Mastering the Rockefeller Habits What You Must Do to Increase the Value of Your Fast-Growth Firm Verne Harnish New York: Select Books (2002). You don’t have a real strategy if it doesn’t pass these two tests: that what you’re planning to do really matters to your existing and potential customers; and second, it differentiates you from your competition. (p. xxiii). Quotes from Mastering the Rockefeller Habits In this handout 2 5 Presentation Outline John D. Rockefeller was the richest man in human history (adjusted for inflation). His $318+ Billion makes Bill Gates look like a pauper. He had a lot of “luck” on his side. He was born at the right time, when fortunes were waiting to be made. But he did a lot right — it is no accident that he was the best of that very lucrative era. What were his secrets? - His habits? Here is one secret that describes so much — John Rockefeller had lunch, every day, with his executive team, for nearly his entire business career. In these lunches, he taught his philosophy, shared and repeated and repeated again his priorities (he never had many), and he established the rhythms of success. Let me repeat — the “rhythms” of success. The Rockefeller Habits were exactly that — habits. Verne Harnish discerned those secrets. In this book he shares those secrets. 9 Questions for Discussion
Transcript
Mastering the Rockefeller Habits
What You Must Do to Increase the Value of Your Fast-Growth Firm
Verne Harnish New York: Select Books (2002).
You don’t have a real strategy if it doesn’t pass these two tests:
that what you’re planning to do really matters to your existing and potential customers; and second,
it differentiates you from your competition. (p. xxiii).
Quotes from Mastering the
Rockefeller Habits
In this handout 2
5 Presentation Outline
John D. Rockefeller was the richest man in human history (adjusted for inflation). His $318+ Billion makes Bill Gates look like a pauper.
He had a lot of “luck” on his side. He was born at the right time, when fortunes were waiting to be made.
But he did a lot right — it is no accident that he was the best of that very lucrative era.
What were his secrets? - His habits?
Here is one secret that describes so much — John Rockefeller had lunch, every day, with his executive team, for nearly his entire business career. In these lunches, he taught his philosophy, shared and repeated and repeated again his priorities (he never had many), and he established the rhythms of success. Let me repeat — the “rhythms” of success. The Rockefeller Habits were exactly that — habits.
Verne Harnish discerned those secrets. In this book he shares those secrets.
9 Questions for Discussion
2 Mastering the Rockefeller Habits
“But how do I implement this stuff?”
[p. xix]
Quotes
But how do I implement this stuff? (p. xix).
“If you want to teach people a new way of thinking, don’t bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking.” (Buckminster Fuller). (p. xix).
The fundamentals in creating a great business are the same for parenting great kids. (p. xxi).
Jack Welch, the retired CEO of GE, had only four #1 priorities the entire two decades he was GE’s leader. (p. xxiii).
You don’t have a real strategy if it doesn’t pass these two tests: that what you’re planning to do really matters to your existing and potential customers; and second, it differentiates you from your competition. (p. xxiii).
Most entrepreneurs actually don’t like working with anyone, including their own employees! This is the major reason why 96% of all firms have fewer than ten employees, and a vast majority have fewer than three. (p. 3).
Unless a company has the ability to determine where it’s going to be this week, this month, this quarter, and this year, it’s not on a trajectory for growth. It might not even be on track for survival… “The idea of always measuring and tracking a Critical Number gives you a firm foundation to know where you are – even if you don’t like the answer.” (Joe McKinney, McKinney Lumber). (pp. 5 & 6).
Maybe it seems too mind-blowing to even consider slowing down enough to institute a daily and weekly meeting structure, but gazelles that have done it are thrilled with the result… This rhythmic pulsing of daily and weekly meetings constitutes the real heartbeat of a growing company. (p. 8).
“Routine sets you free.” (Allen Rudy of Express-Med). (p. 9).
“Who do I need to be, and what do I have to do to get there?” (Molly Bolanos, Mostly Muffins). (p. 11).
As goes the leadership team goes the rest of the firm. The two most important attributes of effective leaders are their abilities to predict and to delegate. (pp. 11 & 12).
