Home » Blog » Book of the month ‘Scaling Up’

By Verne Harnish

Mastering the Rockefeller Habits 2.0

In the words of the character ‘Red’ (played by Morgan Freeman) in the film The Shawshank Redemption “You gotta make a choice, you either get busy living or you get busy dying!” In nature a plant that ‘has stopped growing’, ‘is dying’ or in the process of dying, much the same is true of a business.

As an entrepreneur or business leader, how high a priority do you place on ‘learning to grow your business’, not only financially but socially and environmentally?

Whatever your business growth objectives as a business ‘knowing how to scale a business’ will put you light years ahead of the competition because the simple truth is that even the brightest of the entrepreneurs I regularly meet are found seriously out of their depth in this area.

I have recommended the book ‘Scaling Up’ serval times in just the last few months. Most businesses that I have ever worked with have a primary focus on GROWING, yet few leaders in the business arena understand that beyond having an effective strategy to establish a successful business you need to have a strategy to scale. There are many things that you should do that many businesses fail to do and there are many things that you should NOT do that many businesses actually do, which is why around 1 in 10 businesses fail in their first 5 years! EFFECTIVE SCALING REQUIRES EFFECTIVE STRUCTURES, PROCESSES AND AN EFFECTIVE MINDSET. 

There are some significant mistakes made by the vast majority of businesses highlighted in this book. 

2 Warnings!

There are 2 warning I would give you to manage your expectations whilst I recommend this book: 

  1. It is obvious from the many case studies and examples quoted that the content is most relevant for larger businesses whose primary purpose is to maximise profits and performance (Level 5 ‘primary focus and purpose is economic growth’). This does not negate the value of the content to smaller business leaders or leaders of Level 7 businesses whose primary purposesare social or environmental well-being as well as financial well-being. 
  2. Whilst everyone I know who has read it finds the content invaluable most of them have said it is a bit dry and not an easy read, which I have to agree with, this said I also knew I HAD TO READ IT even though it was not easy. I found the audio book a little easier to digest than reading alone! 

Whatever type of business you lead many of the principles in this book will be directly or indirectly relevant to the growth your business. If you lead or own a small or small to medium sized business, you will find that you will need to adapt how you implement the core ‘Scaling Up’ principles from predominantly large business implementation examples provided in the book. 

The book is split into four sections – people, strategy, execution and cash!

The 2 big ‘Scaling Up’ concepts (principles and philosophies) covered in this book are:

  1. The 7 Strata of Strategy
  2. The 10 Rockefeller Habits

Strategy

The author states the importance of creating ‘an industry Dominating Strategy‘
in the form of “The One Page Strategic Plan”

“The 7 Strata of Strategy Framework”is the page behind this plan 

The 7 Strata of Strategy

There are a number of great models around business strategy I have encountered over the years for example Deri Llewellyn-Davies’ Strategy on a Page (S.O.A.P). Many of the key elements overlap between these models with all of them placing a heavy emphasis on concepts such as purpose, vision, core values, storytelling, brand identity and big goals!

The 7 Strata of Strategy model is as good as any I have encountered although like other models it makes no reference to the fundamentals of Axiology which enables you to more effectively identify the most authentic purpose and highest values of an individual or group (Axiology is the study of values which I have learned and applied in business for over 13 years)

The 7 Strata are:

  1. Words your business owns (in the mind)
  2. Brand promise
  3. Brand promise guarantee
  4. One Phrase Strategy
  5. Differentiating activities (3 to 5 Hows)
  6. X Factor (10x to 100 x underlying value)
  7. BHAG – ‘Big Hairy Audacious Goals’ 

‘The 10 Rockefeller Habits’

Without question what I found to be the most useful part of the book is the explanation of ‘The 10 Rockefeller Habits’ These 10 habits were established in the years of scaling of one of the most enduring names associated with sustained business growth for over 150 years. Based on extensive research by Roy Williams 90% of wealthy family business organisations loose all of their wealth within 3 generations. The Rockefeller dynasty is one of the 10% that have sustained and grown their wealth beyond 3 generations so it is no surpirse to find out that ‘they have a cause bigger than their organisation at the heart of their activities and objectives. Historically this can be categorized as ‘having sustainable philanthropy at the center of the organisation’s purposeful vision‘ . This aligns with the findings of an author I have previously reviewed (Family Prosperity by Nicholas Charles) which is “For a family to sustain wealth beyond 3 generations it must have sustainable philanthropy at it’s corein other words it must have a purpose bigger than the family (business) itself.   
A brief summary of the 10 Rockefeller Habits:

1. The team is healthy and aligned

  • Each team member understands each other’s differences priorities and styles
  • Frequent regular team meetings (typically at least once a week)
  • On-going regular education 
  • Open team debates and communication

2. The team is aligned with the number 1 thing that needs to be accomplished by the business this quarter 

  • Critical numbers are identified and monitored by the team
  • 3 to 5 priorities needed to support this critical number are identified
  • A clearly communicated engaging quarterly theme celebration / reward related to the quarterly priorities and numbers  

3. Communication Rhythm (of critical numbers) is established throughout the business

4. Every facet of the business has a person assigned for accountability

5. Input / feedback from ALL team members about challenges and opportunities must be collected every week 

6. Customer feedback data must be treated as important as financial data

7. Core Values and Purpose must be alive within the business

8. All team members know verbatim 4 core elements of the business strategy   

  • BHAG (The businesses big goals)
  • Core Customer Profile (Avatar profile)
  • 3 Brand promises – reported on a weekly basis
  • Elevator pitch

9. All team members can answer quantitively how good their day or week has been i.e. they have between 1 and 3 Key indicator numbers that relate directly to their roles and functions.

10. The businesses plans and priorities are visible to everyone.

  • This includes consistent regular communication of the business purpose, vision and core values.
  • Scorecards of progress visible throughout the business.
  • Having regularly meetings to monitor progress and deal with situations.
  • A system that enables effective high priority management. 

Whilst the author advertises his own business services at appropriate places in the book I also love that the author references many other books and services that might be of interest to those wanting to learn about business growth.

This book is rich with so many other ideas and practical examples that I could easily write several more pages on it, however, if you want to learn about how to scale a business this is definitely a book you should have in your collection.

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