How a few companies make it … and why the rest don’t

By Verne Harnish

This multi-award winning book provides practical tools and techniques for building an industry-dominating business.

Where many books teach you how to start a business, Scaling Up takes you through the second phase, propelling your company to the next level.

If you’d like to advance from small-time player to the super league – this is your detailed road map on how to expedite the transition.

Harnish presents four major decision areas that every company must get right in order to grow exponentially – people, strategy, execution, and cash.

The opening chapter begins with an overview of the above categories, before going into greater detail on each one.

The following acquaints you further with the author’s main areas of focus.

Scaling Up People

Do you know who your great people are? Can you tell the difference between a lax employee and someone who is critical to the business?

It’s time to face some brutal facts about those with whom you associate. Sometimes the people who seemed perfect at first are no longer a good fit for your company. Relationships change. People change. You need to take stock of your people inventory sooner rather than later; otherwise, they will continue to drain you and your business.

Here’s a breakdown of the three tiers of People:

The Leaders: By working through relationships, goals, and accountability, you will better recognise and prioritise the people challenges in your business.

The Team: By utilising strong marketing and specific interviewing methods, you will attract the right talent to grow your business.

The Managers (Coaches): Approaching management practises that keep your people engaged, productive and happy; as well as continuously educated as the business grows.

Scaling Up Strategy

What is your company’s strategy? Have you got one? Is it clear?

And how do you know when you have an industry-dominating, competitor-crushing strategy?

Without one, your business may not only fizzle but could end up in turmoil.

In the beginning, you probably felt like you had to say ‘yes’ to anything and anyone. You were hungry for opportunities and hell-bent on getting customers. You’d take it all!

But Harnish is adamant that you –

Say yes only until you have the luxury to say no.

It is critical that your business strategy is well-honed and attended to regularly. It’s all about knowing your game and having your ten next moves laid out.

Here’s a breakdown of the three tiers of Strategy:

The Core: This tactic bridges the People and Strategy decisions and examines the values, purpose and competencies of the organisation.

The 7 Strata of Strategy: This process guides you through a framework for constructing an industry-dominating plan. It is to help determine your company’s brand promises and goals.

The One Page Strategic Plan: This plan introduces the tools to manage strengths, weaknesses, opportunities and threats within your organisation.

Scaling Up Execution

The pivotal question here is:

Are all processes running without drama and driving industry-leading profitability?

To ensure you are running a tight ship, Harnish advises you to follow the Rockefeller Habits Checklist.

It is your blueprint to keeping everyone in your team aligned and heading in the same direction.

There are 10 habits divided into the following 3 disciplines.

Priorities: Less is more in driving focus and alignment.
Data: Qualitative and quantitative feedback provides clarity and foresight.
Meeting Rhythm: Give yourself the time to make better/faster decisions.

And here are the 10 items addressed on the Rockefeller Habits checklist:

1. The executive team is healthy and aligned.
2. Everyone is aligned with the number one thing that needs to be accomplished this quarter to move the company forward.
3. Communication rhythm is established, and information moves through the organisation accurately and quickly.
4. Every facet of the organisation has a person assigned with accountability for ensuring goals are met.
5. Ongoing employee input is collected to identify obstacles and opportunities
6. Reporting and analysis of customer feedback data are as frequent and accurate as financial data.
7. Core values and purpose are “alive” in the organisation.
8. Employees can articulate the key components of the company’s strategy accurately.
9. All employees can answer quantitatively whether they had a good day or week.
10. The company’s plans and performance are visible to everyone.

Scaling Up Cash

Harnish cautions that –

You can get by without decent People, Strategy, and Execution, but not a day without Cash.

The key is to generate sufficient internal cash flow and profit to grow your business, without having to rely on the bank.

And if you can keep three to ten times more monetary reserves than your competitors, you’ll have enough to cover anything unforeseen yet continue to be ahead.

Here’s a breakdown of the three tiers of Cash:

The Cash: Focuses on generating sufficient cash internally to fuel growth.

The Accounting: Outlines how the accounting sector can better support the organisation in generating truer measures of revenue and profit.

The Power of One: Walks you through the 7 financial levers that every business leader can control to scale up cash.

The author then takes you through his Next Steps, starting with:

5 Things to Do Now

O jumpstart the transition into the next phase of your business, here are five things Harnish says you can do immediately:

1. Have your entire leadership team (and employees) read or listen to the book.
2. Form a weekly council.
3. Launch a quarterly theme.
4. Start the daily huddle.
5. Plan your first quarterly or annual offsite.

But whatever you do, don’t try and do everything here at once. It’s a slow, relaxed process that should be taken one step at a time. Otherwise, you could find yourself completely overwhelmed.

Work out what your starting point is – which of the four focus points will you tackle first? Do everything you can to get that part right before moving on to the next process.

Harnish advises that –

It generally takes two to three years for all the tools, techniques and habits to become part of the company’s DNA, and another two years to truly master the use of them.

In other words, there is no quick fix solution. You have to play the long game.

And should you need a bit more help to get things moving, Harnish also offers ongoing support through global certified coaching partners, online learning and workshops, and management technology.

But in the end – who will ultimately succeed?

Success belongs to those who have an insatiable desire to learn, and an unquenchable bias for action.