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Kevin & Jackie Freiberg

Ownership is a State of Mind, Part 1

screamThe great writer Robert Frost once said, “Isn’t it a shame that when we get up in the morning our minds work furiously—until we come to work.” In the new economy this can’t be true. Everyone must come to work fully engaged and ready to make a difference. A global revolution is under way and it’s calling for gutsy leaders—people who can inspire knowledge workers, idea merchants, and business innovators to exercise their own brand of leadership by assuming ownership and personal accountability. The future belongs to those who understand the power of culture and use it to feed the entrepreneurial spirit. Here are 21 ways you can begin to create a culture where people have a vested interest, emotionally as well as intellectually, in the success of your business. Stay tuned for parts two and three because we will add to this list.

Equip People to Think and Act Like Owners

If you want your people to think and act like owners of the business, you have to do more than just offer profit sharing, provide stock options, and share financial information. You must educate them. It means demystifying the language of business, explaining what the numbers mean, teaching how that information can be applied. At Semco, one of the companies we will tell you more about next month, every employee not only receives the company’s financial statements, but is encouraged to attend classes on how to read and analyze these reports. Employees must understand how economic value is created, how revenues and expenses translate into profit, how they can create financial security for themselves and the organization, and what investors contribute and want in return.

Communicate everything you can to your associates. The more they know, the more they care. Once they care, there’s no stopping them.

Sam Walton

Ownership requires a sweeping perspective, not a narrow focus on a particular product or service line. It demands great execution in the present with an eye simultaneously kept on the future. Employees must be taught to see themselves as the people who make the business grow. But conventional organizations are designed to do the opposite. Focusing employees on one narrow part of the organization, they send the message: “Take care of your functional area. Let senior executives worry about the company as a whole.” This attitude is obviously demeaning (since it assumes that only those at the top are capable of strategic thinking), and it instantly shuts down imaginative, creative thinking. It ignores the fact that the company’s success will be determined by the leader’s ability to draw upon and leverage the brain-power and heart-power of the whole organization. It practically guarantees mediocrity at best, and invites downright failure.

Change the People Who Make the Rules

Ownership doesn’t only mean changing the rules; it means changing the people who make the rules. Suppose you were to allocate the freedom to hire employees, set targets, and establish schedules to those in your company closest to the front lines. Chances are, those employees would feel more committed and work more productively because they would know that their opinions are trusted and that they are considered the experts of their world.

Examine the significant areas in your organization and find five where you can relinquish control and trust your people to do the right thing. If anyone habitually abuses this freedom, deal reasonably but firmly with him or her.

Liberate Talent

Ownership means that people are free to act without the fears that squash initiative. When employees have to cling to safety nets, they are certainly not going to commit themselves to a system in which they have responsibility and accountability. Self-preservation becomes the norm.

quad graphicsThe late Harry Quadracci, founder of Quad/Graphics, one of the world’s foremost printers, pushed his people into thinking like owners and assuming the responsibilities that viewpoint engenders. In one characteristic move, he financed an expansion of the trucking fleet by inducing his drivers to find loads for their return trips. Handing them the keys to their trucks, he announced that they were all now owners in the corporation’s new division — DuPlainville Transport. How they made the rigs profitable on return trips was up to them. When the drivers asked Quadracci how to do that, he answered, “I don’t know anything about driving an 18-wheeler.” To their own amazement, the drivers found loads and made their new division work.

Turn Up the Volume on Trust

Ownership is a radical approach because it recognizes that an organization’s true experts are the people on the front lines, and trusts them to operate with the organization’s best interests in mind. And that trust will bolster employees’ self-confidence and encourage them to take on even more responsibility. Herb Kelleher, Southwest’s chairman, once observed, “You build self-confidence when you give people the room to take risks and you give them the room to fail. You don’t condemn them when they fail, you just say, “that’s an educational experience and we’re going on from here. We’ve just spent a good bit on your education; we hope to see you apply it in the future.’”

We have little patience for managers who ask, “How can we be sure that people will act responsibly with the level of power you’re talking about?” We tell them that some people may disappoint them, but we’re willing to bet that the majority of their workforce is made of up individuals who, once they have a financial or emotional stake in the business, will take responsibility for themselves and those close to them everyday. (If not, they’re making poor hiring decisions.) Most are hardworking dual-career couples. They pay their mortgage or rent on time; they lug their kids to and from school, soccer, piano, and a whirlwind of other activities. They attend church, mosque, or temple. Many are involved in a charity; others are room mothers and Cub Scout leaders. Yet, some managers question whether these people can be trusted, whether they can handle the responsibility. Such managers are not just out of touch — they’re arrogant. They should have the guts to let go!