Successful delegation starts with choosing the right person. Keep in mind the rule that one great person can replace three good people. With the right people, delegation is a four-step process to pinpoint what they are to do, create a measurement system for monitoring progress, provide feedback, and then give out appropriately timed recognition and reward. (p. 13).
3 Mastering the Rockefeller Habits
“A strong culture leads to superior performance, higher
employee retention, and a better-aligned organization.”
[p. 43]
Increase in complexity leads to stress, miscommunications, costly errors, poor customer service, and greater overall costs. (p. 13).
The fundamental journey of a growing business is to create a predictable engine for generating wealth as it creates products and services that satisfy customer needs and creates an environment that attracts top talent. In summary, growing a business is a dynamic process that requires a shifting set of priorities as the leadership team navigates the predictable evolutions and revolutions of growth. Continuing to grow the capabilities of leadership throughout the organization; installing systems and structures to manage increasing complexities; and moving ahead with the market dynamics that impact the business, are fundamental to successfully growing a business that’s fun and predictable. (p. 16).
You need to market your firm to potential employees with the same vigor you use to attract potential customers. (p. 19).
Overall, getting the right people in the right positions is the first and most important job of the CEO and executive team. Also important is getting the wrong people out as quickly as possible – though for many reasons this is one of the hardest aspects of running a business. (pp. 21-22).
You know you’re doing the Right Things when revenue or market share – or both – are growing at twice the market. (p. 22).
If you consider that a business is simply “people” doing “activities,” the model supports a familiar notion that you lead people and manage their activities – you don’t manage people. (p. 24). (emphasis added)
The bigger your company gets, and the faster it’s growing, the harder it is to get everybody on the same page. The problem, of course, is that there isn’t a single page… (p. 29).
Nothing ever gets done in any organization until it shows up on somebody’s weekly To-Do list – and I do mean weekly! Quit thinking in monthly increments and drive all measurements, deadlines, and deliverables down to weekly increments. It may be painful in the doing, but it needs to be done. (p. 39).
Having a few rules, repeating yourself a lot, and acting in ways that are consistent with the rules – these are the three keys for providing your children with a good moral foundation or providing a company with a strong cultural foundation… A strong culture leads to superior performance, higher employee retention, and a better-aligned organization. (p. 43).
“I essentially spent the last six years repeating myself.” (Hatim Tyabji, Verifone). (p. 44).
This is no different than teaching your two year old right from wrong. Young, old, or in between, people need to know what marks they’re supposed to be hitting. They want to understand how they can conduct themselves to please you and your customers. (p. 51).
The old saw is true. The organization with too many priorities has no priorities. (p. 53).
4 Mastering the Rockefeller Habits
Have you ever noticed the lengths to which we human beings will go to avoid doing what needs to be done? (p. 53).
A company’s goals and priorities won’t be successful in driving the organization if they’re easily forgotten or ignored. (p. 63).
I think people need to know where they’re going and they want to know when they’ve arrived. (p. 67).
Recurrent customer and employee hassles cost your employees 40 percent of their time, not to mention what it’s costing your company in lost customers and revenues… What makes people hate their jobs? What makes them non-productive, complaint-happy deadwood? The answer: recurring problems and hassles. (p. 71).
You’ve got to have rhythm… At the heart of executive team performance is a rhythm of tightly run daily, weekly, monthly, quarterly, and annual huddles and meetings – all of which happen as scheduled, without fail, with specific agendas. (p. 83).
In the 19 years I’ve spent working with growing companies, the predictable winners are those who have established a rhythm and a routine of having meetings. (p. 84).
How are you going to make your quarterly goals if you aren’t driving performance monthly, weekly, even daily? (p. 85).
Daily and weekly meetings are demonstrably superior to one-on-one sessions… People will give one person excuses that they’d never try before an entire group, where confrontation is likely… I’m also sold on the value of the collective intelligence… (p. 92).
What really matters to your customers? Your brand promise. (p. 95).
