Running A Profitable and Efficient Business

Episode with guest: Rich Armstrong

President at The Great Game of Business

(This episode was recorded in October of 2021.)

Key Episode Take-Aways:

1. Shifting your planning process from this is leadership's plan to this is our plan. (click to jump to this topic below)  And when we use the word High-Involvement Planning, we mean it, we want to get more and more people involved in the planning process for the primary reason of getting buy in and confidence and ownership and the plan right shifting a plan from you know, hey that's your plan from leadership to this is our plan. And that's High-Involvement Planning. But it's not just about building financial plans or a budget it's really about building a long-term strategy and supporting those budgets and financial plans right and really understanding where you're going and how you can position yourself better in the future than you are today.

2. The key steps to plan effectively for your business. (click to jump to this topic below)  it really starts with those aspirational goals. Where do you see this business in three to five years? You know, what are not only the performance goals that you have for the company, let's say financial goals are growth goals, but also aspirational goals? What really do you want to achieve? I mean, what why are you here, your purpose, your values, those types of things. And I don't want people underestimate that step, because as the first step, because especially with a new, you know, workforce that that we're going to have in the future is that they want to be working with a company that has some meaningful goals, right?

3. Being able and prepared to do more with less to combat the labor shortage. (click to jump to this topic below)  But if I come back to the quote, I always use to explain what the biggest takeaway I get from the book, The Great Game of Business is that the most efficient way and most profitable way of running a business is just to teach people how the business works and give them a voice and how the business is run and provide them a stake in the outcome. And I think we're going to have to, you know, help people be more productive it starts with that is the giving them the business education, they need to make better decisions, but maybe faster decisions.

Continue scrolling to read the full episode transcription.

Announcer 0:00

Welcome to the "Change the Game" Podcast, where we share stories of open book management and highlight capitalism at its best. Thank you for tuning in to this episode of the "Change the Game" Podcast with special guest Rich Armstrong. In this episode Rich discusses our Great Game conference, highlighting stories from our All-Star companies who used The Game to thrive during the pandemic, how using High-Involvement Planning can help you better position your business for the future, and how great game practices can improve the productivity of the workforce to combat the current labor shortage. Here's your hosts Rich Armstrong and Steve Baker.

Steve Baker 0:36

Welcome to the "Change the Game" Podcast where we are changing the game by doing business differently and we're highlighting stories of capitalism at its best. I'm Steve Baker and with me as my special guest is Rich Armstrong, you may know rich as the president of the Great Game of Business. What you may not know is that Rich has been instrumental in the ongoing development of SRC holdings, open book management and employee ownership practices. Through really practical, firsthand experience, he's actually led several of SRCS different business units through the years. And while you may be looking at his picture on our podcast page and see the flowing hair and the beautiful smile, you probably don't know he's been here for 30 years. That's crazy. This guy's got Great Game of Business flowing through his DNA. This level of experience is pretty awesome. It's enabled him to successfully apply the practices in small businesses, midsize businesses, and large-scale companies all around the world. He co-authored Get in the Game as well as the update to the number one bestseller the Great Game of Business. And you should probably know this that Rich's guilty pleasure is making music in his home studio. He's a wicked guitar player in his 90s rock tribute band plush Rich Armstrong. Thanks for being our guest today. How are you doing?

Rich Armstrong 1:59

Good, Steve. Well, that's a quite the build up there. It's about half of it true.

Steve Baker 2:05

Well you deserve it

Rich Armstrong 2:06

Yeah, some of its true, but most of it is questionable.

Steve Baker 2:10

[Laughter] Well, we'll go with what I know you're a good guitar player. So yeah, but I also know that you're a fantastic coach. And I, you know, when we got ready for this podcast, I was thinking about just a few weeks ago we finished our 29th annual conference here in September, and with nearly 800 people coming out of their bunkers, you know, to participate in the conference, we were able to usher in over 40 companies to our All-Star team, highlighting the best of the best in open book management. And this is a real celebration, a lot of learning a lot of networking was really awesome to have that energy and, and whatnot. But still, in the week since we were in Dallas. I've taken several calls from longtime practitioners that were kind of asking for help, because after the kind of the renewal and the hoopla of the conference, they felt like they had maybe lost a little bit of something to the game, that their game wasn't what it once was. Have you heard any stories like that?

