This section details the evolution of the design over the course of 6 months of development at Rak Tamachat. From my analysis early on it was clear that Open Book Management would have a profoundly positive effect on the organization and community but it took many months of incremental design to find a system that met the goals and created the advantage I knew was possible.
As mentioned in the Goals and Analysis section, the early financial record keeping and tracking system was designed based on single-entry bookkeeping. This system was implemented early on with a simple petty cash drawer and ledger book to give community members access to money for market expenses, project resources and tools.
The ledger book was the key element to the function of this design. Any time someone needed to make a purchase, they would take an amount from the petty cash drawer that they expected would cover the cost of what they needed, go to the market, make the required exchanges and then return to the petty cash drawer any leftover change. The purchases were then recorded in the ledger book and categorized based on whether the money was spent on “food” or some other project “task”.
The project owner had agreed to pay 105,000 Thai Baht (THB) per month of which we would break into 3 categories as established through an agreement with TGI regarding how the project would be funded and managed. 30,000 THB per month would go into a “food” budget, 30,000 would go toward a “task” budget, and the remainder would be divided amongst the 4 mangers and one additional account, in case additional managers were ever called for.
Occasionally, the ledger book would be recorded in a spreadsheet and balanced against the moneys received to insure that proper accounting was taking place and to catch any potential discrepancies before they became compound problems.
This is very standard financial tracking. With these types of financial systems there is no real forward looking element that provides direction or creates a culture of proactive management. On the contrary, the culture that a backward looking tracking system creates is one of reactionary spending. This is typical of almost every community, business and project I have ever encountered and, I believe, is a perhaps one of the most significant factors in the failure of so many of these well intentioned projects.
Below I’ve attached two spreadsheets that were used in early tracking of our financial spending converted to PDF. Because of the conversion to PDF these documents may be a bit hard to follow but they are only meant to provide an example of the rudimentary and cumbersome systems we were using at the time.
Design Phase 2 – The Game Begins
As the project continued and more time was afforded to design a more forward looking and interactive financial system, I began with a simple “scoreboard” design to help introduce the community to Open Book Management and the financial systems they were using and working with but had yet gained any clarity into.
This early scoreboard gave us a context from which to plan our financial direction. But, it was easy to see that it did not effectively accomplish all the goals and many gaps in this design soon became apparent.
Open book management basics
Before you can see clearly how this board worked (and what its gaps were) you’ll need a framework for how Open Book Management is used and works.
Open Book Management utilizes game theory as a way to engage “players” in the financial workings of a business. The idea was developed through Jack Stack who recognized that business operations can be related to that of a game. The trouble is, the players (in the case of a business or organization, the employees or volunteers, in the case of our community, the interns and community members) tend to only know one thing about the game they are playing: what is out of bounds.
In a business, how common is it to know all the things for which you might be reprimanded but never really know the goals of why you are there or how those goals benefit you, the community or anyone else (save maybe some already wealthy suit)? How motivating is it to know all the things you might get in trouble for, but nothing else?
Jack recognized that those playing the game lacked motivation because they knew only what was out of bounds; not how they score points; what the score was and; most importantly, whether or not the team was “winning”. To resolve this, Stack determined that what was needed was, in essence, the business equivalent of a scoreboard.
The board we created for Wheatsville’s Open Book Management system was adapted from our consultation with Zingerman’s ZingTrain. ZingTrain gave us the tools to understand game theory and impressed upon us the most important thing, to define a goal or target number. That goal becomes the “plan”. In the case of our Wheatsville game, we determined the goal to be a target Margin Minus Labor (MML) metric. The MML was then backed out into a set annual labor and sales goals for each department. This annual plan was then broken down into quarterly goals that had a bonus program tied in if we managed meet the planned MML and thus win the game and the attached bonus (MML also = Make More Loot). These numbers were then further worked out into monthly and weekly plan numbers that could help us keep track of our progress toward the goal on a weekly basis.
Every week we would have departmental and all store meetings to review our past numbers and forecast how well we expected to perform in the coming weeks. Incentivized by a quarterly bonus, this process helped us to innovate new strategies of reaching our goals both on individual department levels and as a whole store. It increased staff participation on all levels of operation and inspired cross-departmental cooperation on a scale never before conceived. Our first year using this program was by far the most successful in all of the cooperative’s history.
Early board layout
Now lets take a look at how the early Rak Tamachat Open Book Management board was laid out and how it functioned.
