Business Elevation: Scale Up Strategies from the Expert Verne Harnish

Welcome everyone to another episode of Mastermind Mastery. This is the podcast for you if you are wanting to create or already running peer groups. It's what we call PACs, Peer Advisory Councils. They might be known as mastermind groups, CEO peer groups, all the same. But this is the podcast if you want to run better PACs, that you want to be better at being a moderator, you want to up your game, learn advanced techniques, hear from myself as well as guests what works, new concepts, trends, techniques. Also learn content, things you can take back to your meetings, different ways to do different things to solve problems that we all have when we're running groups. It will increase your retention, reduce your attrition, get you more members, make you more money, this is the podcast for you. I'm Tina Corner Stolz, the host. I've been doing this since 2005. I built a territory of 10+ groups, sold for a multiple, started LX Council, Leader Exchange Council, in 2012. We are a licensing model. We are the leading educator in the peer advisory council space. We have the podcast. I have a licensing program with certification. I've written 2 books. So today, when you hear this episode, each and every week, it's a new podcast where we dive deep into a topic for 15, 20 minutes. One week it's me doing a deep dive on all the experience and insights from not only today with our entire licensed partner community or the past, what I've learned along the way. But we also have guests that are out there doing groups today that share their insights and new concepts. So let's get started with today's episode.

So welcome everyone to another episode of Mastermind Mastery. I am your host, Tina Corner Stolz, and today we have an extremely special guest. I am so excited, and you will be too once you hear what it is, because your key takeaways are going to be about how you can run your peer groups even better and just some really good pieces of wisdom from someone who's been in this space and what I have called a little bit like the GOAT, the greatest of all time in the peer group spot, is Vern Harnish. So Vern, welcome to the show today.

Tina, good to be on the show.

Well, no, thank you. And in this short time we have together, and I'm sure our audience knows your background, but I'm gonna rattle it off just in case and as a good reminder to them about the extensiveness that you have in this space and also what you do And because you're passionate, your mission with entrepreneurs, right? And while you are CEO, founder, et cetera, of Scaling Up, you've written the book Scaling Up. You also have written the book, The Rockefeller Habits, Mastering Them. Um, but also co-founded the Growth Institute and how you do, you know, do that for entrepreneurs. Um, and you are also the founder of EEO. And there's so many other things you do, like you're a wonderful speaker, but we're gonna get to that later. Um, but as a founder of Entrepreneur Organization, you know this space so well. And when you combine your knowledge of the value of peer groups with what your passion is with entrepreneurs, which aligns with that, but with all the work you've done with scaling up and, and how that impacts the entrepreneur, um, just, you have a lot of wisdom to share with our audience today. So, I know they're gonna have a lot of takeaways from today. And so I kind of would like to start with kind of your thoughts about peer groups, right? And how it kind of helps entrepreneurs and, and just in general, cuz you have some good insights about that.

Yeah. Well, you know, the impetus for EO, Tina, was the late Steve Jobs. So I had a chance to host Steve for his very first public speech after being fired from Apple. I mean, he was massively depressed. You know, here he was, the founder. It was his baby. He's got it ripped from his arms. And so I've got about 1,200 young entrepreneurs in the audience. By the way, I've got Michael Dell sitting next to Steve, and I've got Mark Cuban and Kevin Harrington and all of that bunch. And he gave an unbelievable speech about what it took to, to launch and, and scale Apple. And then I threw a party for him, and surprisingly, he showed up. I thought he was just going to come from Pixar over, share his story, which he was kind enough to do anyway, and then leave. But he stayed. But what was interesting is he stood alone in the corner until I remember Joanne Marlowe asked him out to dance on the dance floor. He was a pretty good dancer. And I remember turning to my buddy Greg Stem, and I said, look, a line from my mentor Joe Mancuso was that it's okay to be independent. It's okay to be independent, but no reason to be alone. And I'll say it again, it's okay to be independent, but no reason to be alone. And I said, I need tonight to start an organization for the Steve Jobs of the world. And we went ahead and adopted YPO and Vistage and all those other peer group structures. And at the heart of EO, as it is all the others, is that peer group. If you speed forward, this is our 37th anniversary. You know, the thing I think was most proud of in the pandemic is that nobody was alone that was in a peer group. And I know your peer groups did the same. We couldn't meet physically like you normally do.