Rich Armstrong 3:14

Yeah, you know, absolutely, I think there's, there was two stories going on coming out of the conference. First of all, from the All Stars, it was really, really inspiring to hear from these companies that really leaned on the Great Game of Business practices during the pandemic, and found a way to you know, really keep their people engaged, keep their people safe, but also see some incredible performance, see the pandemic as well. I mean, as you know, with all those, you know, 40 plus companies, we had one company that had a layoff, and that was one person was laid off. And that was in a publishing printing business, right. So, there was some real success going out their people finding ways to keep the discipline of the game, going through the pandemic, but to your point, there was also some long-term players that found it difficult to keep up with that discipline. And you know, and they have kind of fallen off the wagon a bit in terms of their practice of the game and they've, you know, really have, especially coming to the conference to get re-energized about the idea and the concept and how it can help your business have really stepped back and said, look, maybe we weren't playing the game at the highest level, maybe we do have some things that we could do better. And that's encouraging to that people recognize that and we're ready to do something different coming out of the conference.

Steve Baker 4:45

Mm hmm. No, I love that. So, it's kind of two different themes that I'm hearing is kind of a getting back to basics, making sure the basic game is operating correctly, and then you know if it's a next level Question like we got that covered, but how do we set up the business for the next five to 10 years? And I'm going to talk about one of our speakers, Alan Beaulieu here in a few minutes. But let's look at back to the basics. What are some of the most common issues that folks face? In, you know, when they look at, hey, I don't know if we're doing the basic blocking and tackling here.

Rich Armstrong 5:20

Well, I think, you know in, I think you've had some conversations also, Steve with some of these practitioners that would admit that maybe they weren't as disciplined to the core fundamentals, right, like huddles, you know, they, you know, everybody out there had to find ways to huddle in a remote situation, or have to change up their huddles into smaller groups or whatever to accommodate the pandemic but some never did return, you know, to the practices, right, or didn't find a good mix of that. So, they're trying to figure out how best to huddle. And there are some great examples of people figuring out how to do it right, where maybe they didn't have the once a week, all company huddle that everybody's in the same room, and there's a lot of energy in that room, and but they figured out how to do that in remote small huddles throughout the company on a weekly basis. But the important thing is that, are they given people the information on it on a weekly basis that they need to make better decisions? Right Are they holding each other accountable for the performance, those kinds of basic fundamental things? And is what sometimes is overlooked? And for the, you know, for the trying to be more efficient, or finding, you know or maybe, you know, falling back in the excuse that Well, we're kind of in some unique times now we kind of lose those disciplines. And I think huddles is a good example, that I see across a lot of companies where they've fallen a little short and keeping that up.

Steve Baker 7:00

Yeah, you know, it's like, when you watch any TV show or movie, it's like when someone goes to see a therapist, the therapist just basically sits there until somebody blurts out their own problem, right. And that's sort of what I was hearing was, either, you know, we were too busy to huddle, or we didn't have enough people. So, I was scrambling around. So, I just didn't have time and yada. And the other one was minigames the idea of you know, we forgot that we have this powerful tool. But the interesting thing is I go back to coach Katie Davis, used to have a saying that would that you know, no matter what people's problem was, hey, our huddle isn't what it needs to be, you're our mini games we're playing, you know, as much as we should, or man, I just need a bonus plan. You know, she goes, there's 10 steps to that meaning, go through the 10 steps of implementation, because if you don't set it up for success in a logical, structured way, and you don't stick to those disciplines, chances are it's not going to work, the best bonus plan in the world won't work if you're not playing the game. So yeah, what I've been hearing for sure is, as you say, huddles. And the other one is, are we really allowing people to just say, hey, we've got something we need to address, let's make it fun, and really put our focus on it and do a mini game. So, I would say that that's a really good way to look at, you know, are we doing the basics? And are we looking beyond? You know, we have plenty of technology to join people together. We just have to be disciplined around using it.

Rich Armstrong 8:30

Yes, Steve and I think you're making also a good point when you're talking about the 10 steps. It's understanding how dependent each step is on the next. Right, and so if you're not huddling, you're probably not communicating the critical number very well, you're not providing line of sight for your folks on what they could be doing differently to meet that critical number. You're certainly not engaging them around, you know, the bonus plan. And so those things, if each one of those steps are very highly, highly dependent on the other steps, so it is very much a systems approach. And I think when there's a break in that chain, no matter where it's at, it causes other issues. And I think it just comes back to that discipline, and we see in huddles, you know, Minigames you mentioned as well as that. People because of time or whatever it was, and they didn't lean on Minigames and in time of crisis, those that practice alone can be very, very powerful, not only to keep people engaged and maybe have a little fun during a very challenging time. But it also is a way to create some wins when you know some small wins when the big wins or feel a little out of reach. Right? And so, I think people again, I you know, I've had clients, you know, and practitioners, you know, fully admit that they probably cut their mini game practices in half, or they didn't do any Minigames and they're going there, you know, regretting that at this point.

