Genius Network Verne Harnish Interview

Genius Network Interview
Joe Polish, President of Piranha Marketing, Interviews:

Verne Harnish
Author and Business Success Expert
Mastering
The Rockefeller Habits
GeniusNetwork.com
Interview Series
Mastering the Rockefeller Habits
Joe Polish Interviews Author and Business Success Expert
Verne Harnish
info@GeniusNetwork.com Phone: (480) 858-0008 Fax: (480) 858-0004
2
Joe Polishs Tempe, Arizona office headquarters for Piranha Marketing is
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Joe Polish
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Joe:
Joe:
Verne:
Joe:
Verne Harnish
Hello, this is Joe Polish, president of Piranha Marketing and founder of the
Genius Network Interview Series. Youre about to hear one of my Genius
Network interviews. I just want to thank you for taking the time to listen
to this and I hope you find it very useful.
If you want to find out more information about some of the
interviews and resources that can help you in your business, you can go to
www.Joepolish.com and we have a Joe Polish Recommends section, with
all kinds of resources and vendors and services and products that we
recommend that could help you in your business. Also, for more useful
interviews and a whole list of other people that Ive interviewed, you can
go to www.GeniusNetwork.com.
Thanks, and enjoy the interview.
----------------------
Hello, this is Joe Polish and I want to welcome you to another Genius
Network interview. I have got a very, very smart guy named Verne
Harnish that is on the line. Verne, you are in Virginia somewhere, right?
We are, right next to Dulles Airport.
Awesome, awesome! I am going to read, real quickly, a short bio on you.
This is the only portion of the interview that I will actually read, so that
people know whom I am speaking with. Then we will get right into it. So
here we go.
If you do not know who Verne Harnish is, here is who he is. He is
married to Julie and he is a father of four children named Cameron, Cole,
Jade, and Quinn. Verne is the founder of two world-renowned
entrepreneurship organizations, the Young Entrepreneurs Organization
(YEO), and the Association of Collegiate Entrepreneurs, which is ACE.
Verne is presently founder and CEO of Gazelles, Inc., which you
can visit at www.Gazelles.com. Gazelles serves as an outsource corporate
university for mid-size firms and hosts a faculty of well-known business
experts including Jim Collins, Geoff Smart, Jack Stack, Neil Rackham,
Seth Godin, and Pat Lencioni.
These are some very smart people. You know Jim from Good To
Great; Geoff Smart from Topgrading; Jack Stack from The Great Game;
and Neil Rackham, who wrote the awesome book Spin Selling; and Seth
Godin, who is one of the worlds leading marketers. Obviously, Verne is
associating with some amazing people.
His company also sponsors best practice trips to GE, Southwest
Airlines, Microsoft and Dell. He is referred to as the Growth Guy. He is
a columnist for several publications and a contributing editor for Fortune
Small Business magazine.
Verne is the author of a really awesome book and I have insert-
ed awesome, that is not in the bio here called Mastering The
Rockefeller Habits: What You Must Do To Increase The Value Of Your
Fast-Growth Firm, which has been translated into Spanish, Chinese,
Japanese, and Korean. Named one of the Top 10 minds in Small Business
by Fortune Small Business magazine. He has appeared on the cover of the
December and January 2002 issue of the magazine.
Verne also chaired the renowned Birthing of Giants
Entrepreneurship Leadership Program at MIT for 15 years, and the
MIT/WEO/YEO Advanced Business Program.
He has also chaired, for many years, the leadership program for
Canadas prestigious Top 40/Under 40 program, and is going into his
seventh year leading an executive program in Malaysia entitled Taipan:
The Making of Asian Giants. He has also launching similar programs in
Australia, India, and Ireland next year.
Verne has a BS in mechanical engineering and an MBA. His
hobbies include piano, tennis, and magic as a member of the International
Brotherhood of Magicians.
Hopefully, I got everything right there, Verne. Is there anything
that I left out that should be mentioned so that people know who you are?
I just received my Serbian version of the book.
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Verne Harnish
4
Verne:
You are kidding!
We are now big in Serbia.
Wow! That is awesome! Well, you are all over the place.
Also, I must say that you also have launched programs in Australia,
India, and Ireland this year. I said next year or last year, but it is this year.
A lot of people may or may not know what YEO is, Young
Entrepreneurs Organization, I actually was a member of YEO many years
ago. I went to Birthing of Giants this last year, with our good friend Rick
Sapio.
I had no idea you actually founded these organizations until I saw
you speak at one of the YEO events on Mastering the Rockefeller Habits.
I thought you were incredible, not only as a presenter, but just a great
thinker, which is why, after all these years, I am so happy to be doing an
interview with you.
Joe, I appreciate it. By the way, they have taken the Y off of YEO now.
We are just EO because we all got old. Now we are just the Entrepreneurs
Organization.
How much did you have to do with that decision, if any?
None whatsoever.
Okay.
I turned over the reins formally back in 91. I launched the MIT program,
which, as you mentioned, I chaired for 15 years. I really was heavily
involved, obviously, beginning from 87 to 91 and still do things with it
today.
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Joe:
Verne:
Joe:
Verne:
Joe:
Verne:
Joe:
Verne:
Verne Harnish
Awesome! First off, I am going to recommend, right now, that everyone
get a copy of the book. We are going to talk about the book and I will ask
you some questions about it in just a moment here.
I highly encourage people to go to www.Gazelles.com. There are
a ton of really, really valuable articles that Verne has written there. I have
been spending the last week reading them all and they are filled with
enormous insights. I would encourage people to check out the site. There
is great information there.
I just want to ask you some questions about entrepreneurism and
what it is you do. There is one thing that I remember from your speech,
when I first saw you speak for the first time. I have never forgotten this
and I have actually quoted it several times, and I wanted to ask you about
it.
You made this comment that a lot of entrepreneurs say that they
work well under pressure or work well under deadlines. You said, It is
not that they work well under pressure or under deadlines. They simply
just work.
We have always kidded that entrepreneurs work half-days; just pick the 12
hours of the day that you want to work. Entrepreneurs could often work a
lot less hours for someone else, but it is just not in their DNA. Your
audience knows that because they are entrepreneurs themselves.
Absolutely. I will also mention that this Saturday, you are leaving for a
nine-month trip with your family to different parts of the world, literally
taking a vacation for nine months. I am happy that you have scheduled
some time in for us to do this interview before you head out, because you
are basically going to be unreachable during this period of time.
The reason I bring that up is, for one, I would like you to maybe
talk a little bit about why you are doing that, and I think it is also
something that many entrepreneurs would aspire to be able to structure a
business so it allows them to have the life, the freedom, and the
capabilities to do something like that. Tell us a little bit about your
GeniusNetwork.com
Interview Series
Verne Harnish
Its not
that
entrepreneurs
work well
under
deadlines...
they just
work,
period.
6
Joe:
Verne:
Joe:
business and what it looks like and why are you going on this trip, how
would you set it up sort of thing, and then I am going to ask you some
questions about the Rockefeller Habits.
First of all, my staff and team are very excited that I will be gone. One of
the things I saw over the many years running the MIT program was that
often the four days up there were the first four days that any of the
entrepreneurs had really left their companies. Because, as you know,
particularly that first four or five years, it is 24/7/365.
The fear that was in their eyes of leaving the business behind, yet
when they got back from the program they realized that, for the first time,
the team had to step up, make decisions on their own. I know Richard
spoke about this when you did the interview with him. Being gone is
really useful for the staff stepping up and making decisions on their own.
This has been kind of a two-year planning process to prepare the
company for the move. I hired a president, Patrick Tien, who is now
running it. We had kind of our final planning session yesterday to turn
over the keys to running the organization.
