Verne Harnish: Listen To Scale

Engaging customers has always been a critical CEO skill, but to win in the age of Amazon, Verne Harnish, bestselling author of Scaling Up and Mastering the Rockefeller Habits, says it’s become downright existential. Here’s what he means, and how to do it right.

Bestselling author Verne Harnish will be the keynote speaker at our 2019 CEO Leadership Conference, Nov. 7-8 in Dallas. More information. 

Verne Harnish

In the late 1990s, Verne Harnish picked up a copy of Titan, Ron Chernow’s powerhouse biography of John D. Rockefeller. For some, it was interesting history. For Harnish, it was a page-turning how-to, a guide to the practices and processes of one of history’s greatest business minds.

The book confirmed many of the things Harnish observed in great companies as a longtime entrepreneur and founder of the world-renowned Entrepreneurs’ Organization, especially the need for priorities, solid data and a set rhythm for operations. Four years later, he released Mastering the Rockefeller Habits, a slim, detailed guide to putting these principles to work. It became an international bestseller.

In 2014, he followed with Scaling Up, an update he dubbed “Rockefeller 2.0.” It expanded on his original work, detailing a virtuous cycle for growing a business by attracting the right people, creating a differentiated strategy, executing that strategy—and making sure you had enough cash on hand to weather the inevitable bad times. It’s since become one of the most influential bestsellers of the past decade.

Nurturing high-growth “Gazelle” firms is Harnish’s passion—and business—but given his interest in Rockefeller, I couldn’t resist asking him what the most powerful CEO of the Gilded Age would make of the C-Suite today—what’s changed and what hasn’t. What follows is a transcript of our conversation, edited for length and clarity.

It’s been more than 20 years since you published Mastering the Rockefeller Habits. What would Rockefeller recognize about business today, and what would he not?

What’s more impressive is what hasn’t changed. He understood the need for getting data in from the field on a daily basis. He had one of the bleeding-edge telegraph systems right in his home. Today, you have some slightly different technologies, but I dare say that a lot of leaders still don’t really have good daily visibility into how well their company is running, particularly mid-market firms. That amazes me.

Number two, one of the most important of what I call “leader KPIs” is getting a lot of quiet time for thinking. He worked from home every morning and didn’t go into the office until lunch.

Today, with all this influx of connectivity and technology, I don’t think we’re getting necessarily more important information, but everything seems to have been raised to the urgent. It’s giving us less time to really think, and ponder, and read, which is critical to the creative and innovation process, which is what you’ve got to accelerate if you want to keep up.

I was enamored by the fact that he was into this kind of daily walk and talk in the morning and the evening. He had lunch every day with his nine directors and—when you speed forward 100 years—the late Steve Jobs’s key to leading was with famous walks and talks with people. Bill Campbell, who was Steve’s coach, would do their walk and talk on Sunday. Steve had lunch almost every day with [Apple design chief] Jonathan Ive. He understood that it’s important to choose who you break bread with on a daily basis.

How’s the role of CEO changing in this era, and how is it not changing?

Our mid-market leaders, they’re faced with too much innovation. They’re faced with too many good ideas. I think part of what happens is we keep trying to apply MBA management techniques to these growth firms, and that’s been the bigger failure.

What do you see as the big challenges facing mid-market CEOs?

There are just a lot more shiny objects. That’s number one, which is distracting. Number two, Rick Kash, former vice chairman of Nielsen, noted in his book, How Companies Win, that in 2007, we crossed a significant line. In [the past], there was more demand than supply. I don’t want take anything away from some of these family-run dynasties all through the last half century, but truly, if you just showed up, you had the business. It was all a drive around the planet on the supply-chain side, to do better, faster, cheaper.

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Now, through the Internet, you can do business with anyone at anytime from anywhere. The fundamental shift that has to be made is get your head out of the cost and supply side of the business, and get it refocused on the demand and price side of the business. So we’ve really been pushing our CEOs to push the supply chain side of the business down closer to the front line, and get much more focused on understanding the customer side of the business, like they’ve understood the supply side of the business for the last five decades.

How do you do that? How do you begin to become a more customer-centric CEO?

First of all, we’re spending literally every day talking and interacting with customers. Everyone loves to talk about how Steve Jobs disliked focus groups. But he would spend most of his afternoons grabbing hold of a customer issue and tracking it through Apple, almost to the chagrin of everyone else in Apple. It could almost feel like micromanagement. But that’s what we did with Sanjeev Mohanty in India.