Steve Baker 10:15

Yeah, for sure. Well, it has been inspiring to see how practitioners, not just the, the 40 companies on the all-star team, but the hundreds of companies that we've seen, I just, I am inspired to see how they've leveraged their game to not just survive, but to thrive in the pandemic, for sure. So that's the basics. Now let's, let's go to the other one, kind of, you know, the bigger picture of what's next beyond the basics, and we're in planning season, it's fall. And man, we're hearing a lot of people talking about, you know, what we heard Allen Beaulieu, our rock star economist from ITR, economics, when he took the mainstage I mean, people were on the edge of their seat, what's it going to be like, what's the next three 5-10 years look like? And he laid out. I mean, basically, in 25-26, recession, 29-30 depression. And his whole message wasn't, this isn't Armageddon. This isn't a roadmap to the apocalypse, it's information. And you now have time to plan, and you don't have time to set up your businesses for success. And your you know, your lives for success. Instead of having it hit you sight unseen, right? So, it takes a little bit of a mind shift to go, like, what are we headed toward? And then say, Okay, wait a minute, how do we set up the next 5-10 years in this business? So, let's talk about how do we do that in the Great Game of Business? And I would lean toward you know, there's 10 steps to playing The Game or implementing The Game in the 10^th step is High-Involvement Planning. So, could you tell our audience what is High-Involvement Planning?

Rich Armstrong 11:59

Yeah, I think it is something that came out of the conference of people trying to understand Okay, if that's where we're headed, what can we do to make sure that we're positioned the best we possibly can if that's going to happen in the future and that is a perfect setup to what people are doing for long term planning right and Great Game has you know, certainly a process for long-term planning we call it High-Involvement Planning.

1. Shifting your planning process from this is leadership's plan to this is our plan.

And when we use the word High-Involvement Planning, we mean it, we want to get more and more people involved in the planning process for the primary reason of getting buy in and confidence and ownership and the plan right shifting a plan from you know, hey that's your plan from leadership to this is our plan. And that's High-Involvement Planning. But it's not just about building financial plans or a budget it's really about building a long-term strategy and supporting those budgets and financial plans right and really understanding where you're going and how you can position yourself better in the future than you are today. And understanding what the future may look like so you can make those necessary moves and I think that's where people were trying to think through coming out of the conference was go do I need to spend some more time in really understanding Do I have a discipline planning approach as well to make sure that I'm positioned the best I can in the future?

Steve Baker 13:35

Yeah, so you know, I read as much as I can to understand you know, different aspects of business because I didn't grow up in business and I'm telling you there's a lot of tech writers and tech entrepreneurs out there that are like you know, super involved in agile and scrums and different things like that I'm not knocking that what I'm trying to get at is that there's one guy Jason freed actually said this long term planning is fantasy and so it we are working with Great Game companies where we believe that planning works because we have a 97% accuracy rate on our five year forecast. I mean, I want you to address that what do you say to someone who says long-term planning is just fantasy

Rich Armstrong 14:22

Well, there's no question the speed of business is faster than it's ever been right, and the changes are happening and it's difficult to understand what's around the corner, right? But it doesn't eliminate the need to set goals right and understand what is your winning aspiration? What do you really want to accomplish in the future and then doing your best to understand what that future looks like? But if you know I guess I put it this way is that you know, it The first step is so setting those goals and you're going to find a way to get there, I can tell you that for SRC, over the years and many practitioners that have adopted this process, they set those long term goals just like Jack's 100 million dollar war chest, you know, 10 years ago, knowing full well that, hey, we got some understanding about what the next 10 years is going to be looked like, but we know there's going to be change, and it's nothing's going to, you know, be different than what we have planned. But we figure out how to adjust. And I think that's the Agile side of it is that the goal remains the same, but we figure out how to adjust based on the changes that's hit us. And so, when we're talking about High-Involvement Planning, or long-term planning we're not saying, you know, set a strategy, and set a plan or a budget. And, and it becomes absolutely fixed. You know, the goals and the aspirations we have for the business remain the same. But the way we get there is definitely going to shift, you know, we're more than likely going to have to adjust. So, it really comes back to frequently a plan, the frequency of your planning, right? people that think they can put, you know, a five-year plan together or an annual plan. And that's it, put it on the shelf, let's go. That's fantasy, but if you put a plan out there, put some goals out there, put a strategy together, and then you start to work that plan, day in day out quarterly reviews, those types of processes, discipline processes, where you can check that strategy and plan against the new changes that are happening in the marketplace. That's planning that's what we would describe High-Involvement Planning. And I think it's pretty agile.