The genesis of it was my wife and I, years ago, when we first got
married, had discussed the importance of taking a year and immersing our
children in other cultures. Joe, as you know our children are going to be
facing a considerably different world than we have been doing business in
now that this extra billion people, particularly from India and China, are
coming onboard into the middle class. This is the biggest single business
opportunity the world has ever seen!
We wanted our children exposed to that side of the planet. So two
years ago, we started the plan to make the move. Our oldest is 12. We
knew if we did not make the move now, we were not going to be able to
really convince him to come with us as he gets more locked in with his
friends and his school and the whole bit.
You can guess the conversation nine months ago, I hate you; you
are ruining my life, kind of thing. He has come around and the other
children are anxious to tag along. So we are going to do it.
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Interview Series
Being
gone is
really
useful for
the staff
stepping
up and
making
decisions
on their
own.
7
Verne:
Verne Harnish
I will be doing business along the way. There is a business
motivation here, too. I will be working a day a week, which is my
commitment to the family, to further open up India and China and Dubai
and other parts of the world to our message.
I have been on tour, but I really want to go over and support our
marketing partners that we have in place in those parts. That is the
secondary reason for making this trip.
First off, I think it is awesome and I think more people should really look
at how they could arrange their lives in order to have these sorts of
experiences. You can read books about it, you can watch videos about it,
but experiencing it is where all of the real true learning and insight comes
from. That is awesome!
Let us get into your book. I am going to probably mention it a few
times, The Rockefeller Habits, throughout the interview, so let us just start
there and talk about this incredible book you wrote, the title, and how it
came about.
I have been doing this for 26 years, the doing being educating executives
of growing companies. Joe, I wish I had done it years before. In fact, we
have been pushing CEOs of companies to write a book.
It is unbelievable what a difference it makes just from a marketing
perspective. The minute you have a book, everybody thinks you are just
smarter the next day, which is crazy.
In terms of a business card to hand out, to get attention in your
industry, to use as a recruiting tool for employees and potential
employees, as a guide in order to share the culture, it is probably one of
the least-expensive marketing things that you could do as a CEO. That is
one of the articles that is actually up on Gazelle.com is kind of a case to
be made and an example of kind of an inexpensive way to do the book, a
medium cost, kind of the $10,000 solution, a $30,000 solution, and the
$50,000 to $70,0000 solution.
I just recognized that it was time to kind of codify the things that I
GeniusNetwork.com
Interview Series
Verne Harnish
The
minute
you write
a book,
the next
day
everybody
thinks
youre
smarter.
8
Joe:
Verne:
have been doing over all of these years in helping these growth companies.
So, I wrote it in 2002. The inspiration for the name came when I was
visiting one of our first marketing partners in Detroit, John Anderson.
John actually launched the YEO Chapter in Michigan.
His wife had been reading Titan, which was a definitive biography
on John D. Rockefeller. Cindy goes, Verne, you have got to read this
book.
So she handed it to me. I read it over the next few weeks. I had
some of the same robber/baron misconceptions of John D. Rockefeller that
a lot of folks have had just through the media and history.
Instead, what I found was an unbelievably young entrepreneur.
Here is a guy that started at age 20 with his brother and some friends. He
fit the profile of the Young Entrepreneurs Organization.
You had a gentleman here who was unbelievably disciplined and
had launched very much at the same time that we have been experiencing
right now. There was this new technology called oil that had been
discovered up in Titusville, Pennsylvania. Overnight, just like kind of the
dot-com era, 1,000 refineries popped up and then died just as quickly as a
lot of the dot-coms did here at the beginning of our century.
Out of the dust came this young man, during what I kind of call the
second wave of a new technology, and ended up dominating that industry.
He went on to become the wealthiest businessperson ever in history. He
makes Bill Gates and Mukesh Ambani and Slim, out of Mexico look poor
by a factor of three.
As I read through what the things were that he did in order to
dominate that industry and to win competitively, the things he did were
universal. They were just basic disciplines and habits that any one of us
today could emulate.
That became really the inspiration for the title and this word
mastery that Michael Gerber is using so much here today. We are
seeing, emulated here with the Olympics, are, I think, what it is all about.
So I called the book Mastering these Rockefeller Habits. They served him
well and, again, I thought they were very simple and practical for
GeniusNetwork.com
Interview Series
Basic
disciplines
and
habits
that any
one of us
today
could
emulate.
9
Verne Harnish
entrepreneurs here today.
There is lot of great insight that every entrepreneur could derive
tremendous value and how-to from. Can you talk about the habits -
priorities, data, and rhythm?
Those three are key, if you are then going to be able to make great
decisions. Really, obviously, our success is just equal to one thing: the
sum total of all the decisions we make personally in our lives and we
influence to be made in our business by our employees, our customers, our
suppliers.
First is that basic of setting priorities. As the famous story goes,
John D. Rockefellers coach was the famous Ivy Lee. Ivy was back then,
the Bill Campbell we see today Bill being the big coach to Steve Jobs
and Eric Schmidt and all those of Apple and Google and this stuff.
But the guy, back then, was Ivy Lee. The one thing Ivy taught the
great industrialists, including John D., is a very simple thing. Before you
go to bed at night, take a piece of paper out and just get very clear what
are the handful of things you have got to do the next day, and be clear what
number one is. The reality is, the best we can do is get one thing really
accomplished each day, that is going to drive us towards our long-term
goals. John D. was very disciplined in setting these priorities and making
sure that those priorities cascaded down throughout his organization.
The second was the importance of data. He was so proud of the
leading edge telegraph system that he had. Just imagine, Joe, what it was
like to get data in from the Russian oil fields back 100 years ago. We are
lucky we have got the Internet!
He was a guy that also understood the importance of thinking and
getting away from the office. He even had a special telegraph line
installed between his home and Standard Oils headquarters, so that he
could stay in touch yet be away, so that he could think.
Then thirdly, this importance of having a meeting rhythm so that
you could deal with the number one challenge everyone has in business
GeniusNetwork.com
Interview Series
Verne Harnish
Before
you go to
bed at
night,
clearly list
what you
have to do
the next
day...
10
Joe:
Verne:
the minute you get your first employee, which is communication.
The thing that particularly enamored me with John D. was when he
first launched the company in Cleveland, because of the way that society
was structured, he and his co-founders would walk to work each day and
they would walk home each day. What he came to realize, and I think
others might have experienced it but he recognized it, that almost all the
important decisions got kind of figured out and decided on these walks,
not in the intervening 8, 10, 12, 18-hour workdays that we were kind of
kidding about earlier.
To his credit, when he moved the company from Cleveland to New
York City, even though that inner circle changed and that is another
tough thing that entrepreneurs have to deal with as they grow the
companies but even though his inner circle changed, he made sure that
they lived near enough to each other, close enough to Standard Oils
headquarters, that they could continue to walk to work together and walk
home together. Then he actually institutionalized, formalized, the daily
luncheon with his top directors.
There you are talking about the brain trust of his company having
lunch together every single day. You have got to know they were busy as
anyone is today, yet they made the time.
What I find is interesting spinning forward here 100 plus years is
the importance of us having talk time, Joe. This is only research that I
have uncovered recently, way after I first wrote the book back in 2002.
This email culture we have has literally driven us to silence. I do not know
how many of your listeners have literally seen, in their companies, people
trying to solve pretty significant issues through email, where you get these
kind of 24 stringed emails together.
I think it is ludicrous in so many ways.
Yeah. If we would just get on the phone and talk for a few minutes, we
could get it done in 15 minutes instead of 15 days. We now understand the
mechanism. That is what is exciting.
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The
number one
problem
that
everyone
has in
business:
Communication.
11
Joe:
Verne:
Verne Harnish
The research comes out of the grieving, research around grieving.
What they found specifically is this: whenever you are kind of concerned
or worried or anxious or facing an opportunity, those kind of things that
turn your stomach as an entrepreneur, it physically sits in your medulla,
this kind of reptilian brain that we have. It is a thing that, again, gives you
the cold sweats.
You can sit in your office and try to think your way through the
issue by yourself, and it physically stays in your medulla. What is
amazing is the moment you verbalize it, you speak it, it shifts from the
medulla right to your prefrontal lobe, which is that part of your brain that
literally says, Let us stop worrying and let us get going and get the
problem solved.
I am convinced, 100 plus years ago, that John D. may not have
understood the physical mechanism but he sure recognized the importance
of having his top team there in conversation every single day. That has
been the importance of driving that business.
First off, that is fascinating to even hear things like that. I love hearing
stuff like that because I am a big believer. I have done a lot of work with
a guy named Dr. Edward Hallowell. He is the leading psychiatrist in the
world for ADD, ADHD.
He recently wrote a book called CrazyBusy: Overworked,
Overstressed, and About to Snap! Strategies For Coping In A World Gone
ADD. He calls what a lot of people perceive or think is ADD, he calls it
Attention Deficit Trade. He wrote a whole article about it for Harvard
Business Review.
He is trained from Harvard. He taught at Harvard. He is a very
bright guy.
He talks about how today we are the most connected we have ever
been electronically, but the most disconnected we have ever been in
human moments. There have been studies and research proven that
staring at a computer literally changes the neural pathways in your brain.
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Interview Series
Verne Harnish
Lets stop
worrying
and lets
get going
and
get the
problem
solved.
12
Joe:
I reinforce this to my team all the time. Pick up the phone and call
people, just talk to them whenever there is an issue, whenever there is a
bottleneck. You will always accomplish more through a simple phone call
than ever trying to send emails back and forth and just being able to
connect with people.
What you were saying about the walks has given me a lot of ideas.
I recently went down to YouTube, which is owned by Google, and saw the
way that they do lunches there. Everyone would just get together and they
can talk and they can eat lunch together. I have no idea if it had anything
to do with this sort of thinking, but I think there is a lot to be said there.
That is a huge lesson for all of our listeners to really think about.
Just on what level is your brain trust, as you call it, Verne, able to get
together and talk and to have those sorts of discussions?
If there is only one thing your listeners get off of this call, it is to find this
brain trust and have breakfast with them once a week. Let me tell you a
couple of stories.
One, we just did a recent piece in Fortune on Bill Campbell, the
great coach of Silicon Valley. In that article, we highlighted the fact that
Steve Jobs regularly goes on Sunday walks with Bill it said in the
article so he can just kind of talk through some things that he really could
not talk to anybody else about; which has been the power of YEO and our
forums, as you probably experienced. It is just having a group of six or
seven other CEOs where you can open up and get that talk time.
I remember back when I was 15 and we had moved from Colorado
to Kansas. I was in a small town called Kinsley, 35 miles literally this side
of Dodge City.
My dad woke me up one morning, early, and he said, I want to
teach you something, son. He took me down to the local diner about 6:00
in the morning.
He pointed me over in the corner and he said, That is the Lewis
boys, and they have breakfast in that corner every single morning. The
Lewis boys were the ones that kind of own Kinsley. They are the
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My dad
woke me
up early
one
morning
and said,
I want
to teach
you
something,
son.
13
Verne:
Verne Harnish
kingpins. He said, That is where they plot the domination of Kinsley
every single morning, discussing has anyones farmland come up for sale
that we can grab before it goes on the market? Anybody have any kind of
used farm equipment? Who would we like to be, mayor or sheriff?
That always stuck with me.
Let us speed forward here today. I went out on a limb last year, in
one of my articles in one of my Growth Guide columns, and declared what
I feel are the three most important pages ever written in business. Those
happen to be in the book Jim Collins Good To Great, pages 114 to 116,
where he outlines the CEO counsel.
It was a piece that I found a lot of people missed in reading Jims
amazing book, Good to Great. When we pinpointed him and said, hey,
Jim, what is just one thing us growing companies could do out of your
book, he said, That!
He outlines, on those three pages, 11 rules for who ought to be in
this brain trust, kind of what the agenda ought to be. It is really about,
once a week, getting kind of an hour of more informal time.
This is not the same as your weekly executive team meeting or
operating meeting that a lot of even small business owners have, like we
do. This is something different.
Ever since I read that book and we started doing it, I have got kind
of a brain trust that gets on a conference call every Monday morning for
an hour. I credit it for being able to get my business to a point where I
could get it turned over to a president and take nine months and go travel
with the family. It would not have happened otherwise, Joe.
Right, right. There are so many things that I would like to ask you, that
you even alluded to here with just talking about the three habits of
priorities, data, and rhythm. You wrote an article at Gazelles, which is
posted on www.Gazelles.com, Stop Doing Email.
Part of getting the first thing done in the morning goes back to one
of the Rockefeller Habits from Ivy Lee, which is to be clear on the one
thing that you need to get done. You actually make the case that jumping
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Verne Harnish
He
outlines,
on those
three
pages,
11 rules
for who
ought to
be in your
brain
trust.
14
Joe:
up in the morning and immediately going to email as being so damaging.
I very much believe that because it sets your whole day off on someone
elses agenda, not necessarily your own.
Can you talk a little bit about that? Because I think many
entrepreneurs hear this but they do not really put it into a habit and they do
not do it. The ones that do, myself included, it makes such a positive
impact on your ability to get done what needs to get done and what you
want to get done. Talk a little bit about the dangers of how you check
email.
Acouple of things. Let us go back to what we now know about the brain.
You had mentioned some things, as well. We are, on average, interrupted
every 11 minutes. The big culprit of that is email and these Blackberries
and other devices that we have.
Yet, the brain takes at least 25 minutes to get up to speed. It is just
like your automobile. You get better gas mileage when you get going and
get out on the highway.
So right there is the rub. The most important thing you can do is
get that uninterrupted 30 minutes to an hour.
Everybodys biorhythms are different, so find your best hour.
Then that is when you have to kind of shut off the world and get the brain
turned on and get it focuses. If you get the one good hour in, everything
else kind of takes care of itself.
I went to go hear Tim Ferriss speak recently, the four-hour work-
week guy.
He is a good friend of mine. I do not know if you knew that or not, but I
have interviewed Tim and I know him pretty well.
I had to admit; I had not read the book. I kind of thought it was a
frivolous title, though great titling; one of the best titles of a book in a long
time. He told the story why he had picked that name, which was smart.
I went, expecting that I was going to get some kind of frivolous
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Interview Series
If you get
one good
hour in,
everything
else kind
of takes
care of
itself.
15
Verne:
Joe:
Verne:
Verne Harnish
talk. What I realized, first off, the guy is amazing, as you know. He is
brilliant and his four-hour workweek is about thatfinding one good hour
every day for four or five days, you can get a lot accomplished.
One of the things that struck me in his talk, because he is big about
not doing email, is just the fact that if I think about my own business,
Joann, my assistant, opens up my physical mail. I cannot remember the
last time I opened up mail. She will put the two or three pieces on my desk
that I really need to look at and she deals with everything else.
It is the same with email. The reality is there are only three or four
emails you really need to deal with.
One of the reasons I am heading over to India is to further instruct.
After hearing Tim speak, I went and got an Indian assistant, Mohad. I
want to now, over the next few months, have him understand what emails
I need to see and what emails I do not. He can be crunching them over the
nighttime, and the next morning I have got them in my in-basket for me to
deal with. I think we have just got to think about email the same as we
treat regular mail in the old days.
I agree. I agree. The funny thing about the modern day, if you do not set
up a process of managing modern life, it will manage you. This really
comes a lot from my discussions with Ned Hallowell, who has now
become a very good friend of mine. We see that with a lot of
entrepreneurs.
Another thing that you mentioned about Rockefeller was about
setting up the special telegraph line to get data, so that he can be away so
he can think. I wanted to actually have you talk about that idea of being
away so that you can think. It is a whole process of setting up an
environment or a way that you can actually do the critical thinking.