Right.

Usually once a month. So people got online for an hour every week, and that kind of support is powerful. Particularly more so in the United States than maybe other countries. We've seen the Surgeon General say that loneliness is more detrimental to your health than, you know, smoking 2 packs of cigarettes a day. And I believe that. And so I've often said to my audiences, particularly men, you know, the research also shows when they ask men who's their best friend, they often report their spouse or significant other, which, by the way, doesn't match what the spouse or significant other reports. Right. And so I'm like, hey, if you were to die tomorrow and you need some pallbearers, you know, who would be the 8? And I got to tell you, most men would struggle. Hey, they'd be gone. I'm not sure they'd show up. They're going to be busy. Not sure I'm that close. They don't like, you know, but you're in a peer group, they're gonna be there for you. And the value and power of that is almost immeasurable, especially when you're going through what are always the crazy times when you're scaling up any kind of a venture. So that's why we're so passionate about that. And at least in EO, the rule is no chapter or anything can tell a peer group what to do. It is sacrosanct. It is our key unit for a good reason. So, you know, that's kind of why I think it's important. And for me, it goes all the way back to that first moment with Steve Jobs.

That was amazing that you, in that moment, realized a gap that existed for entrepreneurs and developed EO from that. Just one event, which was amazing.

Right.

And so here you've been around so many people that are running groups, and then of course you're scaling up coaches, right? Work with entrepreneurs, et cetera, too. And there's a big marriage between the two that can happen because those entrepreneurs that are in those groups are trying to scale their business.

Yes.

Obviously, right? And so any kind of words of wisdom and thoughts for our audience about, um, as you're running a group, how you should be paying attention to that for those owners and helping them scale. And, and, you know, because you can't just let it happen because they need to be thinking about scaling so they can exit appropriately, whatever that looks like. And sometimes they're still too close and not thinking long-term enough.

Yeah. Well, and that's where you, you and I were riffing on that before we got started. I, one of the first things that we emphasize at our CEO boot camps is to go back and run your leadership team like you would a peer group. Everything you've learned about peer group health is absolutely critical for you to bring inside really every meeting and every group of employees that you have inside the organization. So the first one is the power of the Lifeline exercise. You know, it's been at the heart of Pat Lencioni's work in Five Dysfunctions of a Team and all of ours. And so we'll encourage a CEO to go back because they've done it in their peer group to go back with their executive team. And it was interesting, we had a, uh, one of the CEOs worked closely with his wife. They've got a man contract manufacturing company. In the cosmetic field. They actually produce the cosmetics for many of the superstars that you're familiar with.

Mm-hmm.

He literally came back from, he came back to the boot camp a second time and he shared that when he did the lifeline exercise with his wife and senior team, his wife shared something that she had never even shared with him, her husband.

Yeah.

And the power of what that does to to bond the group cannot be underestimated. So first, go back and everything you've learned about bonding in a peer group, do that with your leadership team. I think even the power of the retreat, the peer group retreat. We saw the research that Google did, Project Aristotle, in terms of what makes for an effective team and what came out of it. Psychological safety. And we know that at the heart of an effective peer group is psychological safety. I have to feel safe that I can share anything. And then first of all, it's going to stay in the room. And number 2, what they discovered are really 2 specific things. Number 1, equal talk time. I know it sounds crazy, but The way peer groups are structured really guarantee that everybody gets an opportunity to share, to talk, to check in, to check out, you know, the great design of those. Yet that's not how they run their executive team meeting. And I often, when I say that, there's all these like deer in a headlight looks. And so what you've learned about running an effective peer group meeting ought to be everything you've learned there brought into your own executive and company meeting as well. So those are just a few. Whatever is peer group health, that's really what Pat Lencioni meant by it's critical that you have a healthy team so that you can build the trust that's necessary to have as Jim Collins said, the brutal conversations, face the brutal facts that are necessary if you're going to move the organization forward.