Steve Baker 16:47

Yeah, it really is. I like to how you wove that into the conversation, kind of reminds me of the old Zig Ziglar and Stephen Covey comment about a plane doesn't get to point B from point A, and a straight line, you know, there's wind, and there's currents, and there's fuel situations and whatever. So, you're, you're always a course correcting when you're doing planning. So, what I took from your comment was, the further away the plan is, or the goal is, the less view we have exactly what that looks like. But as we get closer, five years, three years, one year, it gets very locked in, right. And so, if we think about a year plan, or a three-year plan, something like that, what's the number one predictor Rich of a successful, meaningful executable plan?

Rich Armstrong 17:36

Well, we've asked that question until a lot of people over the years and just to confirm what our own experience here is at SRC, but it always comes back to buy in and confidence of your people in that plan. Do they believe it? Do they believe this strategy, do they believe what we're trying to achieve as possible those kinds of things? And so, the cornerstone, I guess, of High-Involvement Planning for us is that confidence score is that once we've created the plan, and we've taken the input from our people, we've created a plan, we give that plan back to our people and ask, you know, how confident are you in this plan from zero to 100%? What's your confidence rating? And you know, you're going to get variety of scores based on the you know, their perspective and their confidence, but the it's less about the score and more about what can we do to raise that level of confidence, right, because if we can raise the level of confidence and buy in, we have seen a direct correlation and the ability to execute that plan and be successful with the plan when that happens, and so I think that we spent a lot of time doing that, and I, in our planning process, just to close the loop and make sure that we're all confident that once we step in to that next step of executing the plan, that we have everybody on board, and they and they have a level of ownership that just can't be matched.

Steve Baker 19:16

So, you're talking about the way to ensure a really successful executable plan is to involve the people who have to execute it. outrageous. I love it.

Rich Armstrong 19:27

So let it sound look pretty basic when you say it that way.

Steve Baker 19:32

Well, it's common sense, but I don't know how common it really is. When I talked to a lot of businesses out there, you know, it doesn't matter really what their operating system is, is that oftentimes they'll go on a, you know, a strategic planning retreat with their leadership team and come back with this great plan and then nobody cares. They weren't there, right. And so, it's their number, not ours. So, you're saying let's take the planning process out of the boardroom and get it to the front line and just like regular Great Game practices 101 is, let's teach Them the elements of success in business and, and ask for their input and try to build something meaningful. So, this sounds like a pretty involved process. Would you walk us through the steps of how to implement and use the High-Involvement Planning process?

Rich Armstrong 20:20

Yeah, you know, absolutely. One thing I would, if anybody's, you know, kind of thinking about this confidence score buy in, I would just test it, you know, why not? You know, just the next plan you put together, no matter how much involved, you've got your people just ask them, you know, how much confidence do you have in it? Another question that we like to ask is, you know, well, if this is the plan, and you have this confidence level, what would have to be true for this to be a successful plan, because they're going to tell you, here's, here's my concerns, but they're going to tell you in in a way that is actionable, right, it's going to give you things that, hey, if you could share this up, if you could make sure in my mind that this is going to be absolutely true, I can believe in this plan, then I think you got a stronger plan as well. So, I'm just I throw that out there. And just as a challenge for anybody that just hasn't done it, just to ask, you know, their confidence now be, you know, I do want to make sure people understand that a bit of the confidence score is the is going to be reflective to the level of business literacy you have built in your company.

Steve Baker 21:31

Hmm.

Rich Armstrong 21:32

Because you know, and this is why we start a lot with the basic practices of the game that raise the level of financial and business literacy first. Because if people don't know how the business actually works, and how they make a difference, sometimes their confidence rating is going to be naturally low, because they just don't understand it yet. And you need to teach them how the business works. So just, you know, just, if you haven't done that first step, you know, knowing that it's going to take a while to build up confidence in the organization where people are, right behind you on the plan. So, think about that before you do it as well.

