145: Verne Harnish — The Spring Tuneup

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What have you learned lately and what has your team learned about growing and scaling the business? What have they learned outside your industry? Being a learning team that is continuously learning and improving, it goes to our company values. Hopefully it's part in some way of all of your companies. If you're scaling, you've got to keep learning. And so we have summits that we do all the time and we wanted to preview some of the speakers and topics and ideas whether you can come to the summit or not, to get your thinking going on the places that you need to learn and focus on next as a leadership team. So listen in, hope this stimulates your thinking, gets you headed down in some interesting and new directions. Keep listening.

Hello and welcome again to the Scaling Up Business Podcast.

I'm your host and scaling coach, Bill Gallagher. So on the show with me today is Vern Harnish. Verne, are you in Denver or near? I am.

Boulder, Colorado.

Awesome. We're talking today about kind of the spring tune up, what you need to do twice a year to sharpen the saw to get your own thinking, learning and growing going and getting your team going. And so we're going to talk about the speakers at the summit and the ideas they present. But this is not just an infomercial for the summit. Many of you, our listeners, will not be able to go for one reason or another. If you could go, great, but if you can't. So we just want to give you a preview of some of the thinking to stimulate your own thinking. And you can read the books and follow them and watch the videos and download whether you could come or not. So Vern, it's kind of your floor.

Yeah, well, you know, the whole idea of the summits is I think it's pretty clear. Mark Zuckerberg reads 24 books a year book, you know, 26 a book every two weeks. Bill Gates is twice that Mark Cuban three hours every day since he was age 20. I think it's pretty clear. And in fact, Microsoft, being one of the top market cap companies, said the significant thing is they changed from being a know it all culture to a learn it all culture. And as the McKinsey report pointed out just a month ago, we've seen finally the fundamental shift on the planet. The competitive weapon used to be cheap labor, now it is smart talent. And I even pointed out that, you know, Steve Jobs, rest his soul, and this week Mark Apple's back on top as the number one market cap company. I think it's unbelievable that their market cap has tripled since his untimely passing. And the most important thing he did last was spend his final two years establishing Apple University. It wasn't a product, it wasn't another service, but it was internal. And he knew he needed to educate not just Tim Cook and the senior team, but everybody inside Apple. And so we really see learning and education not as a nice to have, which it might have been last century, but it is the competitive weapon. The challenge is, you know, 11,000 business books every year. I see my job, as I've had for years at Fortune magazine, to curate, you know, what are the handful of the best books.

The idea of reading so much is overwhelming to a lot of people and yet it's so, I mean, we have a huge following right at the summits and in our coaching clients from Vistage, ypo, EO and like organizations who are all invested in learning and growing themselves. But there's not only keeping that, but also getting the rest of their team right?

And that's why we formed this opportunity. Twice a year in 48 hours, you can consume the equivalent of a dozen plus books. And most importantly, it's what Steve hall shared, who has not missed. He and his team haven't missed a summit for 15 years as he scaled his first company to 300 million and then lately a division of a company from 100 million to a billion. He said the quality of the conversations that his team are spurred on to have because of the stimulation of these speakers has been profound in terms of his ability to scale. So look, you've got to out learn the competition. And so that's why we work hard to say, all right, what are the dozen best books that have come out recently? And not only do you can you hear directly from the horse's mouth, the authority, but you're sitting at round tables where you've got a real chance to work with the material which we think is important.

So talk about who are the folks, what are some of the ideas that we're covering so people can begin to get some of that stimulated thinking here.

Yeah, well, excited. The guy that I had endorsed the front of scaling up, Henry McGovern, who has scaled from his first Pizza Hut in Poland to now 38,000 employees. They were, they've been over the last 12 years the best performing European owned restaurant chain in the world by a factor of two. Henry's flying in from Poland and he's going to share what are the practical things that he's done to scale this organization over the last 26 years. And so excited Henry McGovern's going to be there. We've got Steve Martin. Steve is Robert Cialdini's partner in the whole influence movement and he's got a new book out called Messengers. You know, who we listen to and who we don't and why. Because one of the things that we've learned is when it really comes down to pricing, compensation, sales and marketing, we have to remember we're selling and dealing with people. And people are not logical, they're psychological. And it's understanding the psychology which is probably one of the most important things we as leaders of companies need to understand. And so we've got literally what's considered one of the top three experts in the world. Steve's in from London, so he's flying over himself to be a part of our scale up summit. So he'll be there. We've got a repeat Denise Lee Young.

Who'S got, before you move on to Denise, this notion of I hear from people all the time, like I my business would be easy except for the people stuff. Right. And there are, I think core to this idea is if you start to look around you, there are people that you listen to, people that you trust, people that you don't, people that you discount. There's a world of that that surrounds us and paying attention to it, cultivating it, developing that is critical. And then thinking about who you are for others and who to become.

Yes. And you know, it's one of the reasons why, and I'd learned it from Jim Collins, I didn't realize that Peter Drucker, you know, the late Peter Drucker read as many, if not more really great fiction books than he did business books. And it's because great fiction really gives you an insight into the human psyche. And that is really what we as leaders need to master as much or more than kind of the quantitative, you know, what we'd call hard side of the business. So, super excited. We're going to lead off with Steve first thing Tuesday morning at the summit.

And then Denise is a nice segue because brand and culture. Right. So talk about Denise's topic, because I think it's a great segue there from.

Well, and it's really the first book I've seen that's done an outstanding job of showing how you've got to integrate your brand and your culture, because it's the culture, it's the people that actually have to then deliver on that brand. So it's one thing to say you, you know, this is what our brand stands for, but if you don't deliver on it. And obviously, you know, she's going to not talk about Southwest Airlines, but we all know that that's been the magic of Southwest and that they were able to get that culture to really align with the brand. One of those being lots of fun, and that's what's made that, you know, made them such a successful company. So Denise is so for our listeners.

A good question to think about right now is where is your brand? Where is your culture consistent with the brand that you have out in the public? And where is it inconsistent? Is a great place to begin to look and think about.

You got it? Then we've got Susan Packard, and Susan's the founder of hgtv. She was also involved in the early days of MTV and other media properties. And again is going to be looking at the human side. Has a book called Fully Human Three Steps to Grow youw Emotional Fitness and Work Leadership in Life. And what it is, is everyone talks about EQ being so critical in the workforce. This is really the first book I've seen that has made that actionable and really brings it alive. And she did that at the companies that she scaled. And so what I love is we've got somebody who's really done it again, like Henry McGovern, who's going to be able to come in and share her specific ideas.

You know, this is brilliant. I was working with a company just in the last week and they were like, oh, we're tired of hearing all about feelings and stuff like that. And I wasn't talking about that. They were talking about another coach that they'd worked with. And I'm like, yeah, it's not the attention, it's the awareness of feelings of yourself and other people. But we're still actually working on action and results. We're still about running a business. We're not just having a navel gazing session. It's the feelings in the context of everything else and understanding how they relate that matters.

Well, and it's always been that thing that Aubrey Daniels taught and I saw it really come alive in Susan's book and, and what she did at HGTV is people do have this extra 40% discretionary effort they can choose to bring to the table or not. And that's if you can tap into that. It is a huge competitive advantage. You know what else it means? You don't have to hire as many people. And we know the number one issue our research is showing because we do that with every audience we're in front of, including the one I'll be with this week with YPO in Las Vegas, is the people side. It's talent acquisition. And so if I can increase productivity literally 45 to 50%, those are a lot less people I need to hire.

Absolutely.

Then I want to switch gears. You know, one of the things that we've really wanted to get focus on over the last year and a half is artificial intelligence. We, you know, it was the AI was the topic at Davos last year, again this year. I mean it's really, it's all the talk among the Fortune 500. The great news is you can do stuff for tens of thousands that used to cost millions. So how do us mere mortal company really think about artificial intelligence? So we have had a top thought leader in that space at every one of our summits and it includes this upcoming summit and that's Mariah Yao in her book and it's appropriately titled Applied Artificial Intelligence A Handbook for Business Leaders. And it's one of a handful of outstanding practical books for business people.

This is a great, totally great because I think people, unless you're in AI, which is not as many people as maybe should be, you're either awed or frightened by the ideas and the impacts of AI but you're not always left like, okay, so how do we take advantage of it in our business?

Very much so. And so we want to hit those. We're also through our scale up x topics, these 10 minute talks. We're hitting some really practical conversations around first. Marissa Levin's going to be there in our book Built to Scale. And how do companies put together exceptional advisory boards? And we've been adamant mid market private companies don't need board of directors. We don't necessarily need the fiduciary, you know, held due fiduciary Responsibility, but we really need advisory boards and how to put those together. She's been the real thought leader in that space. Two we got Walker Dibel on Build Buy, then Build and it has been a huge message that we've been taking out to companies which is one of the best ways to grow is through acquisition. The biggest trend right now there's about 3 million baby boomers and you know, as the baby boom goes, goes the economy, it's about 3 million baby boomers that have pretty significant companies that they need to exit over the next five to 10 years because they don't have any children who want those businesses. And it is real. And as he subtitled business it's, you know, how entrepreneurs outsmart the startup game. I really do think that we should scale through acquisition as much through organic growth.

