Book Summary of ‘Mastering The Rockefeller Habits’ by Verne Harnish

The Three Decisions and Three Habits

Over many years of working with successful entrepreneurs, and studying the life of John D. Rockefeller, Harnish boiled down their success into three simple habits and decisions.

The first habit is priorities. These are a handful of rules – some of which change, and some of which don’t (like your BHAG, for instance). You should have some for the company as a whole, and for each individual who works there.

The second habit is data. This is ensuring that the organisation has sufficient data on a daily and weekly basis to provide insight into how the organisation is running, and for what the market is demanding. Ensuring that everybody has at least one key daily or weekly metric driving their performance.

The third and final habit is rhythm – which are the daily, weekly, monthly, quarterly, and annual meetings to make sure that everybody is aligned with the short and long term goals with the business.

The decisions you need to make boil down into the following three questions:

Do we have the Right People? Are we doing the Right Things? Are we doing those Things Right?

Priorities: Mastering a One-Page Strategic Plan

As your company grows, it gets harder and harder to keep your team on the same page. The best way to do this, Harnish tells us, is to boil all of the most important things your company is focussing on into one page.

To follow along, you can download a copy of the plan here: https://gazelles.com/static/resources/tools/en/OPSP.pdf

It should cover the following items, most of which will be covered in more detail in the following sections.

Opportunities and Threats – list the five biggest opportunities and threats facing your organisation over the time frame you are considering.

Core Values – these are the five to eight statements that define the “shoulds” and “shouldn’ts” that inform all decisions made at your company.

Purpose – this is the reason your company is in business. Why you do what you do. As an example, Wal-Mart’s purpose is “To give ordinary folks the chance to buy the same things as rich people.”

Actions and BHAG – this is your 10 – 25 year lofty goal, similar to Kennedy’s legendary goal to put a man on the moon.

Targets and Sandbox – the target is where you want your company to be in 3 to 5 years. The Sandbox is basically your market – where you’ll play, the product/service you’ll provide, and your expected market share in 3 to 5 years.

Brand Promise – this is the key need you satisfy for your customers. It should be measurable.

Key Thrusts/Capabilities – these are the 5 or 6 things you need in order to reach 3 to 5 year targets.

Goals and Key Initiatives – this is what your company needs to achieve this year, and the 5 or 6 key initiatives that will help you get there.

Critical Numbers – this is where you should have one or two numbers – ideally one from the balance sheet and one from the income statement. It should represent a key weakness in your economic model or operations, that if addressed, will have a significant impact on the business.

Actions and Rocks – these are your quarterly action steps.

Theme, Scoreboard Design and Celebration – create a quarterly or annual theme to bring focus to the year and post your scoreboard where everybody can track your progress on the plan.

Schedules – determine when things need to happen. Unless activities show up on somebody’s weekly to do list, nothing gets done.

Accountability – this is where you identify which person is accountable for which particular activity on your plan.

Now that we’ve figured out what we need to be foussed on, let’s take a deeper dive into the most important areas of this plan.

Priorities: Mastering the Use of Core Values

Having a few rules, repeating them until everybody is sick of hearing you repeat them, and then making sure everybody acts in accordance with them, is how you create a strong culture.

It makes leading people much easier, generally leads to better performance, higher employee retention and better alignment across the company.

Once you have those core values, you should translate them into the quarterly Individual Performance Plan of each person on your team. For each core value that you have, each employee (and you) should be able to identify actions you’ll take to live it out.

Other things you can do include creating recognition awards for people who live out your core values, communicate examples of people living them out regularly, and make them a large part of your quarterly and year themes for the company.

Priorities: Mastering Organisational Alignment and Focus

Having too many priorities is the same as having no priorities.

In order to get your organisation aligned with your long term goals, you need to identify the top 5 priorities in your company and also clearly identify which of the 5 is the most important.

There are seven common leading priorities in fast-growing companies:

  1. Not big enough to compete in the market;
  2. Lacking a key player in a key role;
  3. Your economic engine is broken;
  4. Somebody else is controlling your destiny;
  5. You need a war chest to compete;
  6. You can’t raise money until you grow;
  7. You need to scan back or you won’t survive.

Once you’ve identified your top priorities, you should put them into your Management Accountability Plan. This will ensure that each priority is assigned to somebody, that you identify the actions that need to be taken and when they need to be taken.

Priorities: Mastering the Quarterly Theme

Now we start to focus on the nitty gritty of getting the plans into motion. You’ve probably been in a work environment where goals and priorities are set and then promptly forgotten.

