketplace-refined understanding of key moves in the industry /sector where they belong.
A person that can command the right resources for the organization and attracts the required social capital at various levels of the organization. Charisma and people skills are important. But the CEO is not there to please people. He/She is there to advance the interests of the company.
When a disaster or crisis strikes, an able CEO knows how to drive the situation from impending annihilation to securing confidence in the eyes of stockholders, consumers, and the public.
The CEO position is very important and complex. But it is more important to expand the role of the CEO for the right person rather than to “box” the person into the limits of the role.
A few years ago, when I assumed a role in a municipal government, it was a new role. I was able to carve my own way into the position, expanded it based on my range of skills and interests, and win it.
When the CEO position has been entrenched, there is a perception that the CEO has to be this and that. Well, at the end of the day, the person should rise above the limits imposed by the position, whether real or imagined, to become successful.
The term of office is very short if you have a very able leader and it is too long for a lousy one.
Cheap airlines are getting better and better.
Newer offerings in new routes. More options to choose from such as print your own tickets, online check-in, are getting better as well.
This is very good for fliers whose budget cannot afford the amenities and the frills of the regular airlines.
The key here is providing value to the point that customers are eager to try on without sacrificing a lot of dollars for the whole experience. The safety, comfort, and overall no-frills experience are what counts at the end of the day. Beware, if you do not read the fine print, you get charge for every little thing. Little thing that we take for granted but adds costs to the operations.
When did you start to think about your organization's value addition to your customers? Is it the price, comfort, peace of mind, guarantees, "the relationship," or the expertise your provide? or how about the lethal combination of these musts.
In these days, standing out in the market is not being the loudest or the most noisy product or service. It is about the filling the gaps, combining the best value for your offer, and ensuring a follow-through of a great experience.
A few days ago I got an inquiry from a manager of one of the growing community programs in Central Alberta. She inquired about evaluation and how they should go about it.
One of the things I noticed is that from all the other networks that I have traveled is that she is the only one who had the courage to inquire about evaluation as one of the elements of her program development. The word “evaluation” conjures feelings of fear of being found out that they have failed, fear of being found out that their work is insufficient, just plain fear.
It is a normal feeling but evaluation is a standard program requirement these days. And the “no money, we are a non-profit” doesn’t work too. Don’t use these excuses to know about this important topic. The initiative to know is why good managers stand out from the crowd.
The question is how you are going to deal with the “you don’t know what you don’t know” challenge.
· The first thing is to do is to ask the right questions and acknowledge that you don’t know anything about it. Organizations refuse to seek outside help because they want to keep their independence but there are no resources internally that can actually provide enough momentum for the kind of change/result they want to see. Staying independent but not knowing what to do is not the smartest move.
· The second thing is to seek experts and people and organizations who have done it before and learn from their success or failure. Look around your sector and talk to organizations that are in better shape in this area and learn how they came to be. You do not have to reinvent the wheel.
· The third thing is to seek ways to get a beginners knowledge and understanding that will propel you to commit to small actions that are building blocks for something greater in the long-run. It is about being a champion or an initiator in your office. Tell your boss that you want to improve your program development skills and get the best practice in results-orientation out there. It will help your organization move incrementally as you seek to be enlightened and later champion progress in this area.
An inquiring mind is a good start. The more you learn about something new, the more you can begin to see its value and usefulness in your organization. Take small steps and you will never regret it.
Most companies, businesses, non-profit organizations see the competition- the organization across the street with the same offering and think that it’s their worst enemy.
It’s not. A coffee house mushroomed in one street is a reflection of actual buyer/consumer interests. That means that there is a demand and continuing demand that needed to be satisfied. Take the cue from the competition that is very successful.
The competition will show you what is selling or not, what the market wants versus what you are offering. The competition will tell you that your services, products, or values are not well-articulated. It will tell you why you need to expand or contract or seek new markets. The competition that is doing well will tell you what practices work and what practices to abandon. What areas are not being serviced, what gaps in customer needs are not being met and what positioning can be done?
A good competition is a good source of information about what is coming around the bend, anticipating that changes can disrupt your business in many ways and that being a bystander of these changes will do you no good. You might be disrupted even before you know it.
Take the case of Uber that has disrupted the taxi cab businesses that have been there for generations. It has created a whole new sharing economy around the needs and interests of consumers who are also users and producers of these services. Do not be the taxicab operator that just woke up one day with a business valuation of less than $200,000.00!
Big box businesses have folded/ are folding up such as Sears, ToysRUs, Greyhound is discontinuing its operations except for Ontario and Quebec, and recently Macy’s might be next in line. These businesses have weathered many storms and remained very strong contenders in the retail market and transport market for years and years. Sears started with a catalog market and became one of the best-preferred retailers for middle-class buyers. Not anymore.
While the middle-class-targeted retailers are folding up, lower buyer segment markets are generating newer and more stores such as Red Apple and Giant Tiger are taking up empty retail space that has been vacated. There is always an opportunity if you can look closer at the changes that are taking place.
Innovation is the stuff that we strut about but rarely understand. It is not a magical moment where executives of Apple just figured it out today. It is a methodical, integrated, and disciplined approach to finding opportunities, studying opportunities for its potentials and risks, and pursuing opportunities to take the business to the next level of competitiveness and profitability.
Is your business merely surviving, beating up the competition, or dominating the space? Do not sacrifice the future of your company in the altar of today’s successes. Learn from the competition and innovate continuously.