Entrepreneurs, ecosystems, and Jack Stack
Who is Jack Stack?
Jack Stack is the star of a recent PBS News Hour feature by economic correspondent Paul Solman. Solman (at his classic best) examines Mr. Stack’s unconventional and highly successful business model. We share this because the model which Stack used to initiate an entire network of small businesses in the Springfield, Missouri is inspiring and instructive. The example also demonstrates that an entrepreneurial model based the bottom-up, local economics can help to raise the prospects of families and communities at a time when the standard model is broken. The resilience and growth potential of the model parallels that found in ecosystems in the process of restoration.
Some background: In 1986, Stack rescued an engine re-manufacturing division of International Harvester that was about to get “plowed under.” Stack transformed the division into an independent firm.
The firm Springfield Remanufacturing Company (SRC) was based on a series of innovative principles based around the concept that the workers along with management would (a) have an ownership stake in the company (b) have complete access to the company’s financial records and (c) have a decisive say in management decisions. The firm grew rapidly into one of the most successful and dynamic businesses in the region. Today, the company has blossomed into SRC Holdings with investments in nearly 60 companies and 1200 employees, many still re-manufacturing motors, cars, tractors, and boats, but others involving home furnishings, warehousing, engineering solutions, and boutiques.
Great Video: To learn how SRC does it, I suggest that you take a break from reading and watch Solman’s interview with Stack and SRC affiliates, but please come back for further thoughts.
What does SRC model have in common with ecosystems? First, is vibrancy. The SRC network of small, local businesses is ever innovating and experimenting. It is based on the needs and intellectual capital of the individual workers and the workforce as a whole. Stack criticizes the standard corporate model for its complete divorce between management (and investors) with employees. This squanders an opportunity to learn and innovate from front-line knowledge base and potential enthusiasm of workers. Where workers have a voice they have often contributed to improved efficiency, product quality, and reduced downtime due to accidents.
Conventional corporatism: Conversely, in the corporate model, stockholders have no real connection to the businesses they invest in, other than the bottom line. Management, is preoccupied with the quarterly balance sheet, and the workers have no say in the decision.
One segment of video shows the workers of one SRC enterprise voting against their expected bonuses based on the open book information and their desire to ensure the company’s wellbeing. Clearly such practices contribute to resilience of the company (the ability to absorb shocks and adapt to changes).
Ecosystems that have survived for millions of years do so through evolution. Competition thrives. Yet the best competitors know have learned through natural selection to engage in win-wins, practices that benefit the system and its infrastructure as a whole. Systemically risky and destructive practices get weeded out – if not, a new kind of ecosystem will replace the old.
There are other parallels: SRC’s re-manufacturing facilities bring discarded engines back to service, a practice that has many environmental benefits including the conservation of metal, reduced need for mining, waste reduction and energy conservation (with reduced carbon emissions).
Furthermore, all nature is local, and the jobs stay there. In a forest, green plants convert sunlight and carbon dioxide into food and oxygen; deer and bunnies browse; foxes and hawks hunt. These jobs are not exported to distant lands.
And natural capital (e.g. the organic matter produced by photosynthesis and stored in wood) is reinvested in the system. Bugs, fungi and bacteria are employed converting logs into humus-rich top soil. Similarly, much of the wealth created by locally-owned businesses including SRC companies is reinvested to provide needed jobs, products and services rather than be exported to financial giants or faraway investors.
SRC Holdings and its founder have helped many budding entrepreneurs (including its own employees) launch new businesses with both training and financial assistance. The ideas often come from people having insight into a particular local need that is not being filled or a resource that is underutilized – great opportunities for growth.
Nature’s entrepreneurs: In the July 13, 2020 post, I described how a myriad community of entrepreneurial plants sprung up as to fill in the void and utilize the newly available sunlight, water and minerals left by our dying pine plantation. The SRC model provides another source of inspiration and wisdom for the future.
For further information on the SRC’s “creative resilience” during the economic downturn see a good article in Ink Magazine. Find out SRC Automotive’s Plan B worked.