One of the antidotes to this is to make sure your team has an emotional connection to the goals so that you generate commitment to them.

There are many ways to do this.

You could do it in a big and flashy way like Mark Moses of Platinum Capital, who once rode an elephant into a company meeting because they were launching an expansion campaign and he wanted his employees to “think big.”

Or you could do it in a more conservative way like one CEO who handed out watches to his executive team that had their three Critical Numbers engraved on them. Every time his executives looked at the time, they were reminded of the priorities and that “time was ticking.”

You can also create rewards for your employees to help further motivate them to reach the most important goals. As long as the goals are clear and they can see progress being made towards the goals, these types of group incentives work well.

Data: Mastering employee feedback

Hassles that continue to come over and over again cost your employees a lot of time. This is the kind of work that makes people hate their jobs. It’s also likely that these issues cost you a lot of customer and revenues.

The answer is to create a system of employee feedback to figure out exactly what these problems are and a systematic process to deal with them.

To get started, ask your team a three-part question: what should we start doing, what should we stop doing and what should we continue doing? Ask them to think about these questions from both their perspective and from the perspective of your customers.

Then, ensure that you are responsive to the feedback. Find some quick wins and cross them off the list. Make sure that your team sees progress being made on them so that they continue to provide input. It’s not enough to just make progress, they have to be able to see it.

Here are 6 guidelines to keep in mind as you continue to work through your employee feedback.

  1. Relevancy – is this an important issue for us to tackle?
  2. Be Specific – make sure to capture the details of each issue.
  3. Address the Root – look at the root issue, not just the symptoms.
  4. Focus on the What, Not the Who – focus on eliminating process issues. 95% of the time it’s a process problem.
  5. Involve All Those Affected – get everybody into one room to discuss and resolve the issue.
  6. Never Backstab – never talk poorly of somebody that isn’t present.

Follow those rules for gathering and dealing with employee feedback and you’ll be well on your way to eliminating your thorniest recurring problems.

Rhythm: Mastering the Daily and Weekly Executive Meeting

At the heart of Harnish’s system for growth are tightly run daily, weekly, monthly quarterly and annual huddles and meetings. He suggests that these meetings should all have specific agendas and should happen without fail.

Here are the meetings he suggests you should have:

The Daily Meeting

In a growing company, everybody should participate in a 5-15 minute huddle, daily. These huddles utilise three of the most powerful tools you have as a leader in getting team performance – peer pressure, collective intelligence and clear communication.

You should hold the meeting at the same time every day and hold it standing up which helps to keep the meeting short and to the point.

Your agenda should include three things – what’s up, daily measurements (data) and where are you stuck?

The Weekly Meeting

The weekly meeting has a different purpose and agenda. You should be focussing on strategic issues and it should last approximately an hour for executives.

The first 5 minutes should focus on good news stories from everybody.

The next 10 minutes should focus on the critical numbers in your business.

The next 10 minutes should be customer and employee feedback. Focus on the issues that continue to pop up.

The last 30 minutes should be a focus on a single big issue. It should be one of your large priorities for the month or quarter.

Finally, close with “one-phrase closes”: ask each attendee to sum up with a word or phrase of reaction.

The Monthly Meeting

The focus of the monthly meeting is learning. It’s a 2 to 4 hour meeting for the management to review progress on priorities, review the monthly P&L in detail, to discuss what’s working or not from a process standpoint and finally to do some training.

The Quarterly and Annual Meetings

Finally, the purpose of the quarterly and annual meetings is to review the progress made on the One-Page Strategic Plan.

The X Factor: Mastering the Brand Promise

The brand promise is the key factor that sets you apart from your competition. It’s the reason that your customers keep returning to you year after year.

This is the starting point for every other executive decision. Make the right call, execute on it and you’ll win. Choose the wrong one and you won’t.

The key here is to focus on customer needs. Not their wants, but their needs. And you need to fulfill their needs in a way that is different than the competition.

After you’ve chosen that brand promise, you need to make sure that you do everything in your power to execute on it and ensure that you can remove any bottlenecks or chokepoints that might get in your way.

It goes without saying that doing all of this is incredibly hard. It should cause you to sweat a little just by thinking about it.

Lastly, realise that everything changes with time, including your brand promise. If the market changes, or your customers needs shift, you need to be ready to respond with a new brand promise that fills that void.

Conclusion

There is a lot to take in with the Rockefeller Habits. Most of the information you’ll have heard before, somewhere, but putting it all together and executing on ALL of it is where the magic is.

Get started building your One-Page Strategic Plan and you’ll be well on your way to building a scalable, profitable business.

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