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4 Secrets To 2x Cash Flow and 10X the Value of Your Business

by Verne Harnish

21 minute read

    Is it possible to grow and scale a company in a year like 2020?

    The short answer is yes.

    As the global economy enters recession, many of the 1,500+ alumni of our Scaling Up Master Business Course are sharing how the tools they learned are powering them through the pandemic.

    Did you know that business leaders are our economy’s first responders? After the 2008 recession, businesses generated 92 percent of net jobs and innovation that fueled recovery.

    Today, our economies worldwide are expecting us to do that again.

    Here’s what Scaling Up alumni and companies are teaching us about how you can best prepare your team to dive confidently into 2021 as a business.

     

    Why You Have to Be Different

    If you only take one idea away from this article, here it is: Being different is an advantage.

     

    being different is the advantage in today's market

     

    To reach new levels of success, you must choose to be different. If you hire employees, price your products, and deliver on services in roughly the same way as everyone else, you’re really not different. And that makes it tough to achieve extraordinary growth.

    Today, I’ll share case studies of alumni companies and how they do things differently along with hacks to help you gain these advantages.

     

    The 2020 Market Opportunity

    There’s a lot to be optimistic about: Even if financial experts are right and we drop 25 percent from last year’s $88 trillion Gross World Production, we’ll still have a $66 trillion GWP!

    That’s twice the size of GWP in the year 2000. That means there’s still a significant amount of business to get IF you’ve got the right mindset.

    Now, are you playing to win ― or are you just playing NOT to lose?

     

    when scaling up, are you playing to win?

    You know what I mean: When a sports team has a huge lead, they change strategy and play defense. In 86 percent of those games, they end up losing. You can’t just play to not lose.

    Let us show you how to be ambitious and truly play to win!

     

    Talk Your Way Through It

    What does it take to win wars and markets? Intel. And I’m not talking about the news. Watching the news makes people depressed, which is the wrong mindset for playing to win.

    To gain intel, you must increase your Talk Time.

    As a business leader, your No. 1 KPI is the number of hours of Talk Time you can log every single day. You can’t think your way through this. You’ve got to talk your way through it. Talk to your support network, talk to your employees, talk to your customers, talk to your mentor. By voice, not email.

    Hack:

    After 12 years with the wind at our backs, sales have gotten more challenging in 2020. Even thriving businesses are watching expenditures carefully. So, we’ve got to up our sales game.

    In our CEO Bootcamp, we teach the importance of communicating in real time, through voice or video communication. Never through email. Especially in sales. Talk through it until the deal is signed and the check’s in the bank.

    Why? Because if you email the paperwork ― even after talking it through ― your prospect will find at least one objection. And this can stall or even kill the deal.

    So, when it’s time to share even the simplest paperwork, don’t email it. Instead, schedule a call with your prospect. If the call is at 9am, email the contract at 8:59am. When you’re on the phone together, walk the client through it line by line and address issues immediately.

    This approach dramatically shortens your sales cycle. And the best way to keep competitors out is to close the deal before they even bid on it.

     

    Learn, Decide, Act

    In war, fighter pilots who could Observe, Orient, and Act the fastest were the ones who won the battle—and lived.

    The business equivalent is Learn, Decide, and Act:

    · Learn faster than the competition.
    · Decide promptly, which is at the heart of our daily meeting rhythm.
    · Act by using the Rockefeller Checklist to drive execution.

    When you complete the Learn-Decide-Act loop faster than competitors, you win.

     

    the learn, act, decide loop helps you scale faster

     

    The Three Disciplines

    If you’re not scaling as rapidly as you’d like, it’s due to one of three reasons:

     

    1. Priorities (Alignment). You’re either working on the wrong thing or too many things. Our course provides clarity around priorities, helping you pinpoint what to focus on next.

    2. Data / Metrics (Clarity and Foresight). You need feedback from customers and employees. The habits you put into place to gain this intel regularly will drive decisions.

    3. Meeting Rhythms (Better, Faster Decisions) Data is worthless if you don’t talk through it.

     

    Steelcase, a massive $4 billion manufacturing company, implemented the Rockefeller Habits in 2000 and saw a 12x productivity improvement. They still practice these simple fundamentals daily.

    Each of their 4,000 employees is within eyeshot of a very simple whiteboard that states their four focus areas ― Safety, Quality, Delivery, and Cost. It details actions, data, and priorities so everyone is on the same page.
    Steelcase employees discuss the data in a seven-minute daily huddle. That’s how the Rockefeller Habits work best: Make the data visible and then strike up conversations about it.

     

    Steelcase employees all track focus areas from a whiteboard

     

    Talk about your focus and data in a daily huddle every day. If you want to move faster, pulse faster. Transparency allows us to focus on the brutal facts that drive performance.

    Start tracking your progress for all to see, and performance will improve. How will you do this in your business?

     

    SMART Goals vs. FAST Goals

    What I just mentioned underpins a term that I’ve updated for the new Scaling Up 2020 Crisis Edition course. In 2020, SMART goals have become FAST goals:

     

    · Frequently Discussed (in the daily huddle)
    · Ