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A Stake in the Outcome

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  • Rob Nagler
    I just finished A Stake in the Outcome : Building a Culture of Ownership for the Long-Term Success of Your Business by Jack Stack and Bo Burlingham. It s
    Message 1 of 1 , Oct 30, 2005
      I just finished "A Stake in the Outcome : Building a Culture of
      Ownership for the Long-Term Success of Your Business" by Jack Stack
      and Bo Burlingham. It's one of the best business books I have read in
      recent memory. The principles in the book correlate highly with what
      we are trying to do with XP imo. My review is appended.

      The book was nice to read, because it confirms much of my experience
      in building bivio. I think we in the software business can go much
      farther and faster than Stack did at SRC with the Great Game of
      Business (http://greatgame.com/). Stack was in the engine
      remanufacturing business. Software development connects directly to
      the end-user, and also has no inventory issues. We can innovate as
      fast as we can type!

      An extension of the Great Game of Business is that creating
      business is the game of business. Stack covers the history of
      SRC and its many subsidiaries. He doesn't shy away from sensitive
      topics like disagreements he had with people and why. The theme is
      that business is about creating future opportunities by teaching
      people about what business is and what they get out of it if they
      are owners. Bo Burlingham, editor-at-large of Inc. Magazine. is
      co-author, and it's a very readable book as a result.
      The book defines 14 rules of ownership:
      [p10] #1 The company is the product.
      [p24] #2 A company isn't worth anything if nobody else wants to own it.
      [p43] #3 The bigger the pie, the bigger the individual slices.
      [p58] #4 Stock is not a magic pill.
      [p69] #5 It takes a team to build equity value.
      [p78] #6 Failures are fine as long s they strengthen the company.
      [p95] #7 Ownership needs to be taught.
      [p118] #8 You build an ownership culture by breaking down walls.
      [p134] #9 Getting out is harder than getting in.
      [p148] #10 To maximize equity value, you have to think strategically.
      [p165] #11 You create wealth by building companies, not by selling
      products and services.
      [p203] #12 A company is only as good as its people.
      [p204] #13 Ownership is all about the future.
      [p258] #14 You gotta wanna.
      Here are some other quotes:
      [p47] Trust is a key element of long-term business success, and you
      can't have trust without honesty and openness.
      [p166] You realize that there's a log more money to be made in
      building and selling companies than in building and selling products.
      So you start searching for opportunities to start other businesses.
      What do you find? They're all around you. THere are more than you
      can handle. You can't believe you haven't noticed them before.
      What you need at that point is a formula that allows you to take
      advantage of the opportunities, preferably with resources you already
      [p207] To one degree or another, the whole process of building an
      ownership culture is geared toward leading people to that epiphany
      [that you control your own destiny through ownership]. It isn't
      easy. In effect, you're asking people to make a fundament change in
      perspective, a leap of consciousness, and all kinds of things come
      along to block the message, as we discovered over and over again in
      the course of our journey.
      [p208] Overcoming those obstacles is essential if you want to create
      a company of owners, but you need tools to get through to people.
      I've always found that the most effective tool is reality itself.
      There are times, however when even a system like the Great Game of
      Business isn't enough. Try as you might, you find that you can't get
      through to people with facts, reason, and logic. The emotions are too
      intense. Communications breaks down.
      [p214] I had a different idea of my role as a leader. My job, I
      thought, was to help people understand reality, and in busines the
      reality is that you are constantly facing threats, some of which you
      can identify, some of which you can't. So you need an element of
      fear. You need to be aware of the real dangers that are lurking out
      there in the market and that could cost you your job if you're not
      careful. Otherwise you won't do what's necessary to protect yourself
      and the people you work with. You'll get complacent. You may even
      get arrogant. You'll think you're doing great because you're
      generating a log of profit. You won't realize how quickly the
      situation could turn around.
      [I do think Stack has become too enamored with what he has created.
      He even says so at one point in the book. In particular, the
      following quote shows that he values "community and culture" for their
      own sake, not the value they bring to the understanding of business
      and to the success thereof.]
      [p244] Having outside investors could change the whole thinking of
      the business. For one thing, the employees would not have a
      controlling interest in the company anymore. Under those
      circumstances, it might not be possible to preserve the community or
      the culture.
      [p257] Nobody likes to leave the comfort zone. Most of us think,
      "Why mess with success?" We've been trained to believe that, if you
      work hard, everything will come to you. It's one of the biggest
      fallacies our parents teach us: "Just keep your nose to the
      grindstone." Then we're caught completely unawares when the
      grindestone is replaced by something better and we suddenly can't pay
      the bills anymore.
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