Apr.20

Mastering the Rockefeller Habits (Notes)

My notes fromĀ Mastering the Rockefeller Habits

  • Overview
    • You only have to define two points
      • where you plan to be in 10-25 years
      • what you have to do in the next 90 days
    • Keep everything stupidly simple
    • Handful of objectives each quarter
    • What you’re planning to do
      • Must really matter (to existing & potential customers)
      • Differentiates you from your competition
    • Priorities
      • Top 5
      • Top 1-of-5
  • Chapter 1 – Mastering Growth
    • 3 Barriers to Growth
      • Executive team needs to grow as leaders
        • Delegate
        • Predict
      • Systems and Structures
        • As you move from 2 to 4 (people, products, etc) complexity increases by 12x
        • 3 Org charts
          • Accountability Chart
          • Work Process Chart
            • One process / quarter
              • Pick most dysfunctional and clean it up
          • Almost Matrix
      • Understanding Market Dynamics
        • “Number one function of a leader… ability to predict”
    • Quarterly Themes
    • Meeting Rhythm
      • Daily huddle
        • Top 5
        • Top 1-of-5
        • Roadblocks
        • Report your numbers
      • Weekly meeting
        • Quarterly goals
    • “One great person can replace three good people”
  • Chapter 2 – Right People Doing the Right Things Right
    • 1% vision and 99% alignment
    • Right People
      • Fewer people paid more
        • Pay 50 to 100% more
      • Lots of training
      • Would you enthusiastically rehire each person?
      • Makes a list of 10-20 people you could email tomorrow who have contact with the type of people you want
        • 2-paragraph summary describing your firm, position, kind of person you want to hire
        • Call ahead of time to give heads-up the email is coming
        • Send email
        • Follow-up a week later
      • Selling the company and its vision
      • Selection Process
        • Behavior-based structured interview
        • Standard Personality Test
        • Bigby Havis & Assoc. online testing products
        • Culture is most important thing; #1 is alignment with core values
        • #2 is positive outlook
        • Emotional maturity ranks high
        • Assessment-center approach
          • 3 or 4 business challenges
          • Candidate gets 1 hour
          • Walk through with candidate to see how they think & how you work together
        • Management hires, bring on as consultant first
      • Get the wrong people out as quickly as possible
    • (Right [Things) Right]
      • Fundamental decisions, relationships and functions of a business
      • Right Things
        • Left side
        • Do you have a viable economic model?
        • Revenue / market share should grow at 2x market rate
        • People and relationships involved in any business
          • Customers
          • Employees
          • Shareholders
        • Leaders success is defined as having satisfied all 3 stakeholders
        • Outcomes
          • Get
          • Keep
          • Grow
      • Things Right
        • Do you have the management practices and processes to take advantage of the market opportunity you’re pursuing?
        • Profitability at top of industry
        • Activities and Transactions
          • Making or Buying (COO)
            • R&D splits off at $10m
          • Selling (VP Sales)
            • Sales / Marketing split at $10m
              • Key measurement for marketing is lead generation
          • Keeping Good Records (CFO)
            • Accounting / Finance split at $10m
        • Outcomes
          • Better
          • Faster
          • Cheaper
      • Priorities
        • Choose one circle on each side that needs the most attention
        • Think of the circles as spinning plates balanced on top of sticks
        • Who is accountable for each circle?
    • You lead people; manage their activities
  • Chapter 3 – One-page Strategic Plan
    • Downloads at gazelles.com
    • To remain competitive, your organization needs 3 things:
      • Framework
      • Language
      • Habit
    • Planning Pyramid
      • A vision is a dream with a plan.
    • One-Page Strategic Plan
      • Planning Pyramid on its side
      • Name of the firm
        • Can be the first step of disagreement
      • Opportunities and Threats
        • Conduct SWOT
        • Top 5 Rule
      • Core Values
      • Purpose
        • Why is this company doing what it’s doing?
        • What’s the higher purpose?
        • Why do I have passion for what we’re doing?
      • Actions & BHAG
        • Review Core Values & Purpose
        • What actions does the firm need to take to bring things into better alignment?