So I hear multiple things here that I want to go back to for our audience. Number 1, Lifeline exercise. You and I may know what that is, but not everybody may know what that is. So do you mind explaining that so we're for sure everybody's going to know what it is?

Well, so you just take a piece of paper, you know, like this and you turn, turn it kind of landscape. You draw a line down the middle and you put from 0 to, I'm 65. And so you put that lifeline and then you can do a modified one with your leadership team. Simply choose what are the highest 5 points of your life and what are the 5 lowest points of that 65 years. By the way, you can't count marriage or children for either. That's a joke.

Yes.

But, you know, unless it was a particularly difficult pregnancy and what you had to go through to, you know, have a child. But don't put the obvious on there.

Right.

But kind of 5 other high and low points. And then you take 15 minutes each and you share that and what you find. So I'll give you an example. and, and, and by the way, here's also a warning. We know that when you add somebody to a peer group, it's not the old group plus one. It's a brand new group. And you should absolutely go through the lifeline exercise with everybody again, cuz you can't just hear it once anyway. And so we had added a member, you know, you know him, Daniel Marcos with the Growth Institute, to our council. And so we all went through our lifeline exercise. Now, I have known Daniel for decades. He was a student of mine at the MIT program, then he was a client. He's a big user of our tools, scaled up tremendously. Yet what I never knew until he did his Lifeline exercise is that at age 1, he caught himself on fire, burned 90% of his body, and spent a, that first year of his life fighting for his life. And once you know that about him, then I understood why he's got the biggest heart of any human being you could ever meet on the planet. And he continues on my council call again this morning, continues to show that heart. But you would never know that. On, on a flip side, I was invited into a major company that you guys would be aware of. They were running through some major issues. And I said, hey, before we get started, let's just do a round of good news.

Oh yeah, that's a good thing to do.

That, that check-in that we recommend at our weekly meeting and are at the heart of peer groups. And they came around to the new head of people. She'd been there about 6 months. Her name was Libby. And Libby shared something about her daughter. And everyone on the leadership team's like, Libby, we had no idea you even had a daughter. Now, that, that's an issue.

That is an issue.

If you don't have that kind of connection, if I'm not aware that what got reported out this morning, oh, my, my, one of our employees announced the date for his wedding, which is June 7th, 2025. And everybody was able to note that ahead of time and kind of celebrate it. And we talked a moment about where, where it was gonna be located and how many guests, there's gonna be 90 guests. But hey, how many of you know those things about your people that otherwise will get missed?

Correct.

And that's critical for us bonding and being healthy. And that's what Google's research found. Your problem. Stop.

Very important. And for those of you guys listening, we will attach in the show notes a link that you can pull down Lifeline exercise. And so it's a template and you can see with instructions and, and know how to execute it. And I think, you know, a couple of key takeaways that you're talking about, Vern, is not only to do it inside your group, do it when you have a new member join because it does change the dynamic group, but do it with your team, your leadership team. And it's also an awesome exercise to do with your spouse.

Yes. Well, and we have a client in Auckland, New Zealand. I was there in February, and he shared that every new employee he meets, uh, as part of the onboarding process, he volunteers his lifeline, and then that opens up the employee to share their 4 or 5 high and low points and that initial bonding, and the things that the CEO picks up about that person, he notes and then is able to really act on that. And so the fact that it's part of his onboarding process, I think, is powerful.

