Class Presentations - Open Book Management

Today we presented final projects for the MgmtAcct course, which were focus on Open Book Management. The project was to look at where it made sense at the targeted companies, and how the implementation plan may work. Below are the highlights from the presentations.

VisionPoint Systems (Virginia): Privately held company (<20>How to begin implementing financial visibility into a company that is less formal in how financial and management information is shared today?

How to implement new techniques while the company is rapidly growing, in a way that doesn't effect productivity or the existing culture?

With many engineers in the company, how will they embrace the need to learn business-centric information and skills?

In a competitive market for talent, some concern about sharing financial information if conditions change (ie. visibility may scare people into leaving).

Timco Aviation (Greensboro, NC): (~200 employees) provides aviation services and interior components. In the highly competitive aviation industry, how do they try and drive greater innovation from all levels of the company? The focus of this presentation was the engineering division and ways they would become more innovative. They laid out how they created "critical numbers" for each group (hrs/job, productivity systems), and their plan for education and creating the rewards system. Interesting take on how they planned to leverage existing "competition" between sub-groups within engineering, especially how it would buffer the plans before direct bonus-sharing increases could be implemented.

Que Pasa Media Network: (Winston-Salem, NC - 100 employees)

Family owned media company focused on Hispanic communities in North Carolina. They are looking to increase overall company value; create less employee turnover (currently not an issue); create greater efficiencies of resources (people, assets, cashflow). The presentation focused on the roll-out plan and education of the various groups that would be involved, and the associated critical number. They face the challenges of a limited budget for education, limited management data (beyond upper-mgmt), and a leadership model that has been driven by the CEO for the lifetime of the company.

Mills Manufacturing (Asheville, NC; 100 employees) - Family owned manufacturer of military parachutes. The presentation focused on similar goals and concerns as Que Pasa. They face the challenges of information leaks (ie. union leaders), high turnover rates, multiple languages spoken in the plant, and many workers with no high-school education. The team laid a plan to identify "public" numbers for the workforce vs. "private" numbers for the management team. Interesting discussion about the challenges of communicating in a simple and visual manner to the various languages and education levels. With high turnover rates and absenteeism, it will be interesting to understand the education challenges they will face, as education will need to be more frequent.

General Parts International (GPI) - The largest privately owned company in North Carolina, they provide auto parts distribution to retail stores and service shops. GPI has two business units, WORLDPAC and Carquest. WORLDPAC had implemented a open-book management style in 1995 and grew the company until it was acquired by GPI. The presentation discussed a plan to take the OBM success at WORLDPAC and look at a plan to implement it in portion of Carquest and GPI. Monthly operating results are shared monthly with Directors and above. Month-end and Daily sales data is shared with all managers. "Critical Areas" were identified across all upper-management.

Overall this was a good mix of small and large companies, public and private. While not all of these plans may get put into place, it forced each of the teams to think about how they could focus each department of a company on their primary ability to effect the bottom-line and the health of the business.

Open Book Management - Brian Healy - Kindermusik

Over the weekend, our MgmtAcct course was enhanced through a visit by Brian Healy (SVP/GM) of Kindermusik International. One of the topics that we've explored in class is Open Book Management, and how it may be a model that students should consider implementing in portions of their companies.

Mr.Healy was also a co-founder of Hooked-on-Phonics, so his perspective on managing a start-up and a global company addedOBM breadth to the discussion.

Some of the topics that interested me were:

• OBM isn't just a management style (process), it must be ingrained in the culture to be successful. People need to be trained, encouraged, and reminded how it helps impact the business.
• OBM requires investment by the company in $$ (training) and time. We spoke quite a bit about how mentoring and listening are needed to make this successful.
• OBM makes each person accountable for their area, on a weekly (or monthly) basis. It forces people to know their role/area, and be accountable for not only that area, but the other areas of the business it impacts. Some people strive in those environments, while others can't handle the visibility. OBM requires the right type of people (see "culture" above).
• As difficult as it might sound, it is possible to find a "critical number" for each group (and person) in the company. OBM forces a company to go through that thought process, and I suspect that the result is it forces everyone to think very hard about what value they bring to the company.

