12 Mar A Tale of Fern & Flubber
For roughly four years now, we’ve been practicing OBM (Open Book Management) here at MMD. The main tool used in the OBM process is a whiteboard in our office, which allows our staff and even our customers to see every detail of our entire financial picture: revenue, profit, cost of goods, cash flow, and expenses – broken down by the key numbers we want to track.
OK, you can pick your chin up off the floor. I know it sounds crazy, but it’s going to be fine – I promise. 😛
MMD’s OBM board is named FERN (ForEver Running Numbers), and it’s located on a huge wall in our office, in plain sight for the world to see. FERN showcases forecasted, planned, and actual financial information. It also displays information about our “Hot Pockets”, which are non-financial stats that we want to keep track of. Each line on the board has an owner (one of our team members in the office/warehouse) who reports data weekly, and adjusts the forecasts if needed.
It happens all the time that customers come into the office, catch a glimpse of FERN, and ask, “what the heck is that?”. I ask them if they have time for me to explain, and if they do, I walk them through what FERN is all about, and how to read our financials and what we’re measuring.
In my opinion, showing our staff and customers our financials this transparently is about as vulnerable (in a good way) as a company can get. The OBM concept was first introduced to me in a book I read called The Great Game of Business, by Jack Stack. When I first read it, I didn’t understand what the heck Jack was talking about. I was more obsessed with the story in the book about a bank that loaned someone $8.9 million dollars with $100k down. I filed away the other concepts that were talked about for “maybe someday I’ll come back to these.” But when I attended the Small Giants Summit in Detroit, Michigan in 2018, one of the attendees described the concept to me in a way that wasn’t so confusing. OBM became so interesting to me that I pursued learning everything I could about it.
I found a two-day OBM seminar taught by Zing Train in Ann Arbor, Michigan, which was a natural fit for MMD given that I had already made a point of becoming a company that operates based on principles of transparency. In a nutshell, the OBM concept helps team members to see how their specific role fits into the company’s overall financial plan, and how they have the power to impact the bottom line. It also proves that you can still be a strong, successful company even if the areas you’re not doing so well in are public knowledge.
There are opportunities for all positions within your company to participate in OBM. All you need are staff members who are willing to learn, and excited to find that their impact on the bottom line doesn’t have to come from huge change.
As I’m writing this blog, Paul, our delivery driver, has become the “owner” of a new line on FERN. His line on FERN tracks how many full delivery trucks go out a week. This is a critical metric, because we pride ourselves on not only being efficient, but also caring about the environment. Paul’s operational line can impact our bottom line in a big way, as it has to do with things like being more fuel efficient, productive routing, timely deliveries, happier customers, etc. By tracking this line, it will help our entire team, because it will improve everyone’s quarterly gain share at MMD (if you want to know more about gain share, shoot me an email: email@example.com).
I’ve been lucky enough to witness OBM in action at other companies, and I can tell you that staff tend to get really jazzed about it. From Zing Train, to Joanna’s Marketplace, to Swift Passport Services (and many more companies across such a wide variety of industries), there isn’t an business I can think of that couldn’t benefit from opening their financials. Trust me – your employees will be empowered and inspired by OBM.
In terms of our personal experience, it took MMD probably three years to arrive at the right financial ratios and Hot Pocket items to measure, but it was worth it, and FERN keeps evolving every year. We keep getting better at it!
Recently our sister company Flat Can Recycling (www.flatcanrecycling) produced its own OBM board, Flubber. Amy, our Recycling Manager, was given the honor of naming the board, since she’s the one managing the recycling. She has a great handle on recycling, so next up, I’m going to educate her about finance. We determined what we want to track, and we’ll be reporting on her board at our weekly huddles (team meetings). Amy will actually be explaining the board to ME at our next huddle, and I’m excited to hand her the reins. Oh yeah – and did I mention that Amy is 18 years old?!
In closing, if this post resonates with you, I strongly suggest that you give OBM a try. Great ideas on how to improve your bottom line can come from anywhere within your organization, if you’re willing to give your team the opportunity to understand your business’ finances.
The folks who inspire me everyday: