Ownership Thinking

Ownership thinking is a great concept that few owners employ. I have written about another book on this subject, The Great Game of Business by Jack Stack. In fact, Brad Hams, the author of Ownership Thinking refers to the Springfield ReManufacturing Corporation (SRC) in Chapter One. SRC is the subject of The Great Game of Business and Jack Stack did for SRC what Brad Hams did at MFD de Mexico, which is the Mexico operation of Bimbo, the Mexican licensee for Mrs. Fields Cookies.

Both authors espouse common concepts. Both authors concepts resonate with the EOS model. You can read about what Jack Stack says in my blogpost. Brad Hams suggests that owners must focus on the Right Education – teach your employees the fundamentals of business and finance, the Right Measures – enable your employees to hold themselves accountable, and the Right Incentives – ones that align the goals of the employees and the business. Like all great concepts, they are easy to understand but difficult to implement. Difficult because it takes commitment and patience. Read the book to learn about Brad Hams’ specific recommendations. EOS client companies accomplish much of what he and Jack Stack suggest with simple EOS tools and concepts.

EOS owner’s educate their employees and align them with the company goals by sharing the Vision of the company over multiple time frames – 10 years, 3 years, 1 year and every 90 days.  They share financial objectives and accomplishments in whatever detail works for them. The EOS tool they use is the Vision Traction Organizer. They also share the Vision in terms of non-financial priorities over those same time frames. EOS owners create a culture of accountability by through the use of nested company, department and team priorities, called Rocks in EOS, and through the use of Scorecards which measure activities that are leading indicators of desired outcomes. You can download free copies of these tools here.

The nugget of gold that both authors offer is that of right incentives.  Self funding bonus programs are proscribed by both. Both mandate bonuses that are tied to company goals, not department or individual goals. These types of bonus programs work if the employees see how what they do contributes to the company success. Jack Stack suggests a balance sheet measure, like the current ratio, and one from the income statement, like pre-tax margins, for success in the current and long term. Brad Hams chooses just one – profit before tax. They go into great detail. This idea is not as easy to understand and it is takes time to implement. Both books provide many examples of success and demonstrate that it works.

You can get a copy of Ownership Thinking here on Amazon. Another EOS Implementer, Mark O’Donnell, has written about Ownership Thinking here. Another EOS implementer, Alex Freytag, was a VP and partner with Brad Hams at Ownership Thinking and is mentioned in the acknowledgements.

Image credit: Amazon

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