Absolutely. And the other key point you made is while one of the keys in the peer group concept is everybody gets equal time, the moderator has to make sure they moderate that. However, is that one of the things I get asked a lot that you're emphasizing is how much personal should you bring into the meetings? It's not all business. And of course, personal and business, you can't split a person in the middle. You have to talk. The personal impacts the business, business impacts the personal, and this is a great way to integrate the two. And—

Absolutely. And that's what, that was the second finding of Google. What created psychological safety was equal talk time. Seems so minor but important. And number 2, they called it average social sensitivity. But if you dig under the covers, that meant that we knew some things about each other personally. Not just professionally. And I, you know, it's interesting. If there was anything good that came out of the pandemic in all of these Zoom meetings is we got a real glimpse into people's personal lives that we didn't have before. We were in their homes. We saw the children running around. We saw their pet. And that is healthy.

It is. It is whether some people like it or not. It's very helpful.

Exactly. Yes.

So true. So true. Excellent. Well, some already good takeaways of the doing peer groups, encouraging your members to do that concept inside the organization, as long as with the lifeline exercise. Also, you got to do it again when new members enter, that there's transition. So along those lines, as we kind of start, I know, to come to a close, our time always goes so fast. Is, um, any other piece of wisdom you would love that would be great for our audience to hear from you, whether it's anything connected with the peer group, um, concept or just in general with entrepreneurs that when you're working with them is helpful to know?

Well, look, I, I believe every human being needs to be in a peer group. That would be the greatest thing that we could do for people on the planet. And so I want to stick, stick with this theme. Bring it to your children's schools. And so the school that Bill Gates went to called Lakeside, it's in Seattle, and we have several clients that have their children in that school as well. You start as a kindergartner. And you're put in a group with other kindergartners and a teacher as the moderator. And that group stays together through all 12 years. And that's there to, so you, again, don't feel alone. If someone's bullying you, you've got a group to bring it to. You've got a group of advocates. If you're having trouble with a particular subject or a teacher, you've got some advocates or a safe place for you to share. And talk that out. I've worked hard to bring that idea to every school that my children have been in, but it is at the heart of the success of Lakeside, which again is a school that we're very familiar with and has this at its heart as well.

And I bet you they stay together way after graduation.

You know, I think—

Lifelong.

You know, that, you know, you know, that's the case in peer groups. They become your— my, my, my forum in Barcelona, even though I've been away, we're still connected on WhatsApp and we were sharing photos of some of the meetups that they've had even after the group has broken up 5 years ago. Yep.

The relationships never die.

That's for sure.

And one of the things I also want to share Even though we didn't dive deep into this before you go, is, you know, you were a speaker at our conference last year, which was a resounding success for everyone leading peer groups because they were able to walk away with wisdom to take back into their groups as content and thought-leading ideas to help their owners, i.e., their members, kind of get to the next level, not to be too cliché about it. But I want to give an example that was really profound for everybody, and it was just one tiny thing you kind of talked about, which was the moneyball stat. Yes, right. And the moneyball stat was, was something that everybody could grasp, take back, and ask every business owner what their moneyball stat was. Like, here's the definition, why it's important, what is your stat, and that is being tracked now.

Yeah.

From the beginning of the year all the way through. And it's really hard to kind of come up with your moneyball stat in some cases.

Mm-hmm.

But just that one thing can have such a profound impact on a business owner's results, right? And focus. But for everybody else in the group to understand that So when they give feedback, right, it's relative to helping them, right, with their moneyball stat. Yes. But my point is, is that you're going to be our speaker this year.

Yes.

And I know there will be wisdom that is going to come out of that conversation that's going to help everyone be a better moderator, chair, forum leader, etc., with their members. Because you, as somebody who's running groups, has to have continuous learning, right? And that is something you really bring to this space. And I want to encourage everyone out there, if they're not following you and following and getting your newsletter and things like that, you're missing a great opportunity because there's really good info to help bring back into your groups.

Well, Tina, thank you. And by the way, I am going to share a killer stat that we've got every one of our clients tracking because of really the pressures around compensation and pricing and inflation. And it has really proven to be an eye-opener. So I'm going to save it for the event. So for the folks that are there, we're going to dig into a couple of those key decisions and metrics that I think is going to add richness to those peer experiences and give them some more things to discuss that are really going to help drive at the end of the day what the number one job of an owner is— valuation, drive the valuation of the business.