What do you mean by that? In your experience, you have coached,
organized, and helped thousands of entrepreneurs and some very, very
successful ones at that, some of the top in the world. What have you
discovered or learned about being in an office, being out of an office, how
to set up the time to really think about your business, your life, and your
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Verne Harnish
The
reality is
there are
only three
or four
emails
you really
need to
deal
with...
16
Joe:
actions? Anything you can talk to that would be strategies that the
listeners could take and use?
Way back there was a sausage company up in Wisconsin. When the son
took over from the father, I think one of the most impressive things he did
that made that company huge is he purposefully rented an office down the
street and disciplined himself to go down there for half a day a week with
just a yellow notepad, and would sit there and think about the business.
We hosted Paul Orfalea, the great inspirational founder of Kinkos
who, right now is just dying because FedEx wants to get rid of that name
or maybe have gotten rid of it already. Paul said something very
important to our audience last fall. Look, the primary job of an
entrepreneur, the most important thing that we do is to provide our
company with ideas.
He described one idea he had that put $30-million to the bottom
line at Kinkos. He said to us strongly, Close your door, get out of the
office, and find that think time.
Eric Schmidt keynoted at Michael Milkens recent global
conference I was out there speaking at. Here is a guy running Google and
Michael is up on the stage saying, Okay, Eric, what is really key to you
maintaining your relevance as a company and as a leader of probably the
most important visible company on the planet right now?
He could have said a lot of stuff, Joe. He said, You know what it
is? It is having the discipline every weekend to shut off email and read a
book, so that I have got more ideas and I have got some time to think.
The new head of Citibank, we did a piece on him in Fortune. He
emphasized the fact that one of the key things that he is focused on is
making sure he has time to think. If ideas are the main thing that we
provide our companies, we need both the learning and then the think time
in order to make that happen.
Then obviously, the best example of which we actually modeled
our two summits around is Bill Gates think weeks. Bill here, having just
made the transition into his foundation, has been speaking deeply about
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Interview Series
Close your
door, get
out of the
office and
find that
think
time!
17
Verne:
Verne Harnish
what habits he wanted to carry over.
One of the ideas he brought with him is this Think Week, where he
takes seven days, 100 to 120 books, manuscripts, PhD theses, and white
papers. I call it that tower of guilt that we all have in our office of piled
up magazines and books we have not got to. Bill Gates hides out up in the
Northwest and for18 hours a day for seven days straight, he plows through
those materials. Plus he has time to then to think about what he is learned.
He has been clear about the significant ideas that have kept
Microsoft, a technology company, relevant. Microsoft is one of those rare
firms that is still actually doing well 30-some years later.
The heart of it is been those think weeks. Example after example
after example have really driven home at least this message to me, and we
have shared that obviously with our audiences.
That is good. That is some fabulous advice.
Let me ask you about something you wrote about in the book. You
wrote that there were 28-million firms in the US, 96 percent of these with
fewer than ten employees.
If you could talk a bit about barriers that keep small companies
from getting larger. What are the obstacles that get in their way, because
a lot of the people listening have small companies? They want to grow
them, they want to make more profits, but they have all these obstacles
that get in the way and they do not know how to overcome them.
I think I mentioned in there that 70 percent of them are home-based. It is
really just them and maybe a bookkeeper. That is the bulk of business in
the United States.
I say this kind of tongue-in-cheek but I think there is some truth
there. The main barrier is people, from the standpoint that I have always
kidded. Most entrepreneurs I know, really down deep inside, do not like
other people. Again, I say that tongue-in-cheek.
In fact, their view is, I would love business if I just did not have
to have employees or even customers to deal with. What they are in love
GeniusNetwork.com
Interview Series
Verne Harnish
Most
entrepreneurs
I know,
deep down
inside,
do not like
other people.
18
Joe:
Verne:
with is their idea. I will come back to that word. They are such idea
people. It is the idea of their business that they are in love with.
For them all those relationships just get in the way. In fact, you
know, a lot of entrepreneurs were kind of a little different in school.
I think you are absolutely right. I remember reading this book Profiles of
Leader and Success that profiled people that had made amazing impact in
the world but also had crazy traits.
This guy profiled everyone from Walt Disney to Frank Lloyd
Wright to Hitler to Maria Montessori, and all kinds of amazing
entrepreneurs on some levels, and then leaders, some majorly destructive,
others well accomplished.
One thing that was mentioned in that book that you made think of
was that they sought out a lot of advice but rarely took anything but their
own counsel.
Most entrepreneurs are loners, Joe, as you know. That is one of the
reasons why I launched YEO was to deal with that issue and for folks to
be able to find some people like themselves that they could hang out with.
That is the overall issue. In the book, I outline three specific
barriers. The first one, related to what I just mentioned, is leadership.
Again, in most home-based businesses, it is the person and maybe
a couple of helpers. They can never get over the hump of trusting that
anybody else could do what they do as well or better. That is the issue.
Now, those that finally do hire their first few employees are
usually able to kind of get over the hump and get up to about ten
employees. One person can lead pretty comfortably, five, six, seven other
people. It is a decent span of control.
Then what happens is as you go from about 10 employees up to 50;
you pass through one of the things they call Vernes Valleys up at the MIT
program. That is about when there are 25 employees. You are big enough
but not big enough. As such, you have to start bringing in some other
people to start leading some of the folks that you have hired.
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They
usually
sought
out a lot
of advice
but rarely
took
anything
but their
own
counsel.
19
Joe:
Verne:
Verne Harnish
Roughly 50 is one of those kind of natural points where companies
settle in, in terms of number of employees. Now if you take 7 times 50
you get 350 employees and that is another one of those plateaus.
Somewhere between 50 and 350 employees, you then have to add
yet another layer of management. It is this inability for the entrepreneur
to get their DNApassed down first to their initial leadership team, then to
these middle managers that you have to bring in as the company grows,
and then to this next level of management is what gets the organization
stuck. We talk about certain activities and habits and processes that can
help you get that DNA passed down, so that the rest of your team is
making as good, if not better, decisions and there is that word again,
decisions than you are.
The first barrier is your own leadership and your ability to get
others to do what you need them to do and be happy about it, and then
figure out how to grow other leaders within the organization. That is
barrier number one.
Barrier number two is really a systems and process issue. We kid
about when you make the move from home-based business literally to
your first office, the first system that gives you a headache and it is going
to be a headache the rest of your life, is your phone system. We all
remember those initial challenges.
We just got done changing out our CRM system here this summer,
and it looks like it is going to kill you when you have to upgrade any one
of these kinds of systems. With zero to 10 employees, you have got to deal
with the phone systems and the computer systems, to kind of keep us
connected.
From 10 to 50 employees, the system that kind of gives up the
ghost is the accounting system. It was sufficient for a while to have your
monthly statement that you looked at and just hoped the bottom line was
black instead of red.
Between 10 and 50 employees, now you start needing more
granular information. I need to know if I am making money by customer,
by location, by skew, by salesperson. Without that kind of detailed
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Verne Harnish
The first
barrier is
your own
leadership.
20
information that can only be had if you upgrade your accounting system,
you start making some bad decisions.
Again, you are going to have challenges with the accounting
system the rest of your life, like you are phone system. These things are
just additive.
Above 50 employees, you then run into a systems integration
problem. You have been running the business basically on three pieces of
software.
You have got some accounting package that you have started out
with, initially Quicken and then QuickBooks. You have had your CRM
system kind of an ACT or Goldmine or something, as a lot of us grew up
on.
They always had this third operating system that usually was
named after the person who created it in the industry. You would have like
ACT, QuickBooks, and then Dave.
You could kind of piece everything together through email, like if
somebody changed his or her address. At some point, just an address
change - because you have got the customers listed in all three different
databases is enough to bring the place to a screeching halt.