Steve Baker 22:17

So, it's sort of like the on ramp to High-Involvement Planning is the 10 steps of Great Game of Business is to, is to actually set the business up for success by teaching people the basics and getting them started getting involved in the business, understanding a critical number, line of sight, everything you talked about. And then when you get to the planning process, the more that you do this annual renewal of high involvement, part of that rhythm of planning that you kind of mentioned, the more people will learn every year, and they'll continue to build on that. And I think that's a really important way to look at it. Because, I know for, for a fact, having not grown up at SRC, but joining you know, more recently, in the last, you know, 15 years or so, is that this was the first place where, you know, I was exposed to the financials exposed to the, the strategy of the business at a high level. And also, that, you know, I think I've always heard Jack, say we you should start with HIV. And yet, when you when you and I wrote the book, get in the Game on the 10 steps of how to implement it, step 10. So, it really speaks to, let's get them in the game. And then let's take them to the next level. So, walk us through this next level, this High-Involvement Planning.

Rich Armstrong 23:29

Yeah, I think a couple of things to address that. The other thing about the reason why we kind of positioned it as the 10^th step is that many of the businesses and the owners that we work with initially, are very much in the weeds of the business, right, they're working much either working in the business rather than on the business, most of the time, they're still actively involving trying to get that daily execution of the business. And they haven't really had the time to think strategically or long term. So, I think, you know, starting with the 10 steps, and building that operation, operating system inside and setting some goals and getting people educated, empowered to run the day-to-day business, helps the owner step away, and the leadership step away and look at the business long term. So, we talked about putting the execution system and the operating system in place first, and then now let's dream a little bit. Another benefit is that you've raised the level of business literacy in the company, that they can actually participate in planning that long term, right? And that that can be very, very powerful. In fact, you know, look out for the tough questions, because there's going to be a lot of tough questions from your people about challenging the plan and what you know, how they fit into it, and what capabilities you need to make sure that you're successful with it. But that's just to kind of set up why we look at it as kind of a 10 Step, it doesn't mean that it absolutely has to happen as the 10 step always, or how you could maybe if they have the bandwidth to go ahead and do everything kind of at once. But we do, you know, from our experience, raise level business literacy, and then get them involved in High-Involvement Planning, and dreaming the, you know, what we could do and starting to put the long-term vision together for the company.

Steve Baker 25:28

It stands to reason if the number one success factor of a meaningful executable plan is bought in, it would stand to reason that understanding would proceed by in so yeah, helping you understand the game they're in makes a ton of sense.

Rich Armstrong 25:43

Exactly. Now, in terms of HIP and the process, we kind of look at the same kind of processes with implementing the Great Game of Business is that there's kind of a 10-step renewal process for this. And, you know, for HIP,

2. The key steps to plan effectively for your business.

it really starts with those aspirational goals. Where do you see this business in three to five years? You know, what are not only the performance goals that you have for the company, let's say financial goals are growth goals, but also aspirational goals? What really do you want to achieve? I mean, what why are you here, your purpose, your values, those types of things. And I don't want people underestimate that step, because as the first step, because especially with a new, you know, workforce that that we're going to have in the future is that they want to be working with a company that has some meaningful goals, right? That we're here more than just the paycheck or the performance of the organization at some place, that I can make a difference, that kind of thing. And I think that steps important. And then just setting those long-term goals really kind of set up that performance yardstick that you're trying to put together anyway, with aspirations. The next step we kind of take is just reviewing your strategy. Do you really, you know, everybody has a strategy, they may think they don't have a strategy, but they're working on a strategy, it may not be a good one, it may not be the right one, but they're working on a strategy and really understanding what that is clearly can help you make the slight adjustments in it to be successful in the future. So, you, we want to know, where are we playing? How are we winning? What capabilities Do we need in place to be able to be, you know, to be successful and position us better in the future as a company? We then you know we really look at the growth opportunities we have ahead of us, right? Because everybody has some opportunities are initiatives that they're looking at, but we try to vet those really understanding? Are they real opportunities? are they worth doing? Or, you know, is it? Can we win at it? Are we, is it aligned with our aspirations and the strategy of the business? All of those are good questions, really understand? Are we growing in the right way? And are we growing, you know, you know, aligned with, you know, the aspirations of the business. And then we take all of that, that strategy, those aspirations, those growth opportunities, and really match it up against the marketplace? And I think this is the unique part of it is that it's a step that I see some companies maybe skip, or they think, you know, I got the smartest people in the room, we know our marketplace. But really doing the research and understanding what's going on in the economy. You know, where's the future client? What's the future climate look like? Like Alan Beaulieu shared with us? That's good to know, to be able to have the right strategy, right? What's your industry and marketplace? Is it growing? Is it? You know, is it slowing down is you know, is there more competition, that sort of thing? You know, what is the reaction? The competition? What's the customer outlook, all of those things, all that intelligence, they help you make sure that the strategy and the growth opportunities you've chosen are matched up well with the company, you know, with the marketplace. Right?