A company’s goals and priorities
won’t be successful in
driving the organization if
they’re easily forgotten or ignored.
[p. 63]
5 Mastering the Rockefeller Habits
[Street Address] [City], [State][Postal Code]
Presentation Outline THE ROCKEFELLER HABITS – THE TOP THREE
PRIORITES – DATA—RHYTHM And lunch daily with his key people – daily!
Rockefeller’s key strategy: control your bottleneck or chokepoint • The fundamentals (for a business, for a parent):
1) Have a handful of rules 2) Repeat yourself a lot 3) Act consistently with those rules (which is why you better have only a few rules)
• The “habits:”
• Priorities • The company should have objective Top 5 priorities for the year
• Data • Rhythm
• An effective rhythm of daily; weekly; monthly; quarterly; annual meetings to maintain alignment and drive accountability.
• “Until your people are mocking you, you’ve not repeated your message enough.”
• Some “criticals”
• The two most important attributes of effective leaders are their abilities to predict and to delegate.
• “Remember, “A” people tend to surround themselves with “A” people, so go only to your “A” network of friends. I’m very serious about this last comment.”
• “The three fundamental activities at the heart of all business are (1) the functions of Making or Buying something, (2) Selling something, and (3) Keeping Good Records.”
• Counsel gleaned from Steve Kerr (formerly, head of GE’s Crotonville Executive education center)
1) In planning the “middle” is gone. Plan for 10 to 25 years out, and for the next 90 days. Nothing in between
2) Keep everything stupidly simple. 3) The best data is firsthand data.
• Bill Gates: “a computer on every desk and in every home”
John D. Rockefeller was arguably the
most successful business leader in
history.
What were his secrets?
It turns out, he had some true, regularly
practiced habits – habits from which he
never deviated.
This book captures these habits, and
demonstrates how to put them into
practice.
These habits provide a workable path to
genuine success.
Mastering the Rockefeller Habits What You Must Do to Increase the Value of Your Fast-Growth Firm
New York: Select Books (2002).
By Verne Harnish
6 Mastering the Rockefeller Habits
Presentation Outline, continued • The book: 1) Mastering Growth • Three barriers to growth common among all growing firms:
1) The need for the executive team to grow as leaders in their abilities to delegate and predict 2) The need for systems and structures to handle the complexity that comes from growth 3) The need to navigate the increasingly tricky market dynamics that mark arrival in a larger marketplace
• To repeat and reinforce…: delegating to others; systems and structures; data drives prediction; Top 5 Priorities; meeting rhythm (Rockefeller met with his executives every day of the 19 years he spent building Standard Oil); Market Dynamics; Grow Thyself; Barriers to Growth; Leadership; Systems and Structures; Market Dynamics
• Delegation is a four-step process, to pinpoint:
1) What they are to do, 2) Create a measurement system for monitoring progress, 3) Provide feedback, 4) And then give out appropriately timed recognition and reward.
2) Mastering the Right People Doing the Right Things Right • The three basic decisions an executive team must make:
1) Do we have the right people? 2) Are we doing the right things? 3) Are we doing those things right?
• Hiring -- Selling the Vision; The Selection Process; Right Things Model • Putting the Model to work:
3) Mastering A One-Page Strategic Plan • To become and remain competitive, your organization needs three things:
1) A framework that identifies and supports your corporate strategy 2) A common language in which to express that strategy 3) A well-developed habit of using this framework and language to continually evaluate your strategic progress.
• The Planning Pyramid: A Strategic Framework (page 31).
• Note: see page 32-33 for the one page strategic plan, or download a copy at http://www.gazelles.com/.
