Mastering the Rockefeller Habits
Cadence of Accountability – How Alan Mulally Rid Ford of Poor Performers - Cadence of Accountability
The three Rockefeller Habits are:
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? Do all staff have at least one key daily or weekly metric to drive his/her performance?
Rhythm - does your company have an effective rhythm of daily, weekly, monthly, quarterly and annual meetings
You don't have a real strategy if it doesn't pass these two tests:
That what you're planning to do really matters to your existing and potential customers; and
It differentiates you from your competition.
The Rockefeller Principles introduce the following vocabulary:
Priorities - Core Values, Purpose, BHAG, Targets, Sandbox, Brand Promise, Goals, Actions, Rocks, Schedule
Data - Smart Numbers, Critical Numbers
Rhythm - Daily huddle, Weekly, Monthly, Quarterly, Annual meetings
Mastering Growth
There are three barriers to growth common among all growing firms:
Delegating to others: 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). The CEO/founder should play only the role of leader and visionary. 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: whatever strengths and weaknesses exist within an organisation can be traced right back to the cohesion of the executive team and their levels of trust, competence, discipline, alignment, and respect.
Systems and Structures: 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. E.g. how we acquire a customer, how employees are selected and trained, etc.
Almost Matrix - the relationships between organisational functions and the business units of the organisation.
Data Driving Prediction: The ultimate goal of imposing structure and systems is predictability. Unless a company has the ability to determine where it is today and project where it will be in a month/quarter/year, it's not on a trajectory for growth. Growth decisions are dangerous if you don't have a good feel for what's going on both inside and outside the business. Note: once a company reaches $50m in revenue, it should have acquired sufficient experience and position in the marketplace to accurately predict profitability. The fundamental journey of a growing business is to create a predictable engine for generating wealth.
The Right People doing the Right Things
There are three basic decisions an executive team must make:
Do we have the Right People?
Are we doing the Right Things?
Are we doing those Things Right?
The Right People
When you have "A" players, it makes all the difference in the world.
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 3-5 years from now.
Hiring - Selling the Vision
"A" people tend to surround themselves with "A" people, so make a list of the Top 10 people who have contact with the kinds of people you want, and email them a two-paragraph summary describing your firm, the position, and the kind of person you want to hire.
Make sure you're truly selling the company and its vision in your recruitment adverts.
The Selection Process
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.
Right Things Model
The Right Things side represents the people and relationships involved in any business:
Customers (including suppliers)
Employees (including sub-contractors)
Shareholders
The Right Things side of the model represents the "Balance Sheet" of the business: who owes and who owns what.
The Things Right side represents the activities or transactions that occur within a business to deliver consistent products and services to the market:
Selling
Making or Buying something
Keeping Good Records
This mirrors the primary top executive functions of COO (Make or Buy), VP Sales (Selling), CFO (Records). This fundamental troika serves under the CEO.
The Things Right side of the model represent the income statement (P&L), delineating the revenues and expenses with a bottom line of profitability.
Mastering a One-Page Strategic Plan
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.
The One-Page Strategic Plan is essentially the Planning Pyramid turned on its side: forever (Core Values) on the left, all the way to Quarterly Actions on the right:
Complete the One-Page Strategic Plan as follows:
Opportunities and Threats - start with a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
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? E.g. 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.
BHAG - Big Hairy Audacious Goal is a lofty 10-25 year goal. For example, Kennedy's BHAG was to put a man on the moon.
Sandbox - the firm's expected geographical/demographic/industry reach - must be a place where it can be #1 or #2.
Targets - where you want the company to be in 3-5 years.
Brand Promise - clearly articulate the key need you're going to satisfy for your customers (aka value-added proposition, differentiator). E.g. FedEx's 10AM delivery promise, Sprint's "pin drop" clarity.
Key Thrusts/Capabilities - 5-6 key thrusts/capabilities necessary for you to dominate your defined Sandbox, fulfil your Brand Promise, and meet your quantifiable Targets. What are the 5-6 big things you need to do to reach your 3-5 year targets?
Goals and Key Initiatives - what your company needs to achieve in the coming year to realise your longer-term targets. The 5-6 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. E.g. fundraising goals, an increase in the number of large accounts, etc.
Actions and Rocks - the quarterly action steps. This is the how stuff. Break down your annual goals into quarterly action steps. 5 or 6 simultaneous 13-week missions that provide priorities to your entire organisation. These quarterly missions are called Rocks to differentiate them from the fire fighting and pebble moving we do on a day-by-day basis.
Theme, Scoreboard Design, and Celebration/Reward - Establish a quarterly or annual theme to bring additional focus to everyone's activities. 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.
Schedules/Due Dates - Remember that nothing gets done in any organisation until it shows up on somebody's weekly to-do list. 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.
Mastering the Daily and Weekly Executive Meeting
To make more than just a lot of noise in your business, you've got to have rhythm. At the heart of executive team performance is a rhythm of tightly run daily, weekly, monthly, quarterly, and annual huddles and meetings - all of which happen as scheduled, without fail, with specific agendas. You'll solve problems more quickly and easily, achieve better alignment, and communicate more effectively.
