A Demographic Profile of Open-Book Management Firms That Play the Game

Through the years, The Great Game of Business, Inc. has worked with news entities, research organizations and academic institutions who are interested in studying the impact of open-book management. Currently, GGOB is proud to support the research of a senior at Yale College who is leading the effort to systematically evaluate the effect of open-book management on corporate performance. He is currently inviting managers of open-book firms to complete an anonymous, online questionnaire.

"Open-book management deserves greater academic attention," says Hutzler, who is also conducting in-depth case studies of several open-book firms as part of the project. "More data can be a powerful addition to the arguments in favor of its adoption, particularly among larger firms."

The adviser for this project is Charley Ellis, founder of Greenwich Associates, and author of several books on investing and management, including What It Takes, a look at the world’s best run professional firms. "We are confident that the insights from this questionnaire will bring important attention to the practice of open book management and the broader themes of corporate transparency," says Hutzler.

Kyle Hutzler can be reached at kyle.hutzler@yale.edu.

Demographic Profile

An estimated 4,000 firms in the United States are practitioners of open-book management, according to the leading business consultancy that specializes in training firms in the process of adoption. Open-book firms are known to be large and small; public, private, and employee-owned; and in diverse industries. The exact proportions of each, however, remain unknown.

While several books and articles have been written on open-book management and its practitioners, there has been very little formal analyses of its pervasiveness and decisions surrounding its adoption or its impact once adopted. This memo marks an attempt to do the former.

For this analysis, I use some 57 one-page case studies of open-book firms created and provided by the Great Game of Business, a group of consultants that train firms on adopting open-book management. I search each case study for details about each firm and its experience with open-book management and have manually compiled them into a qualitative dataset.

There is undoubtedly an inherent selection process to relying on the Great Game of Business case studies in which only the most successful adoptees are presented. Assuming, however, that GGOB has an incentive to showcase the broadest possible diversity of firms that have adopted open-book management, there is also a risk that the sample may not be truly representative.

Nonetheless, this represents a unique attempt to quantify the demographic characteristics of the types of firms that choose to pursue the more transparent and non-hierarchical leadership style that open-book management represents. All data is based on the year in which the Great Game of Business profiled the company

Highlights

• Open-book firms can be found in many industries – but most are concentrated in the industrial or business services sectors.
• 81% of open book firms have less than $100m in sales.
• Most open-book firms have been founded in the past four decades – but some longer standing firms have converted, typically after a change in ownership.
• More than half of firms have less than 100 employees.
• Most firms are private or employee-owned.
• There is nearly equal representation among firms who adopted open book management in a distressed (major decline in sales or risk of bankruptcy), stagnant, or proactive context.
• The most common open-book management practices adopted were targeted, short-term bonuses; extensive business education for employees; scorecards; and huddles.
• The most common metrics of focus cited in the company case studies were sales and profits.
• It appears that a principal value of open-book management is improved forecasting and smaller variances from plan. This positive impact was cited by at least a quarter of firms studied.