It is literally entrepreneurs being able to get their systems in order
so that they can then handle the complexity that is growing as the
company grows. You have got just kind of a systems and structure
problem.
First is leadership; second are your systems, processes, and
structures. The third barrier then is just some pure market dynamics.
There are a couple of them.
One is an internal versus external challenge. Most of the time, the
world, if you can get your leadership and system problems fixed, will let
you get to about $10-million in revenue. But something happens when
you add that extra zero. All of a sudden now, if you have launched a new
kind of business, you have just proved to the world that it is viable, and
now you have got a lot of competition that is entered.
Or, in order to piece together $10-million in revenue, you are
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Interview Series
The third
barrier
involves
some pure
market
dynamics.
21
Verne Harnish
making some big companies mad, and now they start to pound on you.
Then you get calls every day about folks wanting to buy you.
What happens is up to $10-million all of a sudden at that size you
start getting sucked into all the operational issues. This is primarily
because you did not get the leadership in place, you did not get the
systems and processes in place you needed to.
Now, right when you need to be out doing battle in the market, you
have now been sucked in to all the internal issues and it is enough just to
crush you. Guys wake up and say, Man, I want to go back when I just
working out of my house, making a lot more money than I am today with-
out all these employees and customers to have to deal with. Those are
the three basic barriers: leadership, systems and structures, and being
able to deal with some of these market dynamics.
Great! Let me ask you, do you think the best approach to overcoming
these obstacles is if you were to put any attention on personal
development, hiring people, and systems? I know this may be a difficult
question to answer because it is different for different businesses, different
people, and situations. If you were to maybe to offer some advice on
where to actually start looking if you are in the middle of these barriers. If
you are an entrepreneur listening to us both talk right now and having to
overcome this, where would you say put your attention?
Well, very self-serving, Joe. It is why I wrote the book. I saw this
happening so many times over the previous two decades I have been doing
this. I would encourage them really to take a look at the book. I deal with
each of these issues and then how to overcome them.
It is why we launched this two-day workshop that is still going
strong a decade later. We have moved 20,000 executives through it. It is
two intense days of helping entrepreneurs figure this stuff out.
I would also point people to and I am excited he is got a new
book coming out Geoff Smarts new book called Who. It is an update to
the famous Topgrading methodology that his father Brad made popular
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Interview Series
Verne Harnish
Man, I
want to
go back to
when I
was just
working
out of my
house...
22
Joe:
Verne:
three decades ago.
It is a method of interviewing and making sure you pick the right
person, that GE and other great companies still use today. We have now
adapted their process so that us mere mortal small businesses can utilize
it. The heart of it is we are really bad at interviewing, Joe.
I know! I have interviewed Brad Smart, and so most of my listeners have
already heard my interview. I went to one of his sessions and I could not
believe how inept I actually was with so many things after having learned
and gone through Topgrading.
We have to recognize the fundamental issue. The fundamental issue is that
we are optimists. We would quit early in the process of launching our
businesses if we were not unbelievably, crazily stupid optimists. That is
our downfall, because all we want to do is see the good and not uncover
what are going to be the issues down the road.
The discipline of how to pick the right people to be on your team
will either save you so much time or be at the heart of the headaches and
sleepless nights that entrepreneurs face. It might make you want to go
back and fire everybody and just go back into the house.
You have a quote in the book where you say that one great person can
replace three good people. Let us talk about that. Can you create a great
person or is it a matter of seeking them out? I think I know the answer to
this, but I wanted to ask you.
It is seeking them out and it is realizing it is not about an individual being
great or not. It is about that individuals fit with your culture and your
approach.
The same person who would be just good for you might be great
for somebody else. That is why it is real critical that in doing your
Topgrading interview and your evaluation, that you really look for the fit
around culture. It is much easier to train the skills than it is the attitude.
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Interview Series
We would
quit early
in the
process of
launching
our
businesses
if we
were not
unbelievably,
crazily
stupid
optimists.
23
Joe:
Verne:
Joe:
Verne:
Verne Harnish
You hear it all the time, but you can get enamored by somebodys
resume. They accomplish all this in some other company, and you think
automatically they are going to be able to do it in your firm. But they do
not fit.
Entrepreneurs, I think, understand kind of intuitively what fit
means, but you have got to make sure you interview for it and look for it.
It is not that an individual employee is either good or great. It is that you
have got to find the ones that fit you. That is going to help them be even
greater because there is that alignment.
You are absolutely right. I recently went through a very high-level
position in my company where I though, in the right environment, this
person would be fantastic. In mine, it was not. It was a huge lesson to be
learned.
Jim Collins very much speaks to this in Good To Great. If you find
yourself having to manage people, you have probably made a miss hire. I
believe you share the same sort of philosophy.
A subject that I think most listeners just would want to run and
crawl under a rock when they are faced with is firing someone. Or you are
thinking, Do I have the right person, and you are always second
guessing yourself. What are your thoughts on, as you say, letting people
go be who they are somewhere else? If you are in a situation where you
just know deep down inside you do not have the right people or something
is missing, how do you recommend actions to take for people in that
situation?
Let me get to that question, but let me go back and finish answering your
other questions, which was the specifically three good equals one great.
That specifically came from the cofounders of The Container Store. I
hosted them for several years up at the MIT program.
The Container Store is this retailer, sells garage organizers, closet
organizers; often called the Home Depot for women. These guys just beat
it out in the trenches. By the way, they sold a piece of it to a private
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Interview Series
Verne Harnish
Entrepreneurs
understand
intuitively
what fit
means...
24
Joe:
Verne:
equity firm this last year and took some chips off the table. So,
congratulations to them. They constantly kept being named the best place
to work in the United States. They beat Microsoft and all the biggies.
I finally said, Lets look under the covers there. They were the
ones who said, Our philosophy is that we can find one great employee to
replace three good.
Then, they pay them literally twice as much. You can do that more
with a retail pay$20 an hour versus $10. But if you are getting three
times the output, your labor costs are actually considerably less. Then
they give them lots of training that helps keep them great.
One of the quotes which drives what we do is one we got from
Michael Dell, You have got to start with great people, but then you got to
keep them great. Container Store provides their people 160 hours of
training a year.
I think Kip and Garrett summarized it much more plainly. They
said when they launched the business, do we want to have a whole bunch
of low-paid stupid folks that we have to manage or would we rather have
first a whole lot less, yeah, better paid, but lower total payroll of smart
people? I think any one of us would rather have the latter.
Absolutely!
They went about day one, store one in Dallas, by putting in place that
philosophy and sticking to it. I think it paid them dividends over the 30
years.
That is great. That is great!
Then your question, which is Ah, so I did not Topgrade. I threw a dart at
the list. I would probably have been better off throwing a dart at the list
than the person I would have picked, and now I got to do something about
it.
If anyone ever says it is easy from an entrepreneurs standpoint
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Interview Series
You have
got to start
with great
people, but
then youve
got to keep
them
great.
- Michael Dell
25
Joe:
Verne:
Joe:
Verne:
Verne Harnish
maybe in big companies it is easy because the folks are faceless and
namelessthey do not know what they are talking about. Man, when
these people become your neighbors or friends it is the most single painful
thing you have to do.
All you can do is just realize is that normally they are as miserable
as you are. We kid with the phrase I am going to free up your future. It
is not doing anybody any good when it is not working. They often sense
it before you do, and definitely the rest of your employees do.
There is that age-old rule that I wish we could follow most of us
do not which is, hire slow, fire fast. But you just try to do your best.
You kind of said something, too. They sense it before even you do. I have
really thought about this a lot, especially with conversations with my
buddy Richard Rossi, and your friend too, that if you even start
questioning it, you are probably already in the area where you know
something is wrong.