7 Mastering the Rockefeller Habits
• Elements of the one page strategic Plan: Opportunities and Threats; Core Values; Purpose; Actions and BHAG (Big Hairy Audacious Goal); Targets and Sandbox; Brand Promise; Key Thrusts/Capabilities; Goals and Key Initiatives; Critical Numbers; Actions and Rocks; Theme, Scoreboard Design, and Celebration/ Reward; Looking Ahead; Schedules; Accountability (many are responsible -- but only one can be accountable);
4. Mastering the Use of Core Values • (To illustrate) -- the six core values for Gazelles:
1) Practice What We Preach 2) Ecstatic Customers 3) 1st Class For Less 4) Honor Intellectual Capitalists 5) Everyone An Entrepreneur 6) Never, Ever, Ever Give Up
• Learn to value, and then practice, storytelling – (start your meetings with stories)
• Orientation – (“you do have one, don’t you?”) • Themes (reinforce – constantly reinforce – your core values) • Have a few rules; repeat yourself; be consistent • Create legends; recruitment and selection; orientation; appraisal process; recognition and reward; internal newsletter; themes; everyday management
5. Mastering Organizational Alignment and Focus • Seven sore points for companies:
1) Not big enough to compete 2) The company lacks a key player 3) The economic engine is broken 4) Someone else is controlling our destiny 5) We need a war chest to compete 6) We can’t raise money ‘til we grow 7) We’ve got to scale back or we won’t survive
6. Mastering the Quarterly Theme • What separates a plan on paper from one that lives and breathes on its own? It’s an idea, an image -- in short, an organizing theme. • Using priorities and critical numbers to drive your theme • Use the Multiple Intelligences list of activities to create your meeting: • Verbal/Linguistic; Logical/Mathematical; Visual/Spatial; Bodily/Kinesthetic; Musical/Rhythmic; Interpersonal; Intrapersonal 7. Mastering Employee Feedback • Gathering the data: be encouraging, be responsive • Ask your employees: what should we start doing?, what should we stop doing?, and what should we continue doing? • Create a situation room for the executive team (with core values and purpose, priorities for the quarter and year, and a map of the geographical territory where the company is engaged -- all prominently displayed!) • Problem-Solving Guidelines • Relevancy; be specific; address the root; focus on the what, not the who; involve all those affected; never backstab.
Presentation Outline, continued
8 Mastering the Rockefeller Habits
8. Mastering the Daily and Weekly Executive Meeting (Structure meetings to enhance executive team performance).
• “Company” means “to share bread” • The rhythms of regular meetings • Meetings: a routine to set you free • More meetings, not less • “Short, punchy meetings with a structure, time limits, and a specific agenda. This type of meeting doesn’t leave you feeling bogged down – it actually sets you free.” • Daily meeting, an imperative • Choose an “irregular” time (e.g., 8:08 am) • Setting: avoid sitting comfortably (stand!) • The more the merrier • The agenda: what’s up, daily measures, and where are you stuck? • Weekly meeting • More issues oriented • To succeed, it must be after a week of daily meetings
(They need each other/feed off of each other) • Five minutes: good news • Ten minutes: the numbers • Ten minutes: customer and employee feedback • 30 minutes: a rock, or single issue • Closing comments • Monthly meeting – agenda is learning
9. Mastering the Brand Promise – Identify the single most important measurable in building value • Consider your BHAG • Define your sandbox • Determine customer needs • Control your bottleneck or chokepoint • Everything changes – including your brand promise • What are you going to do to utilize technology? 10. Mastering the Art of Bank Financing – Make banks compete to loan you money!
• A “knock your socks off’ presentation will get funded with better terms, less-restrictive covenants, lower interest rates, and waived fees…
• Learn to ask; learn who to ask; learn how to ask; learn what to ask for… • Steps to financing:
1) Loan opportunity assessment 2) Strategy development 3) Loan package preparation and research 4) Searching for the right banks
Presentation Outline, continued
9 Mastering the Rockefeller Habits
Strategic Questions Strategic leadership focuses on transforming the organization from what it is to what it aspires to become. This fourth dimension of leadership requires a long term and change-oriented perspective for an organization to envision the future and develop a practical, achievable and yet aggressive strategy for shaping its destiny. At this level of leadership, employees follow the leader because they believe in the leader’s sense of vision for the future, even if they do not fully understand what the journey will look like. A willingness to leave the past behind and follow the leader into the future is heavily influenced by their understanding of (1) how the organization treats people (relational); (2) how competent the organization is (operational); and (3) whether the organization walks the talk of its stated values (systems).
