brand book bites from scaling up
– the book: Scaling Up: How a Few Companies Make It…and Why the Rest Don’t takes all the wisdom and principles of the business classic Mastering the Rockefeller Habits and translates them into practical tools and approaches for scaling up a business
– the brain: Verne Harnish is the founder and CEO of Gazelles, a firm that provides education, coaching, and technology services to mid-market companies worldwide. Verne is also the founder of Entrepreneurs Organization and has spent more than 30 years helping entrepreneurs and their teams scale up. In other words, he’s the perfect person to write a book about growing a business.
– the best bits: Scaling Up is divided into four sections based on the four fundamentals leaders must master — people, strategy, execution, and cash. Each section is packed with case studies, exercises, practices/processes, and tools and planning frameworks, as well as instructions on how to use them. (All materials are available for download on http://scalingup.com at no charge. Also available are bonus chapters!)
Sprinkled in between all of the hands-on content are gems of business wisdom including:
Goals without routines are wishes; routines without goals are aimless. The most successful business leaders have a clear vision and the disciplines (routines) to make it a reality.
Managing people is difficult because people are complex. In today’s high-pressure environments, it is very easy to get caught up in the fight for results and to forget about the complex human beings who are needed to produce them. That’s why it is good to remind ourselves that in business and in life, the journey, not the destination, is the reward…People are not resources that you consume.
Individuals or organizations with too many priorities have no priorities and risk spinning their wheels and accomplishing nothing of significance. In turn, laser-focusing everyone on a single priority creates clarity and power throughout the organization.
Success belongs to those who have these two attributes: an insatiable desire to learn and an unquenchable bias for action. Those who win are constantly looking for better ways to do things and to improve…Keep on learning and acting as you scale up.
Perhaps the most important framework in the book is The 7 Strata of Strategy — “a comprehensive framework for creating a robust strategy that differentiates your company from the competition and helps you establish the kind of roadblocks that allow you to dominate your niche in the marketplace.” They are:
- Words You Own – the piece of mind-space you own within your target market)
- Sandbox and Brand Promises — who/where are your core customers, what are you really selling them, what are your three brand promises, and what methods do you use to measure whether you’re keeping those promises
- Brand Promise Guarantee — no explanation needed
- One-PHRASE Strategy — the key lever in your business model that drives profitability and helps you choose which customer desires to meet and which ones to ignore
- Differentiating Activities — specific actions that represent how you execute your business differently from the competition
- X-Factor — a 10x to 100x underlying advantage you have over your rivals
- Profit per X and BHAG (10- to 25-year goal) — the metric calculated with a numerator (profit — or any other similar measure) and the denominator representing your company’s unique approach to scaling the business e.g. Southwest Airlines’ is profit per plane which focuses management on the number of planes in the air since its brand promise includes lots of flights
– the brand story: The case study on Appletree Answers, a Delaware-based answering service and call-center provider, is revealing. Verne explains that, as founder and CEO, John Ratliff had made 24 acquisitions to build the company and it operated out of nearly as many locations. “The leadership team had to integrate apprehensive employees into the culture after they suddenly found themselves under new management,” Verne writes. And because they were “painfully out of touch” with employees’ concerns, they were adding to the problem.
They took on the challenge of figuring out how the company could live by one of its stated core values, “take care of each other.” They eventually launched the “Dream On” initiative which asked employees to submit a request tied to one thing they would like to happen in their personal lives. No restrictions. “As the responses trickled in, Ratcliff got a crash course in the daily realities that his frontline employees faced…Many team members were grappling with health problems, others were suffering financial problems.” The company decided to provide grants and other resources through the program, like fulfilling the dream of an employee to take a first family vacation with a disabled daughter. The program had a profound effect on employee turnover, dropping it from the industry average of 110% to 20%. Verne reports, “While the initiative cost money, it paid 20 times return on investment in terms of reduced turnover costs in less than a year.”
The rest of the company’s values turned out to be: integrity matters, think like a customer, spirited fun, be quick but don’t hurry, employees are critical, and small details are huge. They also articulated a company purpose: Enhancing the lives of customers and employees, one interaction at a time.”
Ratliff is quoted as saying “Growth companies are good at getting a lot of things done. The worst thing you can do is get a massive amount of the wrong thing done. If you have clearly articulated Core Values and a Purpose that are part of your everyday experience, it helps direct that massive action around the right activities.” Well said!
– the bottom line: Scaling Up is such a comprehensive resource on running a business, it’s almost as if Verne and the Gazelles team are right there with you as you are reading it. Of course, nothing can compare to their experienced consultation — but this book gives you pretty much everything you need to succeed and scale successfully.
Listen to my interview with Verne to learn:
- the difference between accountability, authority, and responsibility
- what is the Theory of Constraints
- how to discover your core values
Don’t miss out on learning from the man himself — the interview is packed with insights and information!
And finally, I have an extra copy of Scaling Up to give away. Please share about this write-up and interview on LinkedIn, Facebook, or Twitter and you’ll be entered to win the giveaway — be sure to use @deniseleeyohn so I get your entry.
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