Scaling Up - Verne Harnish

Scaling Up - Verne Harnish

Learn how to get your company out of inertia and start growing exponentially!

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You got the idea. You set up your business plan. You have launched your new venture and achieved relative success. Now, it's time to take the next step: scale your business!

The author explains that the life cycle is divided into three phases: the beginning, when companies are like little mice (phase in which 96% of enterprises are stagnant), the escalation, which the author compares with gazelles, which is when the company grows by more than 10x their profit, and the elephant stage, when they are already giants and slow their growth rate.

So, do you want to know how to make your business stop being a mouse to climb like a gazelle? Stay with me!

About the book "Scaling Up"

More than a decade after the publication of "Mastering the Rockefeller Habits", the author Verne Harnish brought a major review of this work in 2014, optimizing and presenting new tools to make his company grow and climb more and more.

Scaling Up: Mastering the Rockefeller Habits 2.0 was developed aligned around the four main aspects of a company's escalation: people, strategy, execution, and money.

In a very didactic way and with many examples of tools like graphs and tables, the author presents the main concepts and the measures to be taken on each of these aspects throughout the book.

About the author Verne Harnish

Verne Harnish invests in several new ventures and startups. He is the founder of Gazelles, a global institution of executive education, coaching and technology. In addition, he is the founder of a corporate training program at MIT (Massachusetts Institute of Technology).

The author also wrote "Mastering the Rockefeller Methods" and "The Greatest Business Decisions of All Times".

To whom is this book indicated?

The book "Scaling Up" brings great volume of content on your pages, so it takes concentration and perseverance during your reading.

For the same reason, it is an extremely valuable material for CEOs and their executive teams who seek to understand and overcome obstacles in the journey to the enduring success of their business.

In addition, the tools presented by the author are useful for new entrepreneurs, who want to understand what to do to start their climb.

Main ideas of the book "Scaling Up"

According to the author, a company must follow some principles to get into an exponential growth curve. They are:

  • Attracting and keeping the right people in the right places;
  • Develop a truly unique strategy;
  • Conduct the execution of your processes and projects without fail;
  • Keep enough money to withstand the storms that may arise.

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[Book Summary] Scaling Up - Verne Harnish

Overview: Aspect 1 - People

The first point of the journey for growth is about people. This includes all employees involved in your team: from leaders, managers, to those responsible for operational tasks.

Verne Harnish explains that people join companies, but resigned because of bad managers. So to keep your team happy and engaged, you do not need to offer free lunch, or yoga classes, but rather choose great leaders.

Put people in the right places, especially in leadership positions. These leaders have the job of making sure the right people do the right things. Once you have the right people, invest in their development and training.

Your managers should be chosen for their ability to train, not just for their technical skills. While training, according to "Scaling Up", they should be able to inspire people, reminding them of the greater purpose of their work. Make sure they recognize the good work of their team as people stand out when they feel valued.

At the same time, managers must delegate, so they focus on coaching, remove employee obstacles, and think ahead.

Verne Harnish also cites the importance of paying well your employees, even if that means hiring fewer people.

In addition to helping in the motivation, engagement, and retention of your greatest talents, this also reduces expenses with selective processes and training of new employees.

Overview: Aspect 2 - Strategy

Initially, Harnish highlights the importance of having well-established values across all levels of the business.

Core values are the rules and boundaries that define the company's culture and personality and provide a "must / must not" test for everyone's behavior and decisions in the company.

Your culture and your values should act as an immune system that expels people who do not align.

The core values, moreover, are the starting point of your strategy. They identify the main purpose of your organization, why it exists, and condenses the answers to those questions in a concise statement.

From there, all company activities will be aligned, especially recruiting, hiring, and rewarding employees.

The seven strata of the strategy

To assist in the design of the strategy, "Scaling Up" suggests an approach based on the following principles:

  • Words that you have - It is important to position your company with words and phrases that will define it in the market. An example would be "safety" for Volvo. Find these words that you will own and use, especially in creating content, using Google Adwords, and searching for keywords.
  • Brand Promises - Get to know your most valuable customers, the group that contributes to the highest percentage of your profits. Appeal to your emotional desires as much as your needs. Also, promote the brand promises that ensure the retention of your customers and make them want to do more business with you.
  • Brand Promise Guarantee - State that the most important thing is that you deliver, no matter what happens. This can be a full refund or a free guaranteed replacement.
  • One sentence strategy - Focus on a primary benefit to the user. Of all the things your customers want you to do, it may be the best price, the best quality, etc. you should focus on a primary benefit.
  • Differentiating activities - Your strategy in delivering services and how it differs from your competitors can make your business thrive or die. Make sure your differentials can not be done cheaply or quickly, or they would be easy to copy.
  • X-Factor - Find your X factor or the one that causes you to outperform your competitors by at least 10 times.
  • Future Goal - Choose a "big and audacious goal" that connects your purpose and strategy. Based on this, create a critical profit metric.

Overview: Aspect 3 - Execution

With the right people and the well-defined strategy, the next step in the quest for success depends on executing quality tasks.

For this to happen, Verne Harnish suggests the following habits:

  • The executive team is healthy and aligned;
  • Everyone is aware of their main goal to this quarter to get the company to grow;
  • The pace of communication is well established, making the flow of information within the organization fast and accurate;
  • Each facet of the organization has a person in charge of ensuring that the goals will be achieved;
  • Feedback from employees is constantly collected, to identify obstacles and opportunities for improvement;
  • The analysis of customer reports is frequently and accurately performed;
  • Core values and purpose are lived by everyone within the company;
  • All employees should be able to respond quantitatively if they had a good day or a good week;
  • The company's plans and performance are visible to all employees.

Overview: Aspect 4 - Money

Finally, Harnish talks in "Scaling Up" about financial management. According to the author, the best companies keep 3 to 10 times more financial reserves than their competitors.

A great example was observed with the attitude of Bill Gates in the early days of Microsoft: he determined that the company should always maintain a financial reserve that covers one year of its operating costs.

Stop saying, "Well, that's how it works in our industry." Make sure you have enough cash reserves because as long as you have excellent leaders and teams, or a brilliant strategy, just this can not save a company in financial trouble.

In addition, companies need money to grow, but nothing slows down money faster than growth itself. With this in mind, you need to make sure your cash flow is as monitored as possible.

Settle your bookkeeping, receive the money as quickly and accurately as possible, and send accounts to customers without error in a proper time.

What do other authors say about it?

In the best-selling "Good to Great", the renowned author Jim Collins also addresses the importance of putting the right people in the right places. Like Verne, he believes that it is first necessary to bring together the skilled people and then formulate the right strategy.

The authors of the book "Leadership Pipeline" cite the relevance of bringing together leaders who are capable of acting as coaches, the so-called "coach leaders," who value and develop the capabilities of their commanders.

Eric Ries underscores the idea of the "growth engine," which drives the viral growth of a company. This principle is explained in his work "The Lean Startup".

Okay, but how can I apply this to my life?

As was said before, the content of the "Scaling Up" is very complete and, to be applied in a concrete way, it takes much study and perseverance on the part of all those involved.

Here are some more tips provided by the author for your practices to work in the real world:

  • Between the four aspects explained in the book, the one that puts the most pressure and impact on the health of the company is money. So always keep your accounts under control and pay due attention to any financial problems;
  • Responsibility is essential for climbing. All goals must be linked to a person;
  • As a leader, recognize the good work of your team;
  • Make use of data analysis tools to get more accurate forecasts and be able to make better decisions;
  • Focus on making sure everyone in the company is aligned with values, purpose, and primary goals.

In addition to these tips, on the book's website, several tools are available to download, so they can help you on your journey to success.

Did you like this summary of the book "Scaling Up"?

We hope you enjoyed our summary and are able to apply the teachings of the author, Verne Harnish, to your company. Leave your opinion in the comments, your feedback is very important to us!

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Book 'Scaling Up'