After I sold Mordam Records, I came across and read Open Book Management: The Coming Business Revolution by John Case. It was published in 1995. In 1983, when Mordam Records was founded, I was already operating an open-book business. John Case stated in 1995 that it was a revolution coming.
It was a revolutionary idea in 2005, but it has become a reality today. If you are familiar with open-book management, I encourage you to be a part the business 2.0 revolution. Open-book management can be a great way to show authenticity and transparency in the world.
Open-book management was something I did not know existed when I founded my company. My culture was hostile to the rich becoming richer and the poor becoming poorer. In truth, I still hate that. The music community also believed that money was the root of all evil. While I don’t agree with the idea that money is evil, I do believe that it can be.
My first concept, my first idea that I held onto in my business, was to stop the idea of the rich becoming richer and the poor becoming poorer-the gap between capital and labor.
What can be done to bridge this gap? What I came up was a profit sharing: If I could link compensation to profitability of my business, then everyone else will prosper. If I don’t succeed, then no one else will. This seemed to be the fairest and most equitable solution I could think of. Now I realize that there is an entire school of business management organizational design based on this idea.
Second, I realized that I needed to teach others how to make money in business. To do this, I needed to share the numbers I used to create the profit shares. The people I worked with became more intelligent once I shared those numbers. They became my friends. They were as keen to prosper as I was. They were willing to put in every brain cell they could with me. They were more successful the smarter they became.
These are the five things you see when your books are opened in your business.
1. We will share your financial data.
You will share everything, but you will also be transparent with each other and work together as a tribe. Everyone will be watching their numbers the same way you do.
2. Everyone in the company will need to know what key performance indicators mean.
Sometimes key performance indicators can be included in financial information. What happens when people look at the numbers is that they begin to identify other important things in their business. They will keep an eye on you.
3. People gain clarity when they learn the language of business. Everyone becomes smarter.
4. As they become more intelligent and understand the language, they begin to think the same way as you.
They begin to think like owners. When people think like owners, they love and protect your business the same way you do. That is what I saw. It was not by design. However, I can assist you in this area by design.
5. It is exciting for everyone in the business to be compensated based upon the profitability of the business.
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