That is yes with an exclamation point.

Yeah. And that's whether you're going to exit or not. You need that valuation if you're going to do acquisitions. You need that valuation if you want to borrow money. You need that valuation if you want to use it for some of your compensation plans or you're just setting up legacy or, or whatever it is that you want for the future. Driving that number, it's important to know what it is. And what are the drivers of valuation? And we're going to give you one of those that everybody ought to be looking at right now.

Excellent. Can't wait, as always. So Vern, thank you so much. And if anyone wanted to learn more or reach out to you or get your newsletter, where's the best place for them to do that?

Yeah, you know, we, we realized our name of our company was so dumb, you know, nobody could spell Gazelle. So we changed it to Scaling Up, the name of the book. So just go to scalingup.com and you're gonna see a bunch of our books right next to it. It's a bunch of free resources, a free mini course, free growth tools, free chapters, lots of resources people can download, and you can sign up for my complimentary weekly insights.

Excellent. Perfect. So lots of good content for everybody for their, for their members. So again, Vern, thank you so much for today. Wonderful takeaways. And as a reminder to everyone, there will be in the show notes the, the, um, lifeline exercise. And as always, appreciate everyone tuning in for this Tuesday. And until next Tuesday, go make it happen.

Hello listeners, and this is a quick promo because we have our national conference, Live Exchange 2024, coming up in October in St. Petersburg, Florida. One day you can attend for a mere $500 and interact with your peers, others that are running groups, network with them, find out best practices, all those challenges that you're having, get insights that can help you personally. In addition to hearing a phenomenal list of speakers, I will open up that day with some insights in regards to moderating, and it will turn it over to Vern Harnish, who, if you do not know him, you know, he's the one who founded Entrepreneur Organization. He understands peer groups extremely well, and he runs Scaling Up. You will take away phenomenal information that will help you run your groups, not only to scale your own practice, but to help your business owners in those groups with the content Vern is going to share. You will also hear on two other subjects, one about the importance of preparing your members for exiting the business, whatever that transition may be, and how do you do that. You will also hear about making change. How do you manage change? How do you facilitate change, which is required in today's environment? Again, content you're you're gonna be able to take back to your groups and use yourself. And last, we're gonna end it with Horse Soldier and 12 Strong. So if you don't know that story, that is the 12 soldiers that went into Afghanistan on horseback prior to us invading Afghanistan. You will hear their story about leadership and how they have transitioned that into a phenomenally successful successful bourbon brand called Horse Soldier, and you will hear how they have scaled that business. And we will end the conference with bourbon tasting. Again, a very packed day. I encourage all of you, if you are serious about your own personal development, I will see you and I will love to meet you personally October 18th in St. St. Petersburg, Florida. Go to our website and you can get all the details, see the details of the agenda, and register. Thank you everyone for listening to another episode of Mastermind Mastery. And to get access to today's episodes, not only the show notes but any tools and resources, encourage you to— not only will you find them in the episode show notes, but also you can go to the website www.lxcouncil.com. So lx counsel.com, and you will find a plethora of articles and content and tools and resources and worksheets and things like that that can be helpful to you in creating and running successful PACs. I want to leave you with one thing that we end and teach to do in every single meeting, and that is the very last thing is to ask, what is your takeaway from today's episode? I encourage you to give that thought. Take advantage of the time you just invested in listening to the episode, and what can you do to move one step closer to the vision that you have and the goals that you're trying to achieve with your groups? So again, take a step back. What's your key takeaway? What can you actually act on? And I leave this with one note, and those of you that have read my book, Your Seat at the Table, you know that I ended the book with a story about my mentor. He always, when he met people, had a pebble in his pocket that he passed to them when there was knowledge shared. And so I ask you today to think about that pebble concept and to pass what you learned today on to someone else. Else, which could be your members, or take it internally to yourself and act on it. So now go do something with those takeaways.