Steve Baker 29:11

Your people? Yeah, I mean, in every job I had before SRC, we benchmarked against ourselves. Yeah, what did we do last year? And who did we sell to? And it wasn't really it's not that we didn't want to know the other stuff. It just I don't think we knew how to get around to finding the information. And in doing something with it. So that's really great. You're looking at, you know, the game you're playing in the sandbox you're playing in.

Rich Armstrong 29:38

Yeah, yeah. And how you're positioned right, are you positioned better? It comes back to that competitive positioning, you know, now and in the future. When you have all that, you've matched up to the marketplace, you have your growth, you have your strategy, then you can really set good strategic priorities, right that the initiatives that you need to you execute on to be successful in the future. So, we set those objectives. And those could be short term objectives or long-term objectives like the next three to five years, what are the top three to five things that we absolutely have to hit the mark on to, to better position ourselves and to reach our long-term goals? But also, short-term priorities? Like what are we going to do in the next three to four months to be successful, that are aligned to those strategies? So, getting, you know, a pattern of long term and short-term priorities that help you move the needle on your on your strategy, not just the numbers, right?

Steve Baker 30:43

So let me ask you a question about that. Because I think listeners might be needing a little bit of clarification, if you're establishing your strategic priorities, how does that compare and contrast to a critical number for the year?

Rich Armstrong 30:57

I think the critical number is one of those priorities. Right? I think the priorities give your insight to what the annual critical numbers should be. And it is, you know, the idea that critical numbers really get centered on a priority that all of the employees can align themselves to, right. So, it's going to probably be difficult for the entire organization to focus on five or six, but definitely, they can focus on one or two, right? And that's where the critical number comes in. And then critical numbers typically from, from our perspective, more short term, you know, what's that major constraint? That's right, in a way, that's not that that's going to kind of, you know, put a roadblock in between you and what goals you're trying to achieve, right? So, it's a little bit of perspective. But the bottom line, critical number is a priority. And it's very strategic, because it's, it's helping you remove some roadblocks and constraints in your business.

Steve Baker 31:59

Perfect, perfect.

Rich Armstrong 32:01

Now all described there, Steve is really about clarifying the strategy, right? And making sure the priorities are set. Because I think that needs to be in place before you ask your salespeople and everybody else in the organization to start building plans around it, right. And I think too many people jump to, hey, we got to put a sales plan or a budget together, and they go right into the budget planning, right, and the sales planning. But if they really ask themselves, do they have a clear understanding of what our goals are and what our strategy is, so we can build a sales plan and a financial plan that reflects that. So, we spent a lot of time with that, to clarify that. And we build that we build, we start with the sales plan. You know, the sales plan is the first step in building a plan buying that strategy. And we start sales because it's, you know, there's a reason why it's the top number of an income statement, right? Because every other decision is going to be made based on what that sales plan is, how do we support that? So that's where we do this confidence score, you know, we start with that to say, hey, give us the sales plan that reflects our strategy. And now how confident are we in that sales plan. And if we have a high level of confidence, when we ask the rest of the organization to put budgets together, support that sales plan, more than likely those budgets are going to be more realistic, right? And more aligned to what resources we need to support the plan, rather than what I did last year, or here's what I want, but not necessarily what I need those kinds of things that happen in budgeting, you know, as a leader, if you're not, you know, if you're not setting it up properly, those are the decisions you got to make right? Is it fluff? Is it too much? Is it they're asking for too much? Are they asking for too little? Those kinds of things, leave that to your people. But just what resources do I need to support the sales plan that we agreed we all believe in? Is really that process. And that's how we build a financial plan. From a line-item ownership level all the way up is based on that confidence. The last two steps of this thing are built around people plan it starts with the people plan is that understanding. Do we have the talent and the resources and the bench strength to be able to really deliver on this short- and long-term plan that we've set for ourselves? And that, you know, has a succession component to that, but it also has a development, you know, how are we developing our people? How are we recruiting? How are we retaining our people as well? And then the last step circles back to the game is the work the plan right now that we we've planned the plan. Let's work the plan. And that comes back to the basic steps of the game right critical member huddles stake in the outcome bonuses, minigames, scoreboards, all those things that help us work the plan and hold each other accountable for achieving it.