In this design, I had limited data to work with. I knew it was important to start using the game as early as possible and not worry too much if it wasn’t perfect. We started with a basic tracking system. The “plan” in this case, was the monthly budget we were given to work with. We knew that we wanted to be able to reserve some of our monthly budget to be able to do other things such as take a vacation or have a party. So my first attempt at a bonus program (incentive for coming in under budget each month) was that any amount not spent would get rolled over into the “Fun Times Awesome Party Budget With Love” account. I will talk more about the faults to this logic in a moment, for now I want to keep to the physical structure of the board.
Each row represents an account we tracked. The first account was the “Market” account. We were given 30,000 THB per month for what essentially amounted to our the food budget for our community of about 10 people. We broke our monthly food budget down into weekly increments so that we could track our spending at our weekly meetings. As long as we spent less than 7500 THB each week we should have money left over in this account at the end of the month that could then be rolled into our FTAPBWL account. Alternatively, if we spent 8000 THB one week, but only 7000 THB the next, we would still be on track with our budget. The important thing is that we are realistic and work with real numbers… we cannot spend what we don’t actually have.
The “Task” row worked exactly the same as the “Market” row except that tasks included any spending (fuel, tools, plants, etc…) that did not fall under the food budget
WIth this early board, I also created a row for “Project” which never actually became used. The concept of the “Project” budget evolved over time. Initially we were expecting to receive this account (90,000 THB) as a lump sum each month to be allocated toward big picture projects that progressed us toward achievement of the permaculture Master Plan design work done by Terra Genesis International. Due to a number of factors, this system changed to a proposal based system whereby the community drafted a proposal for funds to go toward these larger projects that would then be prioritized and funded on a case by case basis as funding became available.
The next row was the “Income” line. This line was to track the amount of money we made by finding ways to generate income. There was no particular goal set around this line in the early stages of the design and project income was simply incentivized in the same way as budget reserves, by placing the extra finances at the end of each month into our FTAPBWL account.
The “Cash on Hand” row was simply to help us keep track of how much funds we had available at the moment we held the meeting. This line was put on the board simply as an indicator of our current financial standing. There were no goals or incentives placed around this figure and our only reason for tracking it was to know where we stood. As it turns out, this was perhaps the most useful aspect of the original board. As the project owner struggled with financial stability in the first months of the project we had many of our monthly budget payments arrive late. Tracking this number on a weekly basis gave everyone in the community a window into our immediate financial standing and help us all to creatively work with the fluctuations of early financial challenges.
There are three columns per week as follows: Spent, Forecast & Plan. The “Spent” column represents the actual amount spent that week for each row. This number was determined from our ledger book and filled in before the meeting. During the meeting we would talk about how much we spent that week in relation to what we had expected. The “Forecast” column is filled in for the next two weeks in advance. The idea is that we think about how we will spend in the future and consider ideas that can help us come more in line with our financial goals (or, when money is short, our financial realities).
So, each week we would have a meeting and talk about our actual spending for that past week and how it compared to our forecast from the previous week. Then we would discuss what we expected our spending to look like in the coming week and how that compared to our monthly budget and/or the realities of our present financial situation.
The Big Board o’ Budget had several gaps that prevented it from performing up to the potential that I knew was possible with Open Book Management.
Firstly, our goals were loosely defined. Each month we simply had the goal of not spending all of our budget for the two active accounts, Market & Task. This weak goal did not generate much in the way of inspiration or creative thinking. As the challenges of keeping a balance in the positive rose during delays in receiving the month’s budget, our goals simply shifted to staying afloat from week to week and insuring that we didn’t spend more money than we had available. We often had to raid our Task budget to feed our Market budget which meant that projects moved slowly as we would avoid buying necessary tools or materials for projects in favor of making sure that we had food on the table.
The next, and perhaps largest, gap was in the incentive. The incentive was not only weak… it was actually counterproductive. By telling the community that if we didn’t spend money it would get rolled into the FTAPBWL account that would then be used for parties and vacations the community was incentivized to spend as little as possible in all areas so they could have a budget full of fun at the end of each month. As a project already struggling with financial consistency… the last thing we needed to do was to incentivize the funneling of money away from project goals into party goals. This gap, combined with a week vision of what the goal of the Big Board o’ Budget was all about, was cultivating the exact opposite of what I had hoped for. I quickly recognized that this would require a full redesign. In the mean time, the tracking of our weekly financial status was valuable and, although I knew I didn’t want to continue incentivizing the wrong things but it would take me some time to redesign the system, I felt it was important to maintain the flow of information and decided to continue using this board despite its obvious flaws.