So we see a lot of companies do that. And if you're a scale up fan and you've got a huge leg up because you have a clear defined culture, you can evaluate the acquisitions based on that and then as you gobble them up and digest them, you can point to and incorporate them into your own culture and use that as a leverage.

And then we're going to be hitting the really important topic of just sales. And so we've got Jack Daly, he's got his new book out, the Sales Playbook and the importance of making sure that hey, if you've got five salespeople, they're probably selling five different ways. And it really is better if you've got one way. And so Jack's coming up on stage for 10 hour, you know, power packed minutes.

Talk about creating the playbook. Yeah, if you haven't created a playbook yet, you should start to think about what are the steps, what are the common, consistent, repeatable ones. And do you have every salesperson doing something different or have you distilled it down and taught people how to do it in a consistent fashion and focused on the iteration and refinement of it.

And by the way, we've got other scale up X speakers, other keynotes they can take a look at. If nothing else, as you said, take a look at the list and these would be the recommended books that you would want to grab and take a look at. But you know what else? We really are spending more time also having some fun. So Tuesday night we're having Atlanta's top 80s band and we've got an evening call where we want everyone to wear black or white with a splash of red. It's kind of a red carpet experience where we're going to have some of the speakers there to do a further Q and A as a warm up then to the band so we can have some fun. And then we're ending it. We're closing with Danny Corby who has just shot a television show with Penn and Teller and he's going to be there as kind of a closing entertainer, magician, mentalist. Also bring in a good solid business message. But you know, we're going to have some fun as well.

So, you know, this is the thing with our off sites and our leaders that they're not always doing is having a little fun and play and learning. And I think those are the times where informal things come up, where the human connections get restored. And if you, if you're not doing something like that with your team regularly, I strongly suggest you put that in rather than just having a quarterly meeting in your conference room and then going about business as usual.

You got it. And we know that having that fun together is really a bonding experience. And so that's what this couple of days is meant to do. In addition, on Thursday we do have a user conference. And so that's where those who really want to dig in even deeper into the Scaling up people strategy, execution, cash. We've got, as you know, Bill, some of our best clients sharing their best practices, coaching partners sharing their best practices so people can really get a practical update on what it takes to implement scaling Up.

So I've led segments at the Scale up conference and fortunately this time I've got a fly off to lead a session the next day in another city. But I think that what I like about it is it's kind of like a public workshop. You're there many people, there's a mix of people new and people existing in the world of it. But it's the Scale up basics, the scale up framework basics and then you can pick and choose the modules that you go to so you can drive deep into different sections and customize your own agenda based on what's important to you right now in the business. Right.

And if I were to frame the whole thing in general, you know, we're, you know, what gets measured, gets done. And we're pretty adamant that a minimum frontline employees ought to be getting an hour of education a month at a minimum. Mid management, two hours a month, so 24 hours a year and senior leaders kind of 48 to 60 hours. And every profession requires that kind of continuous education except our profession. It's one of the reasons why I think leading businesses we need to professionalize. And so the spirit of it is, hey, in two to three days, just twice a year, six days a year, you can meet those kind of requirements. And look, we're piloting our businesses and you would not want a commercial pilot who, by the way, has the most continuous education even more than doctors, thank goodness, knock on wood, because of the amount of time you and I spend on airplanes. That's the kind of thing we think is critical for the senior leadership of growth companies. We've got to make this investment and this is our way to try to make it better. Really simple. By the way, mention, you know, we stream it. Scott Nash with Mom's Organic Market. He's been having teams come from 20 million. They'll hit now about 300 million. He stays back and he watches the whole thing, you know, from the comfort of his office and has various teams in conference rooms that are dialing into the streaming. So if you, if you don't want to travel, it's available there as well.

