Thank You For Firing Me

Meet 11 successful businesspeople who turned a stumbling block into a launching pad.

(page 2 of 9)

Economic downturns and recessions put many workers out of jobs, but for Jack Stack, the downturn of the 1980s didn’t just affect him; it kicked thousands of his co-workers at International Harvester out of the factories and onto the streets. 

 At the time, Stack was plant manager of Springfield Renew Center, a division of International Harvester. He had started working in Illinois at International Harvester when he was 19. “I basically failed at everything else in my life, so I went and got a job at a manufacturing facility,” he says. “I started in the mailroom, and then I progressed through the organization.” He took advantage of tuition refund programs to go to college. His open-book strategies also helped him work his way up. “The more information I shared, the faster I got promoted,” he says. It worked so well that in 1978 he was promoted and transferred to Springfield to run the remanufacturing   factory here. 

 Four years later the economy was singing a different tune, and International Harvester initiated mass layoffs and restructuring to stay afloat during the recession of the early 1980s. The layoffs were a nonstop topic of major headlines and newscasts, and Stack’s employees came to him worried about the stability of their careers. The factory was moved into a diversified group, which is when Stack says he knew they were on the chopping block. After months of being in a state of anxiety and fear, Stack proposed that he and the employees buy the company. “What alternative do we have?” Stack asks. “We either shut it down; or you live with a company that has no capital, which is bankrupt; or they sell it to somebody. Those were the three choices. We said to ourselves, if they’re going to sell it to somebody else, why not take a run at it?”

 As Stack soon found, buying the factory was much easier said than done. After receiving Stack’s proposal, the International Harvester executives investigated the factory’s books, but shortly thereafter, Stack came across an ad posted in The Wall Street Journal that listed the factory for sale, dashing the hope he had built up after months of uncertainty. In October of 1982, Dresser Industries entered negotiations to purchase portions of International Harvester and began what Stack calls a weird, weird deal to purchase Springfield Renew Center. Originally, Dresser was only purchasing the construction equipment division, which excluded the remanufacturing factory; however, as one Dresser executive told him, the only reason they wanted the factory was because it was priced so low that if they were to liquidate, they would get their money back. “That couldn’t have been more of a slap in the face,” Stack says. Demoralized, he and his team acclimated to being able to work for a new company.

 By this point, Stack had hit his breaking point. “I couldn’t face these people and tell them that we’ve gone from one frying pan into another frying pan,” he says. The nation’s unemployment rate was at 12 percent, and Stack had four children to support at home. Leaving the factory wasn’t an option. Just as Stack had resigned himself to working under Dresser, International Harvester broke off the deal. On December 15, they approached Stack and offered to sell him the facility. “I almost fell over,” he says. 

 Because Stack’s background was in manufacturing and management, he had to learn how to run a business on the fly. “The best advice that I would give anybody to this day is, if you want to learn about business real fast, go out and borrow an enormous sum of money,” he says. “Seek capital, and when they tell you that you can’t have it, that’s when you start learning, and you begin to think like an investor.” For every rejection he got, Stack would sit down and figure out why he was turned down, then he would revise his business plan to address it. “Every time, I had to write a business plan for a different level of Dante’s circle of hell,” he says. Each bank, insurance company and capital investor that denied him—and there were more than 50 of them—provided an insight into which metrics and values mattered most. 

 Eventually Stack learned enough to get it right, and he secured the funding needed to purchase Springfield Renew Center, which he renamed Springfield ReManufacturing Corporation (SRC). Now in its 32nd year, SRC is what most would call a highly successful company. “One of our mottos here is we are creatively paranoid,” he says. “We don’t take success lightly.” In fact, it wasn’t until SRC’s 25th anniversary that Stack and his team were finally able to cast aside their initial paranoia as to whether their grand experiment would work and recognize the company’s success.  

 That achievement is ultimately due to Stack’s open-book-management style, which has always been a core component of Stack’s working strategy. Ever since he first started in the industry at 19, Stack has shared financial data with his co-workers, even when he wasn’t supposed to. Sharing information is the cornerstone of open-book management. Through sharing profits, creating bonus packages and offering stock options, companies are able to empower their employees to be more successful. “We’ve got this gap between the haves and have-nots because we don’t spend enough time teaching the have-nots how the haves made it,” Stack says. Demystifying those financial figures and educating employees on how their roles play into the company’s success encourages employees to think beyond simply doing their jobs and to reframe their work as a significant part of the overall mission. 

 Having a strong foundation of engaged employees is integral to Stack’s next career move: retirement. Through the next few years, Stack hopes to build a big enough balance sheet so that the next generation has the freedom to reinvent the company however they see fit. “We’re really, really making certain that the company can be a 100-year-old company,” he says. With his legacy in place, his rescued company thriving and his signature management style gaining traction, Stack is ready to slow down. As to how he’s leaving the working world, he plans to go out the same way he came in, with a bottle of Miller Light in his hand. 

 

Biz 417’s B-School Breakfast Series

Hear from these featured business owners firsthand as they give their best advice and answer your questions at our business education breakfast.

 

Edit Module
Edit ModuleShow Tags

December 2017

Today

  • Sun
  • Mon
  • Tue
  • Wed
  • Thu
  • Fri
  • Sat
26 27 28 29 30 01 02
03 04 05 06 07 08 09
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 01 02 03 04 05 06
Edit ModuleShow Tags