A Controlled Experiment using Open-Book Management
Business coaches don’t usually get the opportunity to conduct a controlled experiment to see whether what they offer really works. But that’s what Bill Fotsch had when he first signed on to help Carlson Wagonlit Travel (CWT), one of the world’s largest travel management companies.
CWT North America has branches all over the U.S. and Canada. Bill worked with a CWT team to pilot collaborative methods in just three of those branches: Rochester N.Y., St. Louis, and Houston. The results? All three pilots exceeded budget by 10-20%, resulting in more than $1.7 million in incremental profit. Results in most other branches were flat.
“Our pilot results are nothing short of incredible!”
—Janet Wheatley, VP, North American operations
How we did it: three steps
To get this performance, Bill and the team implemented the Open-Book Coaching methodology:
- Identify a critical number—in this case, site revenue minus site direct costs, or “direct profitability”
- Engage employees in figuring out how to move the needle on this number by generating more revenue and reducing costs. Says VP Janet Wheatley: “The people who have the greatest pulse on our financials are our front line travel counselors.”
- Meet every week to review financial results, brainstorm improvement ideas, and forecast future results.
The front-line counselors came up with ideas no one had thought of. St. Louis customer relations rep Renee Belville, for instance, contacted vendors to recover money lost due to hotel no-shows, cancelled flights, etc. Over the first several months she collected $189,093—a huge savings for CWT. Each of the pilot branches came up with their own ideas on how to improve results, which were then shared with the other pilot branches. Given the very strong results, CWT subsequently chose to roll out Open- Book Management across all their branches.
“I feel that CWT management has entrusted us with this financial data, and that empowers us to create positive financial opportunities for the company.”
– a travel counselor
Coach Bill Fotsch shares the backstory
“Betty Fix, a lovely person in CWT corporate sales, saw Open-Book Management as a unique differentiating tool, a way to win business. So when soliciting John Deere as a corporate account, CWT explained to John Deere that the reason their agents would provide Deere with a higher level of service was because CWT agents understood the economics of their business and, consequently, that in a very real sense, John Deere was actually paying their salaries.
“Now, the Deere people were intrigued by this, but were naturally skeptical. So they came to St. Louis, and asked to take one of the agents to lunch, with no other CWT persons along. The lunch was a success for CWT. A couple weeks late, John Deere chose CWT as their corporate travel partner.”