        • BHAG
          • 10- to 25-year goal
      • Targets & Sandbox
        • Target
          • Where you want the firm to be in 3- to 5-years
        • Sandbox
      • Brand Promise
        • Key need to satisfy your customers
        • Differentiation
      • Key Thrusts / Capabilities
        • 5 or 6
        • How you’re going to
          • Dominate the Sandbox
          • Fulfill your Brand Promise
          • Meet your Targets
      • Goals & Key Initiatives
        • Goals
          • What your company needs to achieve in the coming year to realize your longer-term targets
        • Key Initatives
          • 5 or 6
          • Corporate New Year’s resolutions
      • Critical Numbers
        • One from the balance sheet, one from the income statement
      • Actions and Rocks
        • How
        • 5 or 6 simultaneous 13-week missions
        • Provide priorities to your entire organization
        • Drive to achieve the quarterly missions (Rocks)
      • Theme
      • Scoreboard Design
      • Celebration / Reward
    • Quarterly Meetings
      • Don’t leave until the next quarterly meeting date is set
      • Reconsider your theme
      • Re-establish your action steps
      • Lots of preparation beforehand
    • Schedules
      • Due dates
      • When things will happen
      • What’s first? What’s next?
      • One page outline of the steps & weekly due dates to complete the tasks
    • Accountability
      • Who
      • Only one person is accountable
        • If everyone’s accountable then no one’s accountable
  • Chapter 4 – Use of Core Values
    • Summary
      • Few rules
      • Repeat yourself
      • Act consistent with the rules
    • Strong culture leads to
      • superior performance
      • higher employee retention
      • a better-aligned organization
      • makes leading people much easier
      • reduces policies and procedures
      • make tough decisions
    • Discovering your Core Values
      • Finding the Right Words
        • First draft in 15 minutes
        • Finished document in 1 hr
        • Mission to Mars
          • 5 employees who demonstrate your core values through observing their actions
          • Who are they?
          • How do they work
    • 8 actions to bring your core values alive
      • 1 – Storytelling
        • See Disney vision
        • Tell a story, end with “and that’s why we consider (blank) one of our core values”
        • Tell stories at monthly and/or quarterly meetings
        • Ask for examples at weekly meetings
      • 2 – Recruitment
        • Use the language from the core values in recruitment ads and job descriptions
        • Test the candidate’s alignment with your core values
      • 3 – Orientation
        • Company legend behind each core value
      • 4 – Performance Appraisal
        • Gazelles.com download, see Figure 4-1 “Creating a Personal Plan”
        • Organize your employee handbook into sections around each core value
      • 5 – Recognition and Reward
        • Use to gain a new source of corporate stories
      • 6 – Internal Newsletter
      • 7 – Themes
        • Core values are most obvious source of quarterly or annual themes
      • 8 – Everyday Management
        • When you make a decision, relate it to a core value
    • Have a Few Rules, Repeat Yourself, and Be Consistent
      • Think of it as teaching your 2-year-old
  • Chapter 5 – Organizational Alignment and Focus
    • Know your Top Priorities!
    • Summary
      • If you have too many priorities, you have no priorities
      • Company’s 5 most important priorities
        • Top 5 and Top 1-of-5
      • Each individual has 5 most important priorities, aligned with the company’s
      • Management Accountability Plan (MAP) aligns specific activities with priorities
    • Establish Top 5 and Top 1 of 5
      • Planning Pyramid
        • Align long-term goals with quarterly challenges
        • Use to determine Top 5
          • For short term
            • What do I need to be doing today to keep the company moving forward?
      • Top 5 and Top 1 of 5 should be basis of a regular performance appraisal process
      • Alignment!
      • Review with all employees at monthly and quarterly meetings
    • Management Accountability Plan (MAP)
      • Assign the accountabilities
      • Gazelles.com download figure 5-1
      • Assign within 24-48 hours of determining top 5
      • Who’s going to be the point person on what, and when they’ll produce the deliverables
      • Week-by-week plan over 13 weeks
      • Everyone needs to produce a one-page MAP for each of their major priorities
    • Finding Top 1 in 5
      • 7 Sore Points for Companies
        • Not big enough to compete
        • Company lacks a key player
        • Economic engine is broken
        • Someone else is controlling our destiny
        • Need a war chest to compete
          • One of the best reasons to go public
        • We can’t raise money until we grow
        • We’ve got to scale back or we won’t survive
      • Pursuing your Top 1 of 5 goal is probably the most distasteful, frustrating and perhaps discouraging thing you’ll ever confront
      • Do not do it alone
      • What is your number 1?