To compensate for the gaps, I decided to explain the issues I recognized in the current scoreboard to the community, share how I wanted to improve the board and down play the incentive aspects in favor of using it mostly to track our current financial status. This did help to improve the issues with the counterproductive incentives but the culture of not spending for a future vacation had already been established and would persist for as long as we used this version of the board.
Some of the other gaps were the Project row that never got used and became an empty line; the income row that had no clear goal or incentive to improve upon; no clear tie in with larger project goals; and, a lack of any incremental improvement (game play concept) that gave the community a challenge to build their skills and strive for long term improvement.
After working with the system above and determining the gaps it was clear that a new design would eventually be necessary. The first step in redesigning the system was establishing a clear set of goals that were both inspiring and motivational. Next was to determine some sort of reward that could provide the incentive to engage and play the game without encouraging the community toward unintended goals… and finally, an incremental approach to playing that gave the community the experience of development and improvement in their skills. All this came together after one solid night of brainstorming and, the following day, the Rak The Budget Board was born.
Recognizing that a clear set of goals was the top priority for an effective use of Open Book Management I went to work defining what the “Desired Conditions” where based on what I had heard from the project owner and the community. Through this analysis I came up with a set of 3 clear financial goals. I found it very helpful, and almost necessary, to incorporate a timeframe into these goals. The goals, as you will see below, focus on accomplishing financial self-sufficiency for the farm.
The three main goals for the Rak The Budget Board were defined as follows:
- Rak Tamachat will be financially sustainable by Jan 2014.
- At least 75% of the monthly income will be produced onsite by Jan 2014.
- Rak Tamachat will be producing 50% of all food consumed on the farm, by weight, by Jan 2014.
These goals were then written on to the board itself as “Desired Conditions” and discussed amongst the community to cultivate alignment and keep us all on track with the conditions we desired to create.
The general gameplay was the same as described for the early Big Board `o Budget with only a few exceptions.
To incentivize multiple goals I decided to separate the game into two games each with their own chance at winning. Both games contributed to the accomplishment of the first goal but focused on one of the two other individual goals.
With specific metrics defined (i.e. 75% of the monthly income will be produced onsite by Jan 2014 & producing 50% of all food consumed on the farm, by weight, by Jan 2014) I was able to design an incremental approach to the game play. The idea was to track the number of months from the start of the game until the end goal and providing an increasing level of challenge over that frame of time. To accomplish this incremental challenge increase I decided to use one of the most natural patterns in existence — Phi, or The Fibonacci Sequence.
Using this format I started to construct “The Plan”:
Once the plan was created for the timeframe in question the rules of the game were written on to the board as follows:
Three people are assigned to the board each month.
They are in charge of producing and populating the numbers for their section of the board each week.
Each month the challenge increases as we work toward the desired conditions.
The Plan numbers show the goal for the month and are distributed over the week.
How to Win:
Two Games —
Rak The Income – Beat the total Income plan AND the % Sourced on Farm Plan for the month.
Rak The Produce – Beat the % FFF Plan for the month.
The only thing left was to create an incentive program that would motivate us to work toward our desired conditions based upon this plan.
This was perhaps the most profound improvement of the new game. Designing an incentive program that worked toward the goals and did not involve money in such a way that would actually be counterproductive was a huge step… that took a lot of brainstorming to accomplish.
I started by asking myself, “What is something that everyone in the community wants and would be motivated by that doesn’t involve spending money?” After spending a lot of time discussing this with my fellow community manager, Toni Robinson, we came up with an idea that seemed to be a nearly perfect fit… it, however, did not come without its own set of challenges.
The incentive we came up with was so simple, yet made a lot of sense within the community environment. For each of the two games we decided to offer everyone in the community a token for one completely free day. This meant that each month we all had the chance to win a day of complete freedom within the community. If the game was won, a token was awarded to every person that they could use at their own discretion at any time. Everyone was in the same incentive pool… we either all won together or we all had to try harder next time.
This incentive did not come without some initial resistance, however. In our first meeting to introduce this new design a member of the community mentioned that if someone wasn’t feeling like they wanted to work, was ill, or for some reason unable to work, they shouldn’t be denied a day off.
I could only agree with this sentiment and I clarified that this incentive was not meant to take the place of sick days or days when people just felt like they needed some personal time. But, I proposed, most of us, myself included, had probably had those days where we woke up and just didn’t feel like participating. On those days we look out and see everyone else working and we are overcome by a sense of guilt for not doing our part. If, however, we were given an opportunity to take that time for ourselves without the guilt, we would likely all be more healthy, happy and productive members of the community.
This argument seemed to resonate with everyone and quickly the game went into effect…
Please see the Implementation section for more details on how this design performed over the next several weeks.