Get on and view it remotely. Yeah, yeah. So that's great. And I think it's great to give folks an overview and hopefully that stimulates this idea of education as well. I think it's useful to think about in particular into your monthly meeting cadence where we recommend getting some learning in. I came across one team recently and they had done a weekly lunch and learn. And rather than carry the whole burden with one of the senior leaders in the company, they just said, look, we're going to have a launch. You sign up and you can teach others on the team something that you care about. So people come in and they'll teach something about a hobby they have. They'll share a book they read. And so once a week they have kind of a lunch and learn that's led by one of the employees. And so it's created a culture and they had to prime it a little bit by getting it going until people. Until it really took off. But they created this culture where once a week there's a lunch and learn. And it's informal, it's led internally. And sometimes it's very business and performance oriented. And sometimes it's really something interesting and amusing in a less direct way. But it's created there a culture of learning the organization and they are outpacing their.

Yeah, for sure. Yeah. Again, as we opened up this thing, learning used to be a nice to have. Now it is the competitive weapon. And even if you want to retain talent, you know, talents like, hey, I, I want someone to invest in me and as Richard Branson said, you know, you want to invest in people enough so that they, you know, could go elsewhere, but then have the culture so that they'll stay. Because you want a bunch of smart people. You don't want a big company of dumb folks. That doesn't that strategy.

What's that other quote along that like if, what if you invest in your people and they leave? What if you don't invest in your people and they stay having dumb people around? So in the monthly cadence in particular, and then a couple times a year and every quarter, how do we elevate the learning? We just had one of our latest clients come on and they're implementing the daily huddle this quarter as part of one of their focus areas in implementing the tools. And they're like, great, could you give us some videos? And I'm like, of course we could give you some videos. Could you tell us some things to read about it? I'm like, of course we've got books to read about. But that, like, what is it that you're dealing with right now that you need to learn and elevate the learning of the whole team on so that everybody's thinking and learning and growing? And what I think is really great about this broad thing and whether you watch the video, whether you come to the summit or you just read the books, the key thing is that you're engaged in the learning and not just within your own industry because no great new fresh ideas are going to come just from within your own industry. You've got to get out to these broader topics to start to grow and expand and beat the competition.

Well, and, and it brings up another, I might call it objection that some people have to learning is they're saying, hey, we can't implement everything we know right now. But that's not how learning works. I mean, ideally, if you could pile it all into your brain right now, the idea is that you, you know, you're making decisions four months or four years from now and I guarantee you that little data bit of knowledge that gives you that slight edge over the competition will be there when you need it. Because the biggest danger is not knowing what you don't know. And that's what you want to avoid. And that's why the leading edge companies are really invested like Apple in Apple University and learning.

I used to struggle with the reading and learning and I would only get to books on vacation and then I didn't want to read any more business books. I just wanted to read some fiction. And you do learn some interesting things, as you point out from that, about human dynamics, about that that feeds something. But I had an advisor talk to me about skimming. She's like, well, read the beginning and then the end and the beginning and the end and look at the figures and find a way to get into it, especially if you are a little ADD or ADHD like some of us are, where you struggle to focus and your mind goes off in different directions. So first I started doing that, then I started listening to books on tape, audiobooks, and I would do that as I was running or as I was cycling. And I used to put in a lot of hours and that stuff years ago. And then I started to get. Then after a while I developed a habit and now I'm better at getting through a couple books a month. But it really took some stepping into it. So I'm always encouraging people, look, if you have to read the short version of something or listen to a book, it doesn't matter as long as you're learning and whatever structure works for you. And to begin to get started and then develop the muscle makes a difference.

Well, and it was an idea from Robert Cialdini, again the father of influence, that drove the way we structured the summits. You know, it's interesting. If you can get somebody to fill out a form, partially, the likelihood that they're going to finish filling out that form goes up dramatically. And so one of the things that we require of the keynoters is not just a lecture to everybody for an hour, but to do three or four activities. I remember when we had Jim Collins, Jim's got 25 years of content, yet Jim really understood. I'm going to pick just five ideas and I'm going to present it, share a great story, but then I'm going to let the team work with the idea for five to 10 minutes. And the fact that you get the conversation started is really powerful. And it's to your point because it gets getting started that is the toughest part. But once you are started, then it's easier to continue the development and the education and the learning in that particular area. And that's what a lot of the teams have found, is the value of just, hey, just throw it all at me in 48 hours. And then we'll sort out what we think is useful and not from that.

Right. And you're always asking, look, what's the one thing you're going to take away? We always ask this in our workshops, so pick an activity. I had somebody who graduated really rapidly from our accelerator programs recently. And she's like, look, Bill, I just come, I hear everything you say and I want to do it all, but I just pick a couple things, maybe even one sometimes, and I just do that one. And that's kind of how I've made the progress I've made. And I'm like, God bless you. Put that on video, will you?

