Scaling Up – a great tool in our consulting practice and a must have in your business

Scaling Up – the 1 book that can have significant impact on your operational performance

A must read for any executive team is Verne Harnish’sbook Scaling Up. I put this book on my personal top shelf alongside Jim Collins’ Good to Greatand Tony Bell’s Great Leadership.If you have not read it, you need to put this on your list to read (or listen to) this year. I have used the key ingredients of this book continually with clients since completing it. Scaling Up focuses on the four major decision areas every company must get right: People, Strategy, Execution, and Cash. The book includes many one-page tools, including the updated One-Page Strategic Plan, One Page Personal Plan,and the Rockefeller Habits Checklist.

The Synopsis- The 4 key areas

People: As Jim Collins says, “you need the right person in the right seat.” In Harnish’s book, he shares resources on how to grade your people, and ensure they are in the positions they need to be. He does a wonderful job of explaining the need to train B and C level players in an organization to become A-players. Harnish explains that one great A player replaces three average team members. These elite performers are at the top 10% of your talent, but their performance depends on your ability to clarify their role. Leaders must stress the need of their organization to clarify the needs of the team. Clarity is essential in defining your team’s roles and goals. Having a clear, measurable goal setting method in place is integral to achieving execution.

From their extensive research, they recognized that A-players get frustrated and worn out working with B- and C-players. Executives and senior leaders must identify those activities the elite team members despise to do. Team goals and goal status should be visible to management with each team member access to ensure accountability. Visibility into goal progress gives A-players the assurance of knowing their progress is being monitored and that any underperformers will be held accountable for failing to contribute their best efforts.

Tools highlighted in people include: One Page Personal Plan, Process Accountability Chart, Function Accountability Chart

Strategy: As an executive, you are looked upon to lead with vision and strategy. Ask yourself questions daily that include: What do you need to start doing?What should I stop doing? What should I keep doing?

As an executive, your role is to make strategic decisions. Build your strategy around the core values, and make sure they’re ingrained in your culture by reinforcing them daily. Understand weaknesses, trends, and social trends that may impact your organization.

Keep your strategic plan to just one page, using your vision, purpose, and values to guide you. Get clarity on each of these elements, and consider factors such how your company measures success, what your brand promise is, and ultimately, which BHAG (big, hairy audacious goal) is your biggest priority right now.

Tools highlighted: Strengths, Weaknesses, Trends; Worksheet and One-Page Strategic Plan

Execution: Who, What, When. Clearly define who is responsible and accountable for each strategic priority. What can you do in the next 90 days to get you started on the road to scaling up your business? The Rockefeller Habits Checklist ensures your executive team is healthy and aligned. The checklist also ensures your core values are visible, lived out, and communication is occurring. You’ll need to be clear that every facet of your company has made a team member accountable to these goals, with an appropriate timeframe for achieving.

Cash: Cash is key to the growth of an organization. While debt and equity have a place in a business, cash is the best tool for growth. Debt minimizes overall cash flow, and equity reduces your ability to control to operation. Acceleration Strategies (CASh)is a worksheet on how to shorten your cash conversion cycle (CCC). It focuses on ways to improve your sales cycle, improve your production cycle, and ensure the inventory you buy gets delivered and paid for quickly.

How can you improve cash quickly? Work on ways to streamline the entire process from a sale through delivery in order to return cash ASAP. Questions to ask yourself include:

“Can I shorten my term of payment for my clients?”

“What additional percent of the invoice can I get upfront?”

In each of these, analyze what will happen. While you may lose a client here or there, your improved cash flow may increase your bottom-line.

The Essential Questions

The Essential Executive Team Question

“What is the one thing I need to do?” Companies that focus perform at a higher level. In study after study, it has been proven that people and businesses who multi-task are less effectiveness.

The Four Essential Customer Questions:

a. How are you doing?

b. What changes are happening in your industry, and how does this effect you?

c. How are we doing?

d. How can we serve you better?

When you find your business in trouble, get out and talk to your customers. If you recall, there was a commercial where the CEO realized sales were lingering and decided to do something about it. He purchased airline tickets for his staff to go get personal with each client and rekindle the relationship. It is true. We can strengthen our business when we strengthen our relationships. Who better to give us a ‘real’ perspective and guide our business decisions.

The Essential Employee Question:

“What am I doing to de-motivate you?” 

Be sure to have this conversation often, not annually. Motivated, engaged employee’s performance levels are far superior to a typical employee. Before each football season, Lou Holtz would survey each player in order to know how to motivate and correct each player. He knew each player was unique. Do you recognize this in your team members?

The Essential Strategic Planning Question:

 “How would we beat us?”

Do you recognize your weaknesses in the market? Do you see areas of vulnerability?  What steps can we take to fix it? We like to recognize our strengths, but in any good SWOT analysis, we need to identify our weaknesses and threats. Don’t lose focus of your strengths in protecting your weakness, but don’t turn a blind eye toward it.

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Mitch Smith
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