Stanley Steemer has built a national chain of franchised carpet-cleaning shops on a base of gutsy leadership. Ask Phil Dean, who operates one of the most successful Stanley Steemer franchises in the United States, what can happen when employees are trusted. His response: “I delegate everything. My feeling is that if somebody’s on your butt, one of you doesn’t need to be there. And I really push that. I put the decision making at the lowest possible level. It costs money, and it takes time to develop people that way, but I have no turnover with my managers.”

The cultures of trusting companies embrace the concept of employee commitment and reject the concept of top-down compliance. In a trusting company, employees are invested in their jobs because they want to be, not because they have to be. The challenges we face today require committed people. And the key to developing them lies in the hands of leaders who know how to liberate talent.

Reward Intelligent Failure

Engendering a spirit of ownership means helping people get over their fear of failure and hesitancy to assume responsibility. People are often reluctant to “step out” or assume responsibility for their honest failures until they are assured that it is safe to do so. Despite your entreaties to initiate projects, take risks, speak their minds, and confront the boss, employees still fear that doing so could jeopardize their jobs. In this area, one thing is certain: People will not overcome that fear until they witness someone rewarded publicly for an intelligent failure. When you explain to your employees that failure is often the forerunner to success, they must trust that you will treat them accordingly.

Empower the True Experts—Those Closest to the Action

When the State of California asked the airlines to use ground equipment powered by electricity instead of gasoline, two of Southwest’s maintenance mechanics in Phoenix, Arizona, Rick Denny and John Garamman, sprang into action. In their research, they discovered that a new electric tug — equipment that pushes the plane away from the gate — cost $160,000. NASA engineers said they could convert each tug from gas to electric for $90,000, offsetting the price of replacing the equipment. Still not content, Denny and Garamman figured out how to do it themselves for $27,000, a savings of $133,000 per tug. Converting an average of 6 tugs at 7 locations throughout California would save Southwest $5.5 million; if the airline were to implement the conversion at all of its 58 locations across the United States — which it later did — the company would save $45 million. It’s safe to assume that Rick Denny and John Garamman have the satisfaction of knowing that they have made a valuable contribution to Southwest and that their contribution meant increased job security.

The true experts in any organization are those closest to the point of action. They know where the waste and redundancy occurs, they know where maligned processes break down and hinder them from doing their jobs and they know where the opportunities for improvement and growth exist. More often than not, the further away from the “trenches” that decisions are made, the worse the quality of those decisions.7. Keep No Secrets

Keep No Secrets

The more people know about your business, the more they will care. When an organization keeps secrets, people disengage because they feel left out. Morale and productivity suffer because employees bring less of themselves to work. How can we expect people to think for themselves and work to build a strong, profitable enterprise if they have no idea what goes into creating the bottom line? How can we make them responsible if they don’t know how their actions affect the business? We are baffled by CEOs and CFOs who will share financial information with golfing buddies, business reporters, and analysts, but clam up when it comes to the employees who have the biggest impact on the organization’s success.

You might be thinking, “Yes, but what if the information we share gets out to our competitors?” We’ve got news for you: Your competitors already know most of that. Internet chat rooms, former employees, suppliers, and customers, not to mention the media, all are powerful sources of intelligence. In fact, if you want to try something gutsy, get your information-technology or marketing people to identify two or three industry chat rooms and find out what people are saying about your products and your business. How much they know might surprise you. Our advice: Spend more time figuring out how to keep your people on the cutting edge of information and worry less about keeping it away from the competition.

Keeping people informed conveys trust and inspires accountability. It treats people as responsible adults who are fully capable of learning how the business works, and who are willing to do what is best for the organization. It tells them, “We want you to have all the information you need to be creative, and to become more deeply engaged in the business.”

Whole Foods is especially passionate about sharing information with everyone in the company. See Whole Foods—A Disciplined Democracy. John Mackey calls it a “no-secrets” management philosophy: “In most companies, management controls information and therefore controls people. By sharing information, we stay aligned to the vision of shared fate.”

The curious Whole Foods team member has access to nearly as much operating and financial data as top management. In all stores, there is a sheet posted next to the time clock that lists the previous day’s sales, broken down by team. Another sheet lists the sales numbers for the same day the year before. Once a week, sales totals for every store in the company are posted. And once a month, stores get a detailed report that analyzes sales, product costs, wages and salaries, and operating profits for every store. Because the data is so sensitive, it isn’t posted publicly, but is freely available to any team member who wants to see it. And store managers routinely review it with their team leaders. Since individual teams make decisions about labor costs, ordering, and pricing — the factors that determine profitability — the reports are indispensable.