  • Chapter 6 – Quarterly Theme
    • Summary
      • Use themes and images
      • Track progress
      • Celebrate success
    • Takes an image to anchor a message with the audience
    • Connects not just with their heads, but also their hearts
      • “encourage the heart” when seeking organizational alignment
    • Priorities and Critical Numbers to Drive your Theme
      • Refer back to one-page strategic plan
      • Take Top priority & align with Critical Number
      • Brainstorm a theme
        • See Core Values
    • Seven different forms of intelligence
      • Verbal
      • Visual
      • Spatial
      • Body
      • Musical
      • Interpersonal
      • Intrapersonal
    • Hit as many of these as possible when announcing the theme
    • Tracking Progress
      • Publically
    • Rewarding and Celebrating
      • Real reward is accomplishment, reaching a goal and doing it together
  • Chapter 7 – Employee Feedback
    • Summary
      • Recurring customer and employee hassles cost your employees 40% of their time
      • Figure out what problems are arising and recurring
      • 6-point process to resolve identified hassles
    • Recurring problems and hassles make people hate their job
    • Six Sigma Institute: fundamentals of quality control
    • Make a 1% improvement in your products and services each week, you’ll gain greater and greater yields from the solutions with each passing year.
    • Aim for solving too many problems, you’ll have made a hassle out of your de-hassling system
    • Gathering Data
      • 3 questions
        • What should we start doing?
        • What should we stop doing?
        • What should we continue doing?
      • Ask from their perspective and from the client’s perspective
    • Collect raw, unedited data, brainstorm solutions
    • Report progress on longer-term issues
    • Log anything which caused them to spend more than a minute doing / something they shouldn’t have needed doing
      • What are customers requesting
      • What hassles customers from doing business with you?
    • Handling Feedback
      • Be responsive
      • Find some quick-hit solutions
      • Don’t summarize the feedback
        • Exception: if it’s personal, deal with it 1-1
    • Reporting Progress
    • Etiquette 101
      • 6-point set of problem-solving guidelines
        • Relevancy
          • Go after what’s causing the most pain
        • Specificity
        • Address the root
          • Ask “why” several times
        • Focus on the what, not the who
          • When all the what’s keep leading to the same who, you may need to fire that person
          • Most hassles are process hassles, not people hassles
        • Involve everyone affected
          • Get the story once, not 10 times
        • Never backstab
    • Management-Development Opportunities
      • Form a mid-level management team to do initial screening
  • Chapter 8 – Daily and Weekly Executive Meeting
    • Summary
      • Got to have rhythm
      • Tightly run daily, weekly, monthly, quarterly, annual meetings
        • Specific agenda
        • Focus on what’s important
      • You’ll solve problems quickly
      • Have better alignment
    • Routine
      • Faster your growing, more meetings you need
      • Short with a structure, time limits and specific agenda
    • More Meetings
      • Quarterly, measure progress towards year-end
      • Annually, set goals based around One-Page Strategic Plan
        • Growing < 15% / year, 1 year = 1 year
        • Growing 20-100%, 1 quarter = 1 year
        • Growing > 100%, 1 month = 1 year
      • Each meeting builds upon the next
      • Discuss new opportunities, strategic concerns and bottlenecks
    • Daily Meetings
      • 5- to 15-minute huddle
      • Because everyone’s together, things get quickly and accurately communicated
      • Focuses the collective intelligence of the team
      • Timing
        • Irregular, 8:08am
          • People do better being on time when the time is irregular
        • Start and end on time
        • Don’t problem solve, only identify problems
      • Who Runs the Meeting
        • Someone who is structured and disciplined
        • Main job: keep things running on time
      • Agenda
        • What’s Up
        • Daily Measures
          • Some sort of measurable behavior
        • Where are you stuck?
          • Powerful to verbalize where you’re having problems
          • > 2 days without being stuck typically means there’s a bigger problem
          • The only people who don’t get stuck are those who aren’t doing anything
    • Weekly Meeting Agenda
      • More issues-oriented
      • Strategic gathering
      • Schedule
        • Same time, same place for 1 hour
        • 5 min: Good News (Big Wins)
        • 10 min: KPIs
        • 10 min: Customer and Employee Feedback
        • 30 min: A Rock / Single Issue
          • Don’t cover everything, every week
            • Issues only addressed at a shallow level
            • Never focuses collective intelligence for a period on one issue
          • Focus on a large priority for the month
          • Limit to 1 issue
          • Raise this issue / rock monthly so its discussed 3x / quarter
          • You’ll knock out 15-20 rocks / year doing this
        • Closing comments
          • Each attendee sums up with a word or phrase reaction
    • Monthly Meeting
      • Focus of monthly meeting is learning
      • 2-4 hour meeting
      • Extended management team
      • Review progress
      • Review P&L
      • What’s working & not in processes and make adjustments
      • 1-2 hours training
  • Chapter 9 – Brand Promise
    • Summary
      • What really matters to your customers?