Steve Baker 35:18

You're reverse engineering this long-term plan and working your way back to the executable steps and the things that must happen. But it's all with this eye on a longer term, building a great company goal, right? It's not just about the stuff we make the services we provide the company is the product. And that's one of the stickier statements that I've ever heard Jack say is that, you know, his big realization was we aren't just making engines here, we're building a great company, something that will last and give us everything we want. The job security, the paychecks, the benefits, the bonuses, the career paths, everything you want, as an employee comes from thinking and acting and feeling like an owner and High-Involvement Planning or HIP gives folks that opportunity to shift from being an employee to thinking more like a businessperson. I really love that. So now we just came out of our semiannual SRC High-Involvement Planning meetings, literally just a couple of weeks ago, I would love it if you talked a little bit about what that feels like. Where you've done the planning, you've done the work, you've looked at the competition, can you talk a little bit about that Rich?

Rich Armstrong 36:33

Yeah, it's part of the as you mentioned, it's part of the rhythm of planning, right? So twice a year, we take these high involvement plans, and we present those first to our own people for their education and understanding and in that with a competence survey, right? How confident they are with it. That with SRC being a holdings company, we roll that up to presenting those same plans, to our board of directors and our sister companies. And that's another level of accountability and another level of confidence as well. What are these plans including, and it basically is what I described is that it shows what our strategy is, it shows what our long-term short term and long-term plan is, what our next year's sales plan is, and what our three-to-five-year plan looks like? And it matches that up with information from the marketplace, that gives confidence in that plan, right? That says okay, here's what we believe the competitors reactions are going to be, here's what we believe the trends are in terms of the economy, the industry in the market, that we're in, here's the customers outlook and perspective, all of that to support that a, the plan that we're putting in front of you, is supported from the market, so becomes a plan that your market and your people can support, right. So that's the element in the whole plan, then this is the last slide of every one of these High-Involvement Planning sessions is the employee's confidence. And it just shows that, hey, you know, you're probably not going to present to the Board of Directors a plan that has confidence rating somewhere in the 60s or 70s, right, you're going to probably try to fix that before you go to the board with that. But you know, you're you know, expect that expect, you know, that sometimes you're going to have plans that your people don't clearly understand. or they don't believe because a variety of reasons, but it's all things that you can fix, you know, that you can work on. If you believe that a higher confidence rating will raise the level of probability that you will execute the plan, right. And if you really focus on building confidence, you're going to have a more meaningful executable plan. And the board of directors for SRC definitely believe that too. And they look at that score, and they want to understand what's behind that score. And because they feel like if you're ending with a high confidence rating from your people, then they can have confidence in it as well.

Steve Baker 39:30

And confidence is the name of the game for sure. I wonder if you would share with our listeners. Barry's quote, you know we have a phrase in the principles of High-Involvement Planning that says no more fairy tale planning. And I love what you just said about it's so important to have the buy in and the confidence of your people because they have to execute the plan. But can you share with folks what Woodbury has always said about planning The SRC way compared to other companies.

Rich Armstrong 40:03

Yeah, it goes back to a story I, you know, I was in one of these planning stages in the early, early days when in Steve's referencing a gentleman it's on our board that was a senior executive of John Deere, this is the guy that reported directly to the CEO of John Deere. So, it's, this is a guy that's been around, he was, I think he was more than 40 years with John Deere. And this is one of his first times, experiencing our High-Involvement Planning sessions where we're presenting to the board. And he made a comment at the end, he goes, you know, I've, I've sent in on probably 1000s of sales and planning presentations, and they tend to always start with, you know, once upon a time and we all live happily ever after, right? They, you know, they, start with, you know, here's, what it is, but we're all everything's going to be you know, doves and rainbows as Jack would say, in the end. And he said that what I saw different in these planning sessions that everybody was very honest, very vulnerable, about what is going on in the marketplace. And they were, they were just we were just as confident in sharing the challenges are the weaknesses we have as we do the strengths. And I think in doing that, you create a more reliable plan, and being honest with yourself, you know, and I think he liked that. And that's kind of the, you know, no more fairy tale planning, right? It's, it's good, let's get to the brutal facts and talk it out. And in a bet, you know, best more reliable plan will emerge?

