Mastering the Rockefeller Habits has been an influential book for Binary. We have been through the process described in the book, and it greatly influenced the development of the company. Further information and tools from Verne Harnish may be found at https: Priorities - does your company have Top 5 priorities for the year and the quarter? Do all staff have their handful of priorities? Realtime Data - does your company have daily and weekly data to provide insight into the organization and the market?
Rhythm - does your company have an effective rhythm of daily, weekly, monthly, quarterly and annual meetings. Each company also has an X Factor - an underlying strategy which must be discovered to gain control of the key chokepoint in the business model and industry. For example for Rockefeller, the key to winning in the oil business was gaining an advantage in transportation costs, so he bought all the railroads.
You don't have a real strategy if it doesn't pass these two tests:. The two most important decisions a business leader makes are defining a simple long-term vision years out, and deciding on a handful of priorities for the next quarter. In planning, the "middle" is gone. Decide where you want to be in years, and what you need to do in the next 90 days.
The need for the executive team to grow as leaders in their abilities to delegate and predict these are the two most important abilities of a leader. He needs a managerial structure in place to let him focus on his real job of growing the company.
If he is focused solely inside the company, he cannot move the company ahead. As goes the leadership team goes the rest of the firm: The need for systems and structures to handle the complexity that comes with growth. Increases in complexity lead to stress, miscommunication, costly errors, poor customer service, and greater overall costs; to keep from being buried, an organisation must put in place appropriate systems and structures.
Systems include accountancy systems, PABX, etc, and structures include organisational charts , of which there are there types:. Accountability Chart - a standard hierarchical organisation chart, which clearly assigns accountability to a single person for a given task, priority or process. Work Process Chart - the critical processes that flow through the organisation. Almost Matrix - the relationships between organisational functions and the business units of the organisation.
The ultimate goal of imposing structure and systems is predictability. Growth decisions are dangerous if you don't have a good feel for what's going on both inside and outside the business. The fundamental journey of a growing business is to create a predictable engine for generating wealth.
To do this, you set priorities for each quarter. Drive quarterly priorities with a Theme. Quarterly themes are powerful goal motivators. They focus the entire workforce on that single, overriding quarterly target in a way that people can not only understand, but get excited about. It's amazing what you can accomplish when you get a hundred people all working on just one priority, instead of Themes create the focus and the fun , but what makes a quarterly goal achievable is a daily and weekly rhythm aimed at keeping everyone informed, aligned, and accountable.
Most important is the daily huddle that lasts no more than 15 minutes per group. If possible, organise a special huddle area, where walls are mapped with the top priorities, core values, metric charts, and market data the " Situation Room ".
A quick way to discern whether you have the right people is to ask yourself if you would enthusiastically rehire each person on your team if given the opportunity. The second question to ask, especially regarding your executive team and other key employees, is whether you think they have the potential to be the best in their position years from now. Testing is considerably more accurate and objective than interviewing. Have applicants submit to several hours of formal testing.
Also use the standard personality test. The most important thing you're trying to determine in the select process is the candidate's fit with your culture. A close second is whether they have a positive or negative outlook , which can be determined primarily through testing. Testing for emotional maturity also ranks high. 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. The Right Things side represents the people and relationships involved in any business:. The Right Things side of the model represents the "Balance Sheet" of the business: The Things Right side represents the activities or transactions that occur within a business to deliver consistent products and services to the market:.
This fundamental troika serves under the CEO. Even though your firm may have issues in all six areas, you can only advance one of the areas at a time. On the Right Things side, you also need the right rhythms if you are a public company, you need very specific Shareholder rhythms.
The six things provide guidance on your required organisational structure. Sell splits into separate sales and marketing functions. Keep Good Records splits into separate accounting and finance departments.
The Planning Pyramid provides a framework and common language to put it all together:. A vision is a dream with a plan. Without all seven levels of the Planning Pyramid which correspond to the different time frames, from daily to forever , your vision will be less than complete.
Core Values - these are five to eight statements that broadly define the shoulds and shouldn'ts that govern your company's underlying decisions. They are the Ten Commandments , or your Constitution , the foundation upon which the rest of your vision is built. Purpose - answers the very basic why questions: Why is this company doing what it's doing? What's the higher purpose for why we're in the business we're in?
Why do I have such a passion for what we're doing? Wal-Mart's purpose is "To give ordinary folks the chance to buy the same things as rich people".
Actions - the actions that the firm needs to take to align itself better with its core values and purpose statement. Brand Promise - clearly articulate the key need you're going to satisfy for your customers aka value-added proposition, differentiator. FedEx's 10AM delivery promise, Sprint's "pin drop" clarity. What are the big things you need to do to reach your year targets?
Goals and Key Initiatives - what your company needs to achieve in the coming year to realise your longer-term targets.
The Key Initiatives are like your corporate New Year's resolutions. Critical Numbers - they should represent key weaknesses at the heart of your economic model or operations that, if addressed successfully, will have a significant and positive impact on the business. Actions and Rocks - the quarterly action steps. This is the how stuff.
Break down your annual goals into quarterly action steps. These quarterly missions are called Rocks to differentiate them from the fire fighting and pebble moving we do on a day-by-day basis. Post a scoreboard that will keep everyone apprised of your progress towards achieving the measurable target of the theme. The celebration is enjoyed when the measurable target is hit. Quit thinking in terms of monthly increments and drive all measurements, deadlines and deliverables down to weekly increments.
Accountability - This is the who level. There should never be more than one person who is accountable. If everyone's accountable then no one's accountable. To discover your company's core values, gather a representative group of staff, ask them to select the five employees that best convey the good things about your company.
When each individual has five names, go around the room and determine the Top 3 vote getters. Then brainstorm to find out the words that best describe who these employees are, how they go about their work, what would customers or co-workers say about them, and why they are valuable to the organisation.
You'll know you've arrived when you get goose bumps on your arm. Go beyond simply posting the core values on the wall or handing out plastic laminated cards. Get a little creative. Use the language from your core values in your recruitment ads and job descriptions. Use these words during staff orientation on their first day, and during performance appraisals.
With a little creativity, any performance measure can be made to link with a core value. Use the core values to generate catchy titles for your internal newsletters, and to set the themes. As CEO, when you make a decision, relate it to a core value. When you reprimand or praise, refer to a core value. An organisation with too many priorities has no priorities.
It is important for management to clearly articulate to employees the five most important priorities that must be addressed to move the company to the next level.
It's then critical for everyone in the organisation to have their own Top 5 priorities , aligned with those of the company. This list should be the basis of a regular performance appraisal. This process creates something magical called alignment. When you have everybody aligned, everybody at every level sees what you see and aspires to what you aspire.
To make your Top 5 and Top 1 of 5 something more than words on paper, to transform them into something achievable, you need a Management Accountability Plan MAP.More...