The Daily Meeting
Everybody in a growing company should be in some kind of 5-15 minute huddle daily. Casual meetings or one-on-one meetings fail to take advantage of the three most powerful tools that a leader has in getting team performance: peer pressure, collective intelligence, and clear communication.
Peer Pressure: In one-on-one meetings there is too much private negotiation going on ("You know what I'm up against..."). In one-on-one meetings there is no Greek chorus singing out when the untruths begin to fly - people will give one-person excuses that they'd never try before an entire group. Peer pressure during group meetings keeps things moving, because it's just easier to get the job done than to have to face the team each day, each week and make the same excuses for having failed to get it done.
Collective Intelligence: The audience lifeline in "Who wants to be a millionaire?" is consistently more accurate than the phone-a-friend lifeline (the equivalent of a one-on-one).
Timing: set the time irregularly - every day at 8:08AM or 4:46PM. People do a better job of showing up on time when the time's not on the half or quarter-hour. Use services like iping.com to remind participants of the meeting by SMS.
Setting: avoid sitting comfortably - make it a stand-up meeting - it helps to keep the meeting short. Gathering in the leader's office makes it easier for him or her.
Who attends: the more the merrier.
Who runs the meeting: pick someone who is naturally structured and disciplined (doesn't have to be the CEO). The main job is to keep things running on time, and the ability to say "take it offline" when two or more people get off on a tangent that doesn't require everyone's attention.
The agenda: just three items long: what's up, daily measurements (data), and where are you stuck?
The Weekly Meeting
The weekly meeting has a different purpose, hence a different agenda. It's intended to be more issues-oriented and strategic gathering. Focus on what's important. Once the habit is created and the meeting is structured properly, most people will look forward to the meeting and find they can't function properly without it.
Schedule: same time same place every week, 30 minutes for front-line employees and a full hour for execs. It can be a conference call if you have several office locations (try also freeconference.com or raindance.com)
Five minutes: good news. Each weekly meeting starts with five minutes of good-news stories from everyone.
10 minutes: the numbers. Discuss the Smart Numbers (which should also be displayed graphically).
10 minutes: Customer and Employee feedback. What issues are cropping up day after day? What are people hearing?
30 minutes: a Rock, or Single Issue. A big mistake at weekly meetings is covering everything every week. As a result, the team only deals with issues on a shallow level.
One-Phrase Closes: ask each attendee to sum up with a word or phrase of reaction.
The Monthly Meeting
The focus of the monthly meeting is on learning - a chance for the executive team to "pass its DNA" down to the next level. It is a two to four hour meeting for the extended management team to review progress, review numbers, discuss what's working and not working, make appropriate adjustments, and do an hour or two of specific training.
The Quarterly and Annual Meetings
The agenda for the quarterly and annual meetings is based around the One-Page Strategic Plan.
Mastering the Brand Promise
Identify the single most important measurable in building value. What really matters to your customers? What is it that brings your customers to you, and keeps them loyally returning, purchase after purchase, year after year? It's your brand promise: the key factor that sets you apart from all competitors. Your brand promise is the starting point from which all other executive decisions are derived.
Determining a brand promise is a fateful moment in the life of any company. Choose the right one - the one your customers respond to, the one you can track and execute day after day - and you win. It's that simple. Choose the wrong one and you'll probably flounder for years, never hitting goals.
Consider your BHAG. Recall Ronald Reagan's resolve to defeat the Soviet Union's "evil empire". Few bothered to ask how it would be accomplished. They just put their energies behind it, and almost miraculously, it became real. By the way, make sure your BHAG is measurable.
Define your sandbox. Figure out your desired sphere of influence over the next 3-5 years. Define it geographically (are you destined to remain a local company/regional/national/multinational), demographically (who will you be selling to), and in terms of product lines and distribution channels.
Determine customer needs. What is your customers' greatest need? Not their wants - they'll "want want want" you all the way to bankruptcy if you let them! What you're looking for is what really matters to the customer. At the same time, it needs to be demonstrably different from the competition.
What's your measurable brand promise? At Orion International, a recruitment firm, it is "14 Days Done" - Orion will complete a hiring process in two weeks flat. Bear in mind: your brand promise shouldn't be easily accomplished. It ought to cause some stress to your organisation. Also, don't confuse brand promise with marketing slogans. Stay pure. Find the measurable deliverable, and leave the sloganeering to the marketing folks.
Control your bottleneck or chokepoint. This was Rockefeller's key strategy. Now that you've put a stake in the ground by determining your measurable brand promise, what are you going to do to lock it up, to hold that position?
Everything changes - including your brand promise. E.g. for FedEx, it was the 10AM delivery. But now all courier firms promise that, it became a given. So FedEx switched its brand promise to "Be absolutely sure" (online tracking of packages). Note that FedEx didn't stop guaranteeing 10AM delivery, they just upped the ante.