There was much more to the discussion, but those are the key points I'l take way with me. In addition to being a very honest and candid speaker, Mr. Healy clearly showed that he enjoyed making an impact on the world in ways that make people better. This was inspiring. It's about making money to pay the bills and satisfy shareholders, but it's even better if you leave behind something better than you started with. It's obvious that Mr.Healy and the good folks at Kindermusik are doing that. Sounds like it would be a fun place to work.

Thanks also to Dr.Beatty for arranging the visit.

Below is a segment of the presentation that was given in addition to the discussion.

Open Book Management - Critical Number

View more presentations from bgracely.

What an MBA program should be like!

We're about 8 months into the program, and we finally had a weekend that was what I had expected the program to be like. Don't get me wrong, the program so far has been very fun, and we've learned quite a bit from both professors and classmates. But this weekend was just a little more rich, a little more complete in terms of the entire experience.

Here's a few of the highlights:

Every class spend much of the time working through cases. I've stated my preference for case method learning before, and this weekend was an excellent example of the types of learning and discussion that can occur when it's focused around multi-facted cases. OpsMgm't focused on capacity planning (for manufacturing & service industries); ITMgm't focused on runaway projects and outsourcing; MgmtAcct focused on companies that are looking at techniques like Open Book Management and Beyond Budgeting; and FinMgm't focused on capital budgeting for multinational companies. Great discussions of the issues within the cases, intermixed with healthy arguments of opinions and personal experiences from classmates. The prep work and actual discussion can be exhausting, but I feel like we learn so much more from this method.

In our MgmtAcc't class, Dr.Beatty has been talking about Open Book Management (OBM) throughout the semester as a topic that student may want to consider evaluating for their work environments. In fact, our final exam is being dropped in favor of a OBM project to create a plan to introduce OBM into one of the companies without our group. Our project (Team 5) will be for General Parts International (Raleigh, NC), a $3-4Byr privately-held company, where teammate Matt Johnson is a Sr.VP. After sending us a recent WSJ article on OBM, Dr.Beatty realized that Kindermusik (referenced in the article) was a local company and arranged to have their EVP/GM (Brian Healy) visit class and give us an overview of how they implement OBM within their organization. Mr.Healy did a tremendous job of sharing experiences and taking Q&A about how OBM helped shape the culture of Kindermusik, and focus each individual in the company on the "critical number" necessary to make that portion of their business successful.

The evening before our FinMgm't class, the amount of discussion between teams in trying to pull together all the information and analysis of the Whirlpool case was excellent. We were literally walking back and forth between rooms in the hotel comparing notes, debating analysis, struggling with how to handle missing data or assumptions, and generally putting in a ton of time for a piece of homework that effects a very small portion of our overall grade. By 2am we were completely blurry eyed and exhausted. But the journey was well worth it. Not only did we each learn quite about about the concept (capital budgeting), but I think we broke down a couple of mental barriers between the teams.

A few weeks ago a few of us where out late, signing Bon Jovi's "Living on a Prayer" with the local cover-band, and started talking about some ways that we could have a little fun and bring the class together a little better. Sometimes we get too focused on school work. The first attempt fell short (sorry Matt Kirk!!), but this weekend's Pajama Saturday turned out to be a big success. I'll get into that more later.

The 1st annual EXFT Ping-Pong Singles tournament reached the finals. This is our unofficial break-time activity. Congrats to Gregg Lewis and Brian Turner for reaching the finals. We're looking forward to the match next weekend.

So all-in-all a really great weekend. Lots of variety, lots of interaction within the class and outside of class, and I think the group is continuing to come together quite a bit more. It's a great bunch of people and a program that I'm proud to be a part of.

Connect the Dots - Activity Based Costing (ABC) and Web Computing

Wow, this Obama guy really is promoting change....2 posts about accounting in less than 2 weeks!!  

This article shows how a software developer created a model that leverages cloud computing (Google AppsEngine, Amazon S3, Twitter), which is driving new computing and business models, and embedded Activity Based Costing (ABC).  ABC is one of the early focus areas of our MgmtAcct class this semester.

So instead of having silos between the production groups and the accounting groups, it's tightly integrated via software that is open to all developers and all customers.  