Steve Baker 41:56

Yeah, for sure. Well, I do have to say that, you know, from my perspective, you know, coming in. And now, of course, I was part of the presentation team that laid Great Games plan out for the next five years for the board at that meeting. And, I mean, it is pretty cool to know that we have to teach nine other companies that don't know about the consulting and training world, we have to teach them our business in 30-40 minutes, just like they have to teach us about, you know, mining equipment or, you know, engines for General Motors, or Harley Davidson. But it's just very interesting that we basically are doing a VC pitch to our own people, to see if they'll invest in us. And I just think that's so powerful because that truly is, you know, people do support what they help create. So, if they buy in, they're much more likely to commit if they commit, they'll execute. And I think everybody listening would want that. So, we've talked about kind of the 10 steps of, of High-Involvement Planning and some of the bigger concepts let's, bring it down to, you know, if we look at, in five to 10 years, we've got recessions, depressions, all kinds of big economic things coming up. And instead of, you know, worrying and fretting and becoming unstable around, oh, my God, the sky is falling, and taking a position of power. What would you take away? I mean, if I asked you the question of what should we be asking, what is the one thing that we heard from Alan and from jack, you know, the smartest people that we know, are seeing something in the future with the great resignation? You know, people aren't coming back to work. There's a whole lot of stressors out there, but what are you hearing Rich?

Rich Armstrong 43:54

Well, I definitely, you know, we had Alan on our podcast, what, a month ago, or following the conference as well. And, you know, we really push in with Alan to not only talk about what the future looks like, but what are some things or strategies of businesses could take to position and bet the best for 2026 and 2030.

3. Being able and prepared to do more with less to combat the labor shortage.

And one that he kept coming back to was that we're going to is productivity that we're going to have to figure out how to do more, with less because of the workforce, labor shortages. We're going to have to crack that code. So how does it company do that? I think is the question to ask and Jack is definitely asking from a manufacturing standpoint. Now, I want to be clear, when we talk about productivity, we're not just talking about, you know, manufacturing, you know, workers or, you know, a workforce, you know, we're talking about you could be, as you've pointed out, Steve, a programmer, a tech programmer, you You're going to have to maybe do with one programmer versus two. And how do you how do you help people be more productive then. And I keep coming back and others may be thinking from a very high level and not in wanting to try to get down to some practical ways. But if I come back to the quote, I always use to explain what the biggest takeaway I get from the book, The Great Game of Business is that the most efficient way and most profitable way of running a business is just to teach people how the business works and give them a voice and how the business is run and provide them a stake in the outcome. And I think we're going to have to, you know, help people be more productive it starts with that is the giving them the business education, they need to make better decisions, but maybe faster decisions. And if you're raising that level of literacy in the company, productivity is going to go up. Because people are more aligned, people are more educated, and they understand the business at a level, that they're just going to be faster and more productive and making the right kind of decisions every single day. And we've seen that in our own organization, you know, at SRC, but we've also seen that with other companies as well. There's a lot of other little tactics that you can do to get be more productive. But I think it starts with, man, if I had a workforce that woke up every single morning, understand exactly what's going on in the business and how I make a difference. How more efficient can you be with an organization than that?

Steve Baker 46:54

Man, what a great way to wrap up this podcast. It's like Jack Stack’s higher law business number two, pretty easy to stop one guy, pretty hard to stop 100 I involvement planning. Rich Armstrong Thank you so much. I think we should do this more often and, you know, delve into the practices and the ideas that great game really tries to teach and promote out there in the in the marketplace. Thanks for being with us. I’ll see you.

Rich Armstrong 47:23

Yeah, Steve. Thanks everyone that joined us.

Steve Baker 47:26

Yeah, so if you want to learn more about High-Involvement Planning, please go to Great Game.com and look under events and join us at the next High-Involvement Planning workshop. It's a great way to spend a couple of days actually delving into the 10 steps. And then all of the different success factors and practices that we use to actually involve more people in your planning process and hence make a better executable plan. So, let's keep the conversation going. Send us your questions, your stories, your best practices, your ideas, your challenges, and of course your victories. That's capitalism at its best. Thanks, and we'll see you next time.

Announcer 48:06

The "Change the Game" Podcast is produced by the Great Game of Business. To learn more, visit greatgame.com