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The Critical Number is at the Heart of The Game

Jul 14, 2020 by Rich Armstrong 0 Comments

 

 

 

The Critical NumberInspired by Rich Armstrong & Steve Baker's book, Get in the Game: How to Create Rapid Financial Results and Lasting Cultural Change.

The original Critical Number™ for Jack Stack and the people of SRC was obvious. With a debt to equity ratio of 89:1, they needed to make the bank loan payment. If they didn’t do that, nothing else mattered—their jobs would be gone. Debt was their weakness and they needed to drive it out of their business.
 
Jack used that one common goal to rally people, get their buy-in and educate them. Not only why it was critical, but how they could influence it. Armed with a common goal people could understand and buy into, Jack could teach debt to equity, along with all the related financial education in their weekly Huddles. And after a year and fifty-two lessons, you can be sure they learned it.

Right now, there is at least one financial or operational number in your company—something right at the heart of your business—that if improved in the short-term, would have a dramatic effect on your business. Does every single person in your organization understand how important that number is?

The Critical Number defines winning. It rallies people around a common goal and provides a focus on what’s most important and critical to the company’s success. When the Critical Number is correctly identified, targeted, and tied to a reward—the rules of The Game have been set. The Critical Number becomes the focus of The Game.
 
Our classic definition of Critical Number is ‘an operational or financial number that represents a weakness or vulnerability that, if not addressed and corrected, will negatively impact the overall performance and long-term security of the business.’
Think of it as your ‘The One Thing’. The one thing that at any given time, is going to have the greatest impact on your business. The one thing you must improve to succeed and that clearly defines winning!
 
Once you have selected your Critical Number the next step in the process is to communicate and educate your people on The Critical Number. Use the following question to develop your communication and education plan. This will help you align your team to the importance of the Critical Number and how their input provided direction in the selection of The Critical Number. These questions will also help you start the education around the Critical Number.
 
Critical to success
    • Why is the Critical Number important to the company’s success? Your people’s success?
Reality based
    • What issues discussed in the business review process supports the selection of the Critical Number?
Impactful
    • How will this Critical Number make an impact on the company?
Team Supported
    • How has the team been included in the selection of the Critical Number?Increasingly important
    • If you do nothing with the Critical Number, what would be the impact to the company?

Common goal

    • Who can directly or indirectly impact the Critical Number?

Attainable

    • Is the achievement of the Critical Number reasonable & achievable?

Learning opportunity

    • What increase business literacy can be realized by focusing on the Critical Number?
This blog was inspired by Rich Armstrong and Steve Baker's book Get in The Game: How to Create Rapid Financial Results and Lasting Cultural Change. Get your copy to discover the process and toolsets to identify and rally your team around the Critical Number, and the important ideas companies often overlook when selecting a Critical Number. 

Find out more about how to open the books and empower your employees in the step-by-step guide to implementing the Great Game of Business below.

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Topics: Open-Book Management, Transparency

Rich Armstrong
Written by Rich Armstrong

Rich Armstrong has nearly thirty years of experience in improving business performance and employee engagement through open-book management and employee ownership, with service as a business coach and as a current executive at SRC Holdings Corporation, a thirty-five-year old employee-owned company and one of the United States’s top one hundred largest majority employee-owned companies. Rich has been instrumental in the ongoing development of SRC Holdings’ open-book management and employee-ownership practices through practical, “firsthand” experience leading several of SRC’s business units. This experience has enabled him to successfully apply these practices in both small- and large-scale company implementations around the world. He coauthored the update to The Great Game of Business—20th Anniversary Edition. Rich is a graduate of Pittsburg State University and serves on the board of the National Center for Employee Ownership (NCEO). He cherishes his time with his wife, Alicia, and four children, Ryan, Ethan, Rylee, and Jackson. Rich’s guilty pleasure is making music in his home studio and playing in his ’90s rock tribute band.

About The Great Game of Business

Our approach to running a company was developed to help close one of the biggest gaps in business: the gap between managers and employees. We call our open-book approach The Great Game of Business. What lies at the heart of The Game is a very simple proposition: The best, most efficient, most profitable way to operate a business is to give everybody in the company a voice in saying how the company is run and a stake in the outcome. Let us teach you how to develop a culture of ownership, where employees think, act and feel like owners.