While this is a small example, it does create an interesting blurring between IT, Ops/Production and  Accounting, especially when you start thinking about the business opportunities that happen when companies leverage the cloud and open development environments. 

Connect the Dots - Relating to what you're learning

In a previous post, I wrote about how an article about the accounting model at Apple helped me connect some learnings from FinAcct (deferred revenues) with something I'm interested in both personally and profession, since I work in the technology sector.  Amazing concept...personal interest in the subject, useful learning area...1+1 = 3!!  

One of the things I'm really enjoying about this semester is that every class seems to be very focused on including assignments that make you apply the current topic to an aspect of your current or former business.  Not only does it make you think about how it's relevant to your world, but it also forces you to go meet people outside your current functional area.  It's a networking exercise, which I believe is where at least 50% of the value of your MBA comes from. 

(btw - that value is a complete SWAG, so don't ask me to do an analysis of it....bad MBA student!!...not using objective numbers to justify a decision or conclusion)

But what happens when the course work covers an area where your company really doesn't focus on anymore?  This is somewhat of an exaggeration, but let me give an example.  In our OpsMgmt course, much of the focus is on manufacturing processes, the creation of physical goods.  We also cover service-centric businesses, but the majority is product-centric businesses.  I work for a high-tech company that sells products, but we don't "build" any of them anymore, at least not the finished good to our customers.  We write software, and then put it on commodity computing hardware, which is built and distributed by 3rd-party partners. Our product managers do handle aspects of this, such as forecasting, but it just becomes a number in a spreadsheet,  So as much as OpsMgmt is critical to business survival, it's a tougher connection point for me because it's not something I actively think about.  

So the $64,000 question becomes, what's the best way to connect with a new topic when the path for connecting is either very bumpy or non-existent?  

"Decision of the Week" - Building a 21st Century Car Company

OK, here goes...we're going to see if we can create some interaction on the site. This question is open to everyone, and all comments are welcome. I'm thinking this one relates to everyone (we almost all drive cars) and it relates to class, as we're taking a mix of Marketing, Operations, Technology and Accounting classes.

We've all been watching as the Big-3 US Auto companies fly to Washington DC and ask for money (bailout, bridge loans, etc.). I believe the total is somewhere between $25-$34B at this point. While these companies all have their share of HUGE challenges (retirement costs, union costs, inefficient operations, poor brand images, etc.), they also have a number of valuable assets (engineering knowledge, production facilities, etc.).  

So here's the question... 

What if the US Gov't (Congress, TARP, Treasury..whoever) decided that instead of giving the existing companies the $25-$34B, they were going to give it to you and asked you to create an automotive start-up. You'd be allowed to pick and choose from existing US Auto expertise, personal, facilities, suppliers, etc., because they all went under. How would you build a 21st century automotive company?  

Some initial thoughts...

My initial thought was to see if I could envision an automotive company being setup and run like a Silicon Valley company that sells hardware and software.  So this new company might look something like this:

• Design - This would be a combination of world-class engineering talent (in-house) and the use of crowdsourcing efforts to continue to stimulate innovative ideas and leverage "proudly found elsewhere" mentality for global ideas.  Build communities of potential consumers to give you real-time feedback on potential designs and demands.
• Production - Why do the automotive companies need to own their own plants?  I wouldn't advocate outsourcing all the production, especially since the funding came from US Taxpayers.  But I would advocate using some of the funding to kick-start a few production facilities that would be spun-off and allowed to compete against each other for the business.  
• Sales and Distribution - We buy books and media from Amazon or iTunes.  We buy groceries and homegoods from Target.  But we have to go to a brand-specific dealer for a car?  No way does that model continue.  And I'm not even sure the Auto Superstores are the right answer either.  
• Messaging & Vision - Maybe this is really advertising, but the American automotive companies really need to start making ads that create a desire to be in their cars. Knowing that I get the employee discount does nothing to give me that awesome feeling you get in a new car and the adventures it could bring.  

OK, that's a few starting points.  I'm interesting in other areas of innovation, or other aspects to consider for change.  Ideas are welcome....

2nd Semester Class Poll