      • Your brand promise is the key factor that sets you apart from all competitors
      • Starting point from which all other executive decisions are derived
      • Both competitive and measurable
      • Start working now on the next value-added improvement
      • Measurable brand promise defines your company in the minds of the public
      • Gives your organization something huge to strive toward
    • Choose the right one… and you win.
      • One page strategic plan
      • Top 5 and Top 1 of 5
        • Brand promise is probably somewhere in here
      • Value-add Worksheet
        • 5 questions
        • Zero in on your brand promise
    • Consider your BHAG
    • Define your Sandbox
      • Desired sphere of influence
      • Define your sandbox geographically
      • Think about your customers and their demographic
      • Consider how many product lines
    • Determine Customer Needs
      • What is your customers’ greatest need?
        • Not want
    • Measurable Brand Promise
      • Shouldn’t be easy
      • Cause some stress
      • Avoid getting caught up in marketing slogans
      • Find the measurable deliverable and leave the slogan to the marketing team
    • Control Your Chokepoint
    • Your Brand Promise can change
  • Chapter 10 – Art of Bank Financing
    • Summary
      • Make banks compete to loan you money
      • Creative process
      • Shaping the right perception of your business in the banker’s mind and heart
    • Average presentation leads to below-average chances of being funded
    • Who to ask, how to ask, what to ask for
    • Have banks compete against each other to loan you money
    • Step 1 – Loan Opportunity Assessment
      • Interest rates vary from prime to prime +2%
        • Depending on perceived risk of the loan and ability to negotiate
      • Three basic phases
        • Preparation
        • Presentation
        • Persistence
      • Four levels of risk
        • The transaction
        • The industry
        • Borrower’s financial position
        • Quality of collateral
      • How much will you need?
        • What your real needs are
        • Create a package that a bank would be interested in financing
        • Prepared to give up equity or incur the debt
          • Determine what you need
          • Decide what you’re willing to give up
          • Determine if your opportunity can attract financing; what you need to do to make it attractive
          • Be willing to commit whatever time and resources are necessary
    • Step 2 – Strategy Development
      • Loan package
        • Writing
        • Research
        • Preparing financials
        • Company biographies
        • Making presentations
        • Following up
      • Hire outside consultant, accountant and/or attorney
      • Process takes 40-100 days
        • 3-6 weeks: package preparation
        • 1-3 weeks: bank presentations
        • 2-4 weeks: bank processes your request
        • 1-3 weeks: final paperwork and loan completion
      • Loan Package is a Strategic Planning Document
        • What you intend to accomplish
          • Steps and resources to meet your objectives
        • Extends 3 years out
          • Current year then next 2
      • Future-focused companies are the ones that continue to prosper
        • Formalized planning process
        • Detailed marketing plan
        • Market intelligence gathering system
    • Step 3 – Loan Package Preparation and Research
      • Selling document
        • Understand your future
        • Where you’ve come from, are now and are going
        • Address potential challenges
        • How you will deal with adversity
        • Define your mission
        • Vision of what the business can accomplish
      • Bankers are conservative and analytical
        • Loan officer processes loan application
        • Makes recommendations to the credit manager and loan committee
        • The right package = easier for the loan officer
        • Credit Manager
          • Focus is crunching financial numbers
          • More information you present, more the credit manager will work with you
            • Give them everything up front
      • Table of Contents
        • Executive Summary
          • Company’s mission
          • How opportunities result in increased earnings and profits
        • The Industry
        • The Company
          • History and Major Accomplishments
          • Divisions, Offices and Shop Locations
          • Market Niche and Competitors
          • Marketing Plan
          • Clients
          • Expansion Plans
          • Company Values or Mission Statement
          • Profit Centers and Product Lines
        • Management and Ownership
          • Brief biography of each of the key people
        • Financial Information
        • Purpose of Loan / Loan Request
          • Also in executive summary
        • Exhibits
    • Step 4 – Searching for the Right Banks
      • Shop at least 10 banks
      • Find the red flags
        • Explain what has occurred and how you are addressing it
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