That financial statement you hold in your hands is 556 years old. The formula and presentation was developed in 1453.
Jack Stack laughs when he proclaims this business nugget. Why? He shredded traditional financial documentations years ago and built a business around each employee managing a share of the expenses and revenues.
Stack brought two of his small-business colleagues to town this month to talk about their career experiences, business mistakes and tricks of the trade.
Fellow business writer Bo Burlingham, editor-at-large of Inc. magazine, and fellow business owner and writer Norm Brodsky shared their insights to a group of businesspeople during a seminar in the Missouri Literary Festival.
Excerpts follow, and the full video is available at sbj.net; search "trusted trio."
Burlingham on the 'SRC fraud'
"We'd written about SRC at the magazine. I (said), 'OK, where are the holes in this story. This was such a great story, there's got to be holes.
"So I came out here and spent a lot of time at the company. I learned two things: No. 1, SRC is a company made up of real people (with) foibles like everybody else. I also learned that it was the real deal. What they were trying to do in this company is really what Jack said they were trying to do."
Stack on his 'aha' moment
"The 'aha' moment drove the Great Game of Business learning process because people weren't ready to really understand those financials. These financials were invented in the year 1453. ...
"These financial statements affect billions and billions of people's lives, and so few people can read them. I think the economic meltdown that we're experiencing today is because of economic illiteracy. We allow somebody else to read something that is basically simple that hasn't changed since 1453. ... We just saw a simple path to success of opening the book."
Stack on why so many businesses fail
"Think about when you go out and you're buying something, doing your pricing right on the spot and adding your margins and figuring out your turnovers - those things are vital to the success of businesses today. The failure rate of businesses is so terrible, it's just astounding. I think last year, the SBA said 650,000 businesses started and 590,000 businesses failed. ... Why did they fail? Because I don't think we teach capitalism. ... What's important is not building a great tractor but building a great company that sustains over a long period of time."
Stack on corporate 'no man's land'
"No man's land is when you've tapped out your credit cards, you've tapped out of your bank loans. You've been doing the same thing for five, 10, 15 years, you can't take it to another level. Bo figures that maybe 60 percent of small businesses spend time in no man's land. They can't get out."
Brodsky on the next level
"No. 1, never (attempt growth) if it would jeopardize the foundation of your business. ... That's exactly what I did. I went beyond my reach. ...
"The second thing, and Jack does it perfectly, ... is develop talent within - people who know how you operate. ... Take those people and start a new division, to go outside of where you are now. ... But don't jeopardize what you have."
Brodsky on thinking differently
"Even in tough times like this, do not reduce your prices. Think differently.
"An example is a year and two months ago, gas prices hit $4 a gallon, right? Everybody sent out a letter to their customers (saying), 'We're sorry, but due to circumstances, we're giving you a gas surcharge on your bill.' You know what I sent out to my customers? 'We're really happy we're able to circumvent the gas surcharge. We want your customer loyalty.' Then we sent it out to all our competitors' customers. We got more business from that letter and overcame the gas surcharge."
I walked away thinking these guys have fun with business and it seems the root, at least partially, is making business simple. There is a valuable and widely applicable lesson in that. So simple that Stack's open-book management education company, Great Game of Business, is donating training materials with Parkview High School students this semester. Seems Stack is serious about defeating financial illiteracy.[[In-content Ad]]
Springfield Business Journal Editor Eric Olson can be reached at eolson@sbj.net.