Yeah, no, that, that, it, look, that is the way it works.

Be stimulated by a whole bunch of things and then just do at least one of them and do it really well or maybe even a couple. But don't try to do something from every single speaker you heard. And that, that's, I think, also the value. Bringing a couple people when I see a CEO is like, oh, I'm going to come. I'm like, you know what? Actually I'd rather have you send a couple of your people if that would make a difference. And not even come yourself or bring yourself and a couple others, because it's different perspectives. Hearing different things will pick up on different things and the same thing true with your leadership team. If you're not attending our summit, have everybody read a couple of different things or come bring something on a key question that you're grappling with so that you get that collaborative perspective on learning that makes all the difference in moving the company forward. Right.

Well, and that's, that's what we've really. So we're partnered up with EO and YPO in Atlanta because, you know, we're bringing the thing to Atlanta and that's really their message out is EO and YPO and Vistage and other members of those CEO organizations, they get a lot of education. They do, yeah. But the rest of their executive team, not so much. And the real challenge is out learning your team. That's. That's dangerous. And so we've got several of the YPO and EO members who they stay back home and they send their team. That way they've got a chance to have this kind of top notch executive education and they then take ownership of the implementation of it, which is what the CEO loves. So I'm with you, McKiel Haggerty, you know, kind of immediate past international chair of ypo, globally, he'll have again, he always has a team there every summit, but he himself won't be there. He's getting a lot of education as he travels around in ypo. And this is really for the rest of his team.

For the team. Right.

And wouldn't it be great if your.

Team all Went off to something or all dug into some learning and then came back with, hey, you know, let's, we just heard this and we think this solves this problem been grappling with and we want to go for it. Right. That's something we all hunger for is having our teams stand up, take initiative, start to drive things, be thinking independently. Right. That's the dream.

Well, and it's why chipmock, you know, we always have those two big tables up front and it's always taken up by one company, Allure Medical. You know, Chip, Dr. Chip Mock's gone from three locations to of 30 locations in just the last 18 months. And he'll have 22 of the leaders of those locations there because he's like, look, I want them to learn this and implement it. I don't want to be the one doing it. And he literally successfully running that company kind of a day, a week because he's got the team truly engaged.

Well, and he's like learning everywhere.

That's right.

His people are out doing, they are grabbing learning not just from our world, but from all sorts of worlds of management and growth and performance development.

Yeah, they're, they're, they're first class.

Yeah, yeah. Well, so, okay, so if folks want to go to the summit. Look, if you, if you can't even do the summit, go look at the books and the, in the speaker list and the roster and just use that as your reading guide. Correct. We've curated a great roster of things to stimulate your thinking and pick a few and start diving into those. So I think the easiest website to tell people to go to is scalingup.com. so scaling up.com and then you go to the Summits tab.

Yeah.

Right.

And look at, just click Summits and.

Click Summits and then look at Atlanta, which is the next one and look at these speakers. Right. Steve Martin. So we've got Messengers, Fusion, Fully Human Trust Edge. You've got Applied AI, we've got Crave, we've got Built to Scale Innovation Games Buy Then Build. We've got the Sales Playbook, the Power of Vulnerability. We'll put a link to all these things as well so that folks can read about, about the books and begin to think about that. And then of course you can register right there for the summit and the user conference. And if you can't come, then perhaps watch by video. And if you can't do any of those things, then start reading the books now or after you got it.

Bill, thank you so much for encouraging people to continue to learn.

Well, thanks again for joining us. Of course we have an episode like this every week on scalingcoach.com or just go to wherever you get your podcasts right. Itunes, Stitcher, all over the place. All good places for good podcasts. The Scaling up podcast is here and we just bring all of the authors, the gurus. We'll have many of these folks on the podcast before you know it. And so we've got something like this every week. Like it, subscribe it, share it with your team, with your friends and get them all Scaling Up. Thanks again for joining us, Vern. We'll talk to you soon.

You got it. Thanks Bill.

Well, special thanks again to the original growth guru Verne Harnish for joining us on the show today and for creating the whole Scaling up framework in the first place. Our show is produced by Crystal Carson with audio production by Podfly Productions and the audio editing by Albert Burge. Our show notes are compiled by Ian Kodina with proofreading by Tim McGowan. If you got some value out of the show, please share it with somebody else. Like subscribe, do all that good stuff and drop us a note. Tell us the parts you loved. Send us a Note to info scalingcoach.com we're always@scalingcoach.com every week. Thanks again for listening. Keep Scaling Up.

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