1. What are our top two priorities as an organization? Note: Level one will be asked the same question. It would be interesting to compare notes with them. Remember, “Until your people are mocking you, you’ve not repeated your message enough.”
2. “You’ve got to have rhythm…At the heart of executive team performance is a rhythm of tightly run daily, weekly, monthly, quarterly and annual huddles and meetings – all of which happen as scheduled, without fail, with specific agendas.” What is our rhythm? Does it need any adjustments?
3. How are we overcoming these common barriers? a. The need for the executive team to grow as leaders in their abilities to delegate and
predict b. The need for systems and structures to handle the complexity that comes from growth c. The need to navigate the increasingly tricky market dynamics that mark arrival in a
larger marketplace. (We could think of this in terms of competing with other communities during times of great change.)
Systems Questions Systems leadership designs, implements and ensures the effective functioning of healthy systems that govern how all underlying operations are managed. It relies heavily upon trust-building to institutionalize and operationalize the authentic values of the organization. In this third dimension of leadership, the leader transitions from managing daily operations to creating an operational environment that facilitates excellent performance by shaping the culture and core values of the organization. At this level of leadership, people choose to follow because they trust that the leader is developing well-run and healthy systems that rise above individually weak supervisors and managers. But building trust in the organization’s systems can happen only when building upon a foundation of widespread relational and operational leadership competency.
10 Mastering the Rockefeller Habits
Systems Questions, continued 1. As you establish and maintain healthy systems, what routine (habits) are vital to your success?
How can you develop systems that meet the needs of both routine and non-routine work? 2. “Keep in mind the rule that one great person can replace three good people.”
How many great employees do we have? How do we attract more?
3. “Having a few rules, repeating yourself a lot, and acting in ways that are consistent with the rules – these are the three keys for providing your children with a good moral foundation or providing a company with a strong cultural foundation…” What are those “few rules” regarding the way our systems function?
Operational Questions Operational Leadership focuses on supervisory and managerial effectiveness. In this second dimension of leadership, the individual progresses from managing relationships to managing the performance of employees and operations. At this leadership level, people choose to follow primarily because of positional and intellectual authority – they assume that the supervisor or manager knows more than they do about the job at hand. However, Operational Leadership builds on Relational Leadership--if you cannot manage relationships, you can never achieve excellence in managing the performance of your employees and operations.
1. “Nothing ever gets done in any organization until it shows up on somebody’s weekly To-Do list – and I do mean weekly!” As a supervisor who understands relational leadership, what are a few things that should regularly appear on your weekly to-do list?
2. “If you consider that a business is simply ‘people’ doing ‘activities,’ the model supports a familiar notion that you lead people and manage their activities – you don’t manage people.” How do you separate “leading people” from “managing activities?”
3. What is our routine regarding meetings? How often do they occur? Are they effective? What changes do we need to make?
11 Mastering the Rockefeller Habits
Strategic Government
Resources
P.O. Box 1642 Keller, TX 76242
817.337.8581
www.governmentresource.com
Prepared by Randy Mayeux
For more information on Executive Book Briefings, please contact Krisa Delacruz at [email protected].
Relational Questions Relational Leadership is the foundational competency upon which all other leadership dimensions are constructed. At this leadership level, people choose to follow primarily because of how the leader treats them. Many otherwise qualified managers never achieve excellence as leaders because they do not manage relationships well. High-performance organizations place a priority on developing the Relational Leadership skills of all employees, from front line workers to senior executives.
1. What are the top two priorities of your organization? Are there any statements of priority or identity in your organization that you have heard so often that you can recite them from memory?
2. This book states that routines (also called habits) bring success. What are some routines that bring you success in your relationship with citizens and coworkers?
3. Have you ever studied the habits of successful people? Did they have any relational habits (habits regarding the way they established and maintained healthy relationships)? What were they? If you have not studied this, who would be a good person to focus on?
