Business Operating System #3: The Rockefeller Habits
May
Verne Harnish studied as a mechanical engineer, after which he decided on a business career and earned an MBA. While studying at Wichita State University, he founded the Association of Collegiate Entrepreneurs and then expanded the concept nationally and later globally when, in 1987, he founded the Young Entrepreneurs Organization (now: EO).
Working and consulting with the members of EO in the following 15 years inspired Harnish to publish Mastering the Rockefeller Habits: What You Must Do to Increase the Value of Your Growing Firm (2002).
His goal was to create a toolset of fundamental principles for running a great business. He was inspired by John D. Rockefeller’s leadership and management principles, GE’s management philosophies, Jim Collins’s Hedgehog Concept, and others.
Specifically, he picked up three habits from Rockefeller:
- Set annual and quarterly priorities and a quarterly theme for the business.
- Collect and use data to make sure the company is running effectively and delivers what the market demands.
- Maintain organizational alignment using daily, weekly, quarterly, and annual meetings.
Harnish also embraced Rockefeller’s concept of finding the “choke point” of a business and taking control of it. He mentions the example of Rockefeller’s Standard Oil, which focused on gaining an advantage in railroad transportation costs, its own chokepoint.
Harnish was also inspired by the rapid rise of General Electric under Jack Welch, and he picked up the following ideas from him:
- Ignore medium-term plans, have a long-term energizing goal, and focus on quarterly objectives.
- Keep everything stupidly simple. If your strategies, plans, decisions seem complicated, they are probably wrong.
- Get firsthand data. Keep close to your middle managers and your customers so you obtain real-time information directly from the source.
The Rockefeller Habits was the first Management Blueprint to introduce practical tools to readers, such as the Planning Pyramid, One Page Strategic Plan, Management Accountability Plan, and Weekly and Daily Meeting Structures.
The approach is more structured than the Great Game of Business but still flexible enough to adopt as companies see fit.
In One Sentence:
Grow your business using a handful of simple and proven principles and tools and regular, structured meetings.
Source: Buyable: How to Build a Self-Managing, Fast-Growing and High-Profit Business by Steve Preda (Amershire Publishing, Glen Allen, Virginia, 2021)