I speak this from my own experience. There are times where I
have belabored doing the inevitable, which is getting rid of someone or
giving them the opportunity to move on, and I just did not do it when I first
thought about it, when I knew it should have been done.
There are situations where people are really superb up to a certain
point. One of the lines from Dan Sullivan is the skills that get you out of
Egypt are not the same skills you need to get to you to the promised land.
Certain people are good to a certain point, but they are only going to take
you to a certain point.
If your bigger future is beyond their capabilities, something has got
to change. Sometimes that means having them not be in your organization
anymore. How do you recommend people going about that obstacle?
First, I do think we fall back on that bromide a little too much, in that,
Hey, our company, our market, our opportunity has outgrown our
people, when I think a big part of the blame is on us. It is what caused
me to launch Gazelles, Joe.
GeniusNetwork.com
Interview Series
Verne Harnish
There is
that
age-old
rule that
I wish we
could all
follow:
Hire slow,
fire fast.
26
Joe:
Verne:
Here I have launched YEO, I knew a lot of the guys in YPO and
Vistage and all these other CEO groups. It was a standing joke up at the
MIT program, where literally the CEOs teams would run scared knowing
that their CEO had just been at this learning program and they are likely
going to come back and be crazed for the next couple of weeks.
Here we are educating ourselves, spending tens of thousands of
dollars on ourselves, and doing nothing for the rest of our executive team.
We wonder, then, why they are not keeping up with us.
I have been doing some work at Motorola University. I knew
Steve Kerr up at Crotenville, when he was running that for Jack Welch at
GE. I realized that we had to get out of this mindset of a genius with 1,000
helpers, as Jim Collins calls it, and begin to provide some high-level
executive education for our CLO and CFO and BP sales and marketing.
We had to get them some education, as well.
That is why we launched these summits and I launched Gazelles.
It was to be this outsourced corporate university so that we could bring this
kind of Fortune 50 quality education of the faculty that you mentioned in
the beginning and bring that down to us mere mortals. I have seen many
executives underneath the CEO that the CEO did not think were going to
make it. When they got a little bit of education they just blossomed and
were able to grow into the position much more than I think the
entrepreneur expected.
I would not want to first just fall back on that kind of Hey, they
are just not going to get it to the next level, without us doing our job to
provide them some education and development.
I have been talking a lot about Goldman Sachs. I have just read
their history, which was a phenomenal read. They have come out of this
entire kind of sub-prime thing unscathed. They doubled their
profitability last year when everybody else was sucking wind, and they are
on record pace in 2008.
The New York Times came out and said, You know, we really see
two things. The Goldman Sachs executives, one, get lots of personal
coaching and go through lots of education.
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Here we
are,
educating
ourselves.
and doing
nothing
for the
rest of our
executive
team.
27
Verne Harnish
I have some firsthand insight there. When Steve Kerr left
Crotenville, when Jack Welch stepped aside at GE and was going to retire,
who recruited him? Goldman Sachs in the year 2000.
Steve spent the next six years building one of the most leading-
edge executive development centers in the world for the Goldman Sachs
executives. Here you are talking about some of the smartest, highest paid
executives on the planet and they are continuing their education. I think
that is what we owe our people.
Just like everyone listening is actually educating themselves by the mere
fact that they are listening to us talk and me interview you, I very much
believe in the same thing for everyone.
Even in my marketing, one of the main methods of selling and
teaching clients how to sell is education-based marketing. It is easier to
make decisions when someone has information, and then they can make
an informed, intelligent decision. I think it is no different when you are
trying to learn and educate yourself.
I am a huge believer in personal development for my own team. I
spend a very good portion of revenue on training my people to be the best.
If there is one thing I think I do right, it is definitely in that area.
Hence, a lot of the deepening of the methodologies and processes
on what to do and how to do it, can be started with your book. Or they can
go to Gazelles. That is one thing that I definitely want to encourage
people to do and hope they do because if any of this is resonating with you,
you can certainly get tremendous amounts of training through what you
have already set up, Verne.
I want to ask you about a couple of other things, though. I will
keep driving people back to the fact to absolutely read the book if you
think it is cool. Go out and buy the book as soon as you are done
listening to us. Buy the book, if you have not done so already. There is
so much to learn here.
I want to ask you about meetings, because I am curious to what you
will say. You mentioned all throughout your methodology the importance
GeniusNetwork.com
Interview Series
Verne Harnish
Here you
are talking
about some
of the
smartest,
highest-
paid
executives
on the
planet, and
they are
continuing
their
education.
28
Joe:
of meetings. You even talk about having daily meetings, and just the idea
causes anxiety in my mind because I do not like meetings. How do you
structure the meetings so they are not so painful to get through? Or maybe
correct my perception of what a meeting or an effective meeting actually
is, because I think a lot of people might share that sort of thinking.
You bet! I think it is because we are in a lot of really bad meetings. You
go to enough bad meetings, and you do not want to ever do that again.
If you think about itjust take a moment philosophicallythe
most important thing about people is we are basically social beings.
Maybe the entrepreneur is not as much, from what I said, and that is why
they often have the biggest aversion to it.
But almost everybody else in the company is a social being. The
most important things that actually happen, happen in meetings. Think
about the meetings with the customer, meetings with suppliers, meeting
with your team to come up with the new product design, and that most
important meeting, that meeting with yourself that is uninterrupted, that is
on agenda, on task, where out of it comes a real detailed list of what we
are going to do next.
Meetings are critical. In fact, all of civilization has been about
getting rid of the mundane work and turning that over to machines. All of
these new dark factories that we have today where the humans that are left
are basically sitting around coming up with process improvement ideas to
make it even better.
As people we were intended to be in meetings. They are just a lot
more fun at the bar than they are in our own companies.
Right!
That is why we hate them. Now, I also know when the meetings are done
right, you actually need a whole lot less of them. That is a big part of what
we teach.
We actually say, If you do it correct, you only need about 10
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When
meetings
are done
right, you
actually
need a
whole lot
less of
them.
29
Verne:
Joe:
Verne:
Verne Harnish
percent of a standard 40-, 50-, 60-hour workweek in order to manage the
business. You may be in, again, other meetings with customers and the
kind of things you ought to do that are market-facing activities.
To run the business, we have a little video clip on our Rockefeller
Habits DVD from Alan Rudy, from Express Med. He took the company
from $8-million to $60-million. When we first met him, he was literally
spending 80 hours a week just trying to keep the wheels from falling off
the place.
Once he got our habits in place, including the 15-minute daily, he
said he was able to reduce it from about 80 hours to a more manageable 8
to 10 hours for him to run his company. He had the other 20, 30, 40 hours
to go out and find the major relationships and partnerships and customers
and ultimately the company to buy his firm.
If you do it right, you can reduce, dramatically, the number of
meetings that you need. The thing we are most controversial about is this
daily huddle thing that you mentioned. Especially when it is small teams,
teams of three, four, five. People are thinking, Hey, we see each other all
day. Why do we need to have this structured 15 minute?
Anybody who is married knows that you can be sleeping with the
person, but that does not mean anything approaching communication is
happening. That is the difference here.
Let me share just a quick story that drove this home. One of the
other guys that keynoted at the Milken conference and is huge in the news
right now is T. Boone Pickens. This 80-year-old, who is now turning 81,
put forth this amazing energy plan.
The other thing he is known for is just the last few years he took
$4.6-million and turned it into $5-billion. That is a pretty huge
accomplishment at his age.
There are 3,000 of us in the audience saying, Okay, T. Boone,
how would you do this? He could have waxed on philosophically about
markets and stuff. No, he said, One thing: it is our meeting rhythm. I
am practically cheering out in the crowd.
He said, It is very simple. Ala John D. Rockefeller at 5:30 every
GeniusNetwork.com
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Verne Harnish
The thing
we are most
controversial
about is the
daily
huddle.
30
morning. Do you want me to go through this?
