People, strategy, execution and cash: four pillars that have to be equally strong in your business to be successful. Advisor to CEOs and Executive Teams Kevin Lawrence talks about the Rockefeller Habits, the challenges that face growing companies when efforts are focused on one area over another, and the benefit of following a simple methodology to success.
Today, I’m going to give you the quickest overview of the Rockefeller Habits that I can – and the key principles you need to understand to see the power and value in this methodology.
Jim Collins says, “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice and discipline.”
And really, the whole idea behind the Rockefeller Habits – combinations of good work from Jim Collins and other great thought leaders – is that, in order for a company to be its best and achieve what it has the potential to, it needs to make conscious choices about where it’s going grow to, and where it wants to be when it grows up. Tangible, conscious choices – and then it needs disciplines to follow through, to actually move towards that.
Most people don’t really make a clear-enough, conscious choice of about what they want to do – and definitely don’t have the disciplines to follow up on it.
And Rockefeller Habits provides a framework for both, that helps you get the best out of your company, and move things ahead.
The main principle is 1% vision, 99% alignment. Meaning – in a lot of strategic planning methodologies – you will put all kinds of effort and days in putting this beautiful 50-page report together, with all this beautiful language. And then it collects dust, and nobody ever sees it again.
So what we want to do with Rockefeller Habits is spend some time figuring out the vision of where we want go. It’s important.
But most of the time goes into aligning the people in the front lines – people who actually do the work, interact with customers, and make things happen – and getting them engaged in what the plan is, so we can go together as a unit, and as a team – rather than executives having a great plan, and everyone else just acting as if nothing’s changed.
So the idea here – and this is a distinction that Verne Harnish came up with probably four or five years ago – is that there’s this thing called strategic planning.
It turns out it’s a really dangerous term, because strategic planning really is two separate processes.
There’s strategic thinking, and then there’s execution planning.
And what you find with a lot of companies, they start out with some rich strategic thinking when they begin their business, or when they expand their business. But after a while, they get so short-term focused that they end up just doing execution planning.
And the truth is their plans can become almost to the point where they’re dangerous – because they’re not in contact with what’s happening in the market, or the trends that are changing in the world, or what their customers are thinking.
They almost end up with an unintelligent plan, because they haven’t done enough strategic thought.
Now, why don’t we do enough strategic thought?
Well, ’cause it’s hard.
What’s the payoff for strategic thought? Three to five years in the future sometimes, or at least a couple months.
It’s not today.
We’re so busy that we don’t take the time to carve out, and have enough strategic thought – and we end up with a execution plan, and we wonder why our company gets in trouble.
The other ingredient is people resourcing, and getting the right people on the bus.
As Jim Collins says in his work, “You gotta get the right people, in the right seats, performing.”
And then finally, cash modeling.
If you don’t understand and keep an eye on cash in your business, you will end up in a world of hurt. Many of you have probably been there.
We’ve got some great tools around cash, actually – one great tool around cash, that makes a huge impact on companies. And personally, I’ve seen a couple of hundred million dollars put back into businesses through using this tool. Just in terms of managing cash, it’s incredible.
So here’s how it all comes together:
If you have a vision of where you want go – think of it as being the roof of the house – and then four pillars underneath that support that roof.
Those pillars are people, strategy, execution, and cash.
And as a company grows, you need to grow each of those pillars.
But the sad reality is that companies typically have a favourite – and typically have one they neglect.
And when you neglect one of those pillars, it’s like a four-legged stool. If you chop off on the legs, sooner or later it’s going fall over – and someone’s gonna be lying on the floor in pain.
Well, that’s what happens in companies.
So in this methodology, what we need to do is to continue to nurture all four of those pillars – so the pillars continue to improve and get stronger in unison.
It’s not going be perfect, but so they’re not too far out of the sync – and we don’t get some rude wake-up calls or ugly surprises.
So all that thinking and theory is great. The question is how do we do it?
In the work that I do with companies, the ‘how’ part is where the value is. The theory is interesting.
So in Rockefeller Habits, the idea is to give you tools to be better leaders as you grow – so as your business scales up, you can too. And we have tools under people, strategy, execution, and cash.
So that’s how the whole model works with the Rockefeller Habits, and why it gets great results – and why I’m such a big fan of these tools.
It’s four-three-two-one results: Four decisions, three disciplines, two dynamics, one driver
- First of all, you’ve got the four decisions. You got to start there, and decide which of those four pillars do you want to improve: People, strategy, execution, cash.
- Secondly, once you’ve made the decision, you’ve got to do something about it.
- We have three disciplines that help you to follow through:
- You’ve got to set your priorities, your goals, your rocks, whatever you want to call them.
- You’ve got metrics or data to help you know that your business is healthy, and on the right track, going in the right direction.
- And then you have meeting rhythms to people in sync, and keep the communication flowing.
Then you’ve got two dynamics: reputation and productivity.
Reputation keeping people happy. Productivity getting results, making money.
The challenge for some businesses is that if they get too focused on reputation: people will love you – but you’re not going to be effective, get any results, or make any money.
If you get too focused on just making money and being efficient, usually you hurt relationships with customers, or suppliers, or employees. So the challenge is trying to keep it between the ditches.
You’ve got to balance these two dynamics constantly, so you don’t get your business in trouble.
And finally, a driver: Someone from the outside who will work with a CEO and executive team to help them be their best.
It can be a coach, who will help to guide you, and hold you accountable.
It could be a consultant, who will come in, and have domain expertise.
Or it could be an educator: someone who will come along and provide you tools and insights to improve.
So the one that I want share with you is around the four decisions: People, strategy, execution, cash.
And as you can see here, people drive happiness, and accountability in the business: The right people in the right seats doing the right things.
You know that when you work with a team of people that you enjoy working with, and you seem to be on the same page, it’s a lot more enjoyable and more productive. That’s what this people pillar is about – about getting that dialled in.
Strategy is about driving your revenues and margins in the future, and a good strategy will be reflected in the margins that you generate in a business.
And we’ve got things like brand promise which is what you promise to your customers that makes you unique, and valuable, in their eyes – such that they’re willing to pay a premium, ideally.
BHAG, Jim Collins calls a “Big Hairy Audacious Goal” – and an ‘X’ factor – something that gives you a 10- to 30-time competitive advantage.
Then the execution pillar: it’s about what generates your profit, and frees up time for other higher priorities, annual plans, quarterly plans and themes.
And then cash, which is your oxygen – keeping your business growing – and making sure, as you grow, you don’t become more burdened with cash problems, or cash headaches. It doesn’t have to be that way.
So people, strategy, execution, cash.
In summary, the Rockefeller Habits is about bringing a set of tools, in those four pillars, to make it easy to optimize each of those pillars as you grow your business.
The root of it is one document in the middle that pulls it all together, which is the one-page strategic plan.
One page that gives you an overview of your whole strategy – from 10 to 25 years down the road – right down to what you’re going do in the next 90 days.
So there you have it: that’s the Rockefeller Habits. Have a great day.