Yeah, absolutely! Please do! I think it is really valuable.
Here is what he does. At 5:30, he has these two analysts who come in and
they start scouring the world for just information on what is going on in
the oil industry. Some pipes bust a leak in Uzbekistan or something.
There is a daily gathering of information.
Then at 6:15 sharp, he calls in from home and has a 15-minute
huddle where they brief him on what they have learned around the globe.
We know that in order for you to see a pattern, you need at least six
data points. If you are seeing them daily, you are going to see the trend
sooner than those folks that are having just the weekly or the monthly
management meeting.
Then at 6:30, he works out. He has got a trainer.
Notice what is happening. By getting this data every day and
having this 15 minutes of talk time, back to what we discussed earlier in
this conversation, his brain then has a chance to go to work on this data
and information while he is working out.
At 7:30 sharp, he then meets formally face-to-face with his team
for 20 minutes, while he has these two egg white omelets. That is where
they then get the final talk time to decide what their trading strategy is
going to be for the rest of the day.
They then go to work, just like we would go to work. Then at the
end of the day, at 4:30, they meet back together, huddle back together and
discuss what worked, what did not work, what they learned, and the rest is
history. It is that kind of rhythm.
It is the same thing I saw at Goldman Sachs. Where Morgan
Stanley and Merrill Lynch have the monthly management meetings and
therefore got caught off guard. Goldman Sachs exec teams meet twice
daily, 6:00 am and 6:00 pm for a few minutes, and as a result, they just saw
it sooner than everybody else. That is the power.
I have one last example. I am a huge fan of Linksys. Janie and
GeniusNetwork.com
Interview Series
Then they
go to
work,
just like
we would
go to
work.
31
Joe:
Verne:
Verne Harnish
Victor Tsao are the couple that built that huge company that ultimately
sold to Cisco for $500-million. Good ending to their entrepreneurial run.
We hosted Victor up at MIT, and our question was, What was
key? How did you beat Microsoft? How did you beat Cisco?
He basically said one thing: The day Janie and I started the
company, husband and wife, we set up a daily meeting at 5:00 every day
for a few minutes. It was a formal meeting. We would sit down and
basically discuss, what did we learn today from a customer, or a move a
competitor made?
By gathering that information and talking about it every day, they
saw micro movements in the marketplace way before any of the big guys
did. Then they said, If we decided there was something we needed to do,
change a word in a document or add an entire feature set to a product, our
rule, well get it done in four weeks.
Let us speed forward a decade or so later. He described how when
John Chamber, CEO of Ciscos doing due diligence on the company,
basically John said, Victor, Janie, you know why we are buying your
company? Fundamentally, you guys have made almost every tactical and
strategic decision about a month ahead of us. You have been a month
ahead of us for a decade, and we have not been able to catch you.
Let us go back one more. Sam Walton. We looked at the fortune
and we said, What is really behind the success of Wal-Mart? Largest
company now, again, on the planet. They surpassed Exxon Mobile this
year.
What we found was a very simple thing that Sam Walton started
the day he launched his first store. That is what I want to keep
emphasizing. These are things that John D. Rockefeller did the day he
started his company; what Janie and Victor did the day they started, when
it was just two of them.
What Sam did every Saturday morning before the store opened, is
he would gather together his handful of employees in his one store. His
question was, What did we learn this week from our customers, what
things did you learn by shopping our competitors? They would have the
GeniusNetwork.com
Interview Series
Verne Harnish
They saw
micro
movements
in the
market-
place way
before any
of the big
guys did.
32
talk time in this meeting, and then they would decide things that they
would want to do to make the place better. Then they would implement it
by noon.
Speed forward several decades later. It is exactly the same habit
today.
Our calculations are, because of this meeting rhythm and data
gathering process, that they are about nine days ahead of their competition.
They have been nine days ahead for 40 years.
Wow!
That is the practical power and importance of these habits. Gathering the
data, meeting about it, and then using that to set your priorities and then
acting on it.
You know, I would almost encourage everyone listening to us. You have
completely changed a lot of my perspective, not necessarily changing but
just added to my perspective. I think getting perspective is important,
which came out of a meeting between you and me in this discussion. I
always take it back to discussions. I would encourage people that are
listening to whoever is a key person in your organization, to listen to this
interview, have them listen to it, and then literally have a meeting of what
did you learn from this interview. Use that as a starting point to put into
practice what it is you are talking about here, as elementary as that may
seem for some people that are already very successful entrepreneurs. I
think it will just elevate you to a whole other level in your thinking on this.
One of the things that you were describing made me think of
something. Verne, I have known Dan Sullivan for over a decade. I have
been in his program, Strategic Coach, for over a decade. He has hired me
several times to help with the marketing and promotions of Strategic
Coach.
One of the conversations I had with him a couple years back that
really got me thinking, was when I asked, Dan, what do you sell at
GeniusNetwork.com
Interview Series
Gather
the data,
meet
about it,
use that
to set
your
priorities,
then act
upon it.
33
Joe:
Verne:
Joe:
Verne Harnish
Strategic Coach? What are you selling?
He said, You know, in a lot of ways, we offer discussions. We
facilitate higher levels of thinking with very successful entrepreneurs. But
it doesnt sound really sexy to say You are going to have a discussion.
I thought about that for a long time and I still do. I have come to
the conclusion that all the insight that is worthy of growth and things that
I have discovered in life all came out of a discussion. It was either a
discussion that I had with another person or a discussion that I have had
with myself. If I can improve the quality of my discussions or the quality
of my own internal discussions, I just tend to get much better results.
The way that you just described meetings, it just made me think of,
well, maybe it is just the attitude of Ive got to go do a meeting versus
Hey, I am going to go have a discussion about what we learned today.
It is all about communicating with other bright people, a brain
trust, and pulling out the insights, the strategies, the methods, and the
things that will take you to reach a bigger future.
I thank you for that answer because it really helps me think through
the whole purpose of being effective versus being ineffective. Is there
anything else you want to say on that before I ask you another question?
In the book we have specific agendas for the daily, we have specific
agendas for the weekly, we outline the power of the monthly, then
obviously we are well known for this one-page strategic plan tool that then
helps you kind of get everything on a page. We outline how you handle
that quarterly meeting.
It is a day, week, month, quarter, year rhythm that facilitates I am
going to use your term discussions, conversations, knowledge sharing,
think time, and talk time that we now understand metaphysically why it is
important. It is the most competitive weapon we have; which is our
brains. I encourage people to take a look at those details.
By the way, Joe, it is why we launched our Growth Summit. We
sit people at a roundtable. We want the teams to stop the craziness for six
months and come for two days and learn together, have conversations for
GeniusNetwork.com
Interview Series
Verne Harnish
It is the
most
competitive
weapon we
have: our
brains.
34
Verne:
48 hours, and really take your thinking to the next level. Then you have
got six months to go back and execute all that. Then we are going to come
stimulate you again for a couple of days.
We answered the questions of our team this last week. Our signups
for that summit are twice what they were last year. We are talking about
what is supposed to be a tough economy.
I am convinced people have figured out that anyone can do well
when things are going well, but it is the smart folks that have the winning
ideas when things get tough. I think they have found that out in two days.
I think it is why our signups are running twice what they have ever been.
This is for the listeners, because I was going to ask you about Genius
Network anyway, but you are talking about it right now. Let me kind of
give my reaction to Genius Network in a roundabout way.
There is reason I call it Genius Network when I do my interviews.
I now have a very high level-coaching group called Genius Network
Mastermind where I have discussions with people that are in the
information publishing business. That is one of the niches that I help
people with, book authors and speakers along those lines.
Genius is sort of the marketing term, but it is really is wisdom that
works. It is connecting people with what I consider great thinking, great
insights, and enormous wisdom. My interviewing you is simply
uncovering what I consider what Verne Harnish has to offer. What a lot of
people would call genius, I look at it as wisdom. You have an enormous
amount of wisdom as it relates to entrepreneurs, and by talking to you
about it and having this discussion, I am able to capture this, record it, and
then share it with other entrepreneurs so that they can learn and grow.
Part of this process is planting a seed. I hope this plants a lot of
seeds in a lot of our listeners minds, so that they can grow those seeds and
grow those ideas and become better entrepreneurs. I am very much a
believer that capitalism is an amazing, wonderful thing and entrepreneurs
are the ones that make the world go around.
You have fabulous training that has helped thousands of these
GeniusNetwork.com
Interview Series
Anyone
can do
well when
things are
going
well...
35
Joe:
Verne Harnish
entrepreneurs. For all the listeners, how do they access, where do they go,
what would you recommend? I know a lot of the people listening would
probably want to attend some of your summits.
Just go to www.Gazelles.com. Joe, We have also got www.Gazelles.tv
back on the daily. Down our right-hand column, we have got, for instance,
a link to the YouTube piece that shows the famous 1-800-Got-Junk
company and Brian Scudamore, the charismatic leader running their daily
huddles.
I know Brian. If you were to get in a fight with him, you think you could
physically take him?
No way!
Actually, I think you could.
I am 110-pound weakling myself. I got a trainer this year. I am almost 50
and we have a one-year-old, so I am trying to get back into shape for this
trip. Since you know Brian, I would suggest taking a look at his
information. Right there is a bunch of just complementary resources that
I encourage your listeners to go take a look at.
You mentioned something important, and that is coaching. I would
be remiss if we did not touch on that.
One of my favorite phrases is, No ones ever achieved peak
performance without a coach. When you think about the great masters,
the Tiger Woods of the world, these are guys that have coaches. If you
think about it, it is the best that have a coach, not the worst.
I think people think that coaches are for folks that need remedial
help. In fact, we all saw Tiger Woods go through a period where he
actually fired his coach. He then went 19 months, almost to the day, with-
out winning a Major. He lost his money title for the first time in 2004. He
himself was wise enough to go back and get another coach, Hank Haney.
GeniusNetwork.com
Interview Series
Verne Harnish
No ones
ever
achieved
peak
performance
without a
coach.
36
Verne:
Joe:
Verne:
Joe:
Verne:
The moment that happened, we have seen some of the greatest golf the
world has ever seen up to the point of his latest injury.
We really think it is critical not only to get the learning, but also to
get some coaching. We think coaching without the learning gets stale; but
the learning without the coaching does not get the traction.
We have got a bunch of coaches ourselves that can help out, but
just go out and get somebody that can hold your feet to the fire and hold
you accountable and have that talk time. I have had the same coach,
Arthur Lipper, who owned Venture magazine for many years. He is been
my coach since 83 and he is been invaluable.
Why did you name your company Gazelles?
It is the term that David Burch at MIT labeled the growth companies in the
economies. He is misunderstood when he said, It is not small business
that generates all the jobs; it is the gazelles, a sliver of small business that
is grown at least 20 percent a year for four years in a row. It tends to be
memorable as well.
There is so much more that I could ask you, but I am only going to ask you
one last question. What I will say before I do that, though, is that I
encourage people to go to www.Gazelles.com to check it out. There are
many articles that you can read there.
Some of my favorites are Raise Prices, Less is More, Stop
Doing This, Nows the Time to Sell Your Business. There are a lot of
really good articles that you have posted there, and I would encourage
people to check you out and read your book. You talk about critical
numbers and smart numbers and a situation room and all kinds of other
very, very, valuable things that all entrepreneurs could benefit from.
Check out our web greeters, another place where we are able to, as a small
business, utilize resources on the other side of the planet. 24/7/365
somebody will pop up on. If you cannot find one of the articles you just
GeniusNetwork.com
Interview Series
Get
somebody
that can
hold your
feet to the
fire...
37
Joe:
Verne:
Joe:
Verne:
Verne Harnish
reference, just ask them and theyll point it to you.
Awesome! There you go. There you go!
I believe in entrepreneurs. The reason I like helping entrepreneurs
and would do it even if I did not get paid for it is because I believe that all
of the inventions, the ability for us to talk on the telephone right now and
record this and have the internet and have shoes and luxuries, they all stem
from the mind of some entrepreneur. Going back to the original definition
of an entrepreneur from John Baptiste Say in the 1800s, it says, An
individual that takes resources from a lower level of productivity to a
higher level of productivity.
For all the entrepreneurs out there that add value and create value
for the world, anything that I can do to help support and help them become
better makes the world a better place. From your perspective and with all
your experience, Verne, what do you think entrepreneurs really do? What
is their call? What is their calling and what are they out there doing day
in, day out?
You are quoting some historical figures there. It is Joseph Schumpeter, the
great economist, who said, The entrepreneur, they are that E in that
non-differential equation that provides a creative destruction that solves.
You already said it; every significant and minor world problem we have
ever faced has been solved by an entrepreneur, not by a government.
We were just contemplating today putting a video together for our
upcoming summit. One of the guys that we decided we are going to
feature is Omar Salah, who, when he was 28, decided to launch this
business in Jordan. The first Jordanian who took a risk to take advantage
of a trade policy we put in place in the US to say, If you want to trade
with the US, you have to go through Israel.
This Jordanian takes the risk crossing the border, finds an Israeli
partner, and the rest is history. It was the single move that brought those
two countries together. It is not politicians or anybody else, but rather a
28-year-old entrepreneur who is very famous today in the Israeli/Jordanian
GeniusNetwork.com
Interview Series
Verne Harnish
It was the
single
move that
brought
those two
countries
together.
38
Joe:
Verne:
circles.
That story has repeated itself every year, every decade, every
generation. I am just in 100 percent agreement. The worlds problems get
solved first when we provide an environment where the entrepreneur can
flourish and we give them the tools they need in order to be successful.
They will get stuff done. T. Boone has got the plan to fix our energy
policy that McCain and Obama could only hope that they could think up.
That is great. For all of the entrepreneurs that are out there listening
wanting to better whatever it is you do, I, of course, congratulate you. One
of the reasons of me interviewing Verne, of course, is to bring some
fabulous habits to you, starting in the form of this interview and his book
Mastering the Rockefeller Habits. There is a lot more where that came
from. Verne Harnish. Get his book on Gazelle.com.
Verne, any famous last words before we end it?
No, Joe. Just keep doing what you are doing and entrepreneurs keep doing
what you are doing.
Thank you. Thank you so much. Have a fabulous time with your family
on your nine-month trip. Maybe we can do a future interview and you can
tell us all about it. I really appreciate you taking the time to do the
interview.
I look forward to it, Joe! Take care!
Hello, this is Joe Polish. I want to thank you for taking the time to listen
to this interview. I hope you found it very useful. Please give me your
feedback on all of the interviews that you listen to. I love to hear your
feedback, so we can always deliver a great program for you.
Our website is www.JoePolish.com. We also have a Joe Polish
Recommends section, so you can take a lot of the ideas and concepts that
you hear on my Genius Network Interview Series and apply them to your
GeniusNetwork.com
Interview Series
Entrepreneurs:
keep doing
what youre
doing.
39
Joe:
Verne:
Joe:
Verne:
Joe:
Verne Harnish
business and find vendors and resources. You can go to JoePolish.com. to
find that information, and click on the Joe Polish Recommends section.
Also, if you would like to find out about more interviews and
invest in more useful Genius Network Series interviews, go to
www.GeniusNetwork.com. Thanks, and eat your competition alive!
GeniusNetwork.com
Interview Series
Verne Harnish
Eat
Your
Competition
Alive!
40

Genius Network Verne Harnish Interview

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Genius Network Interview

Joe Polish, President of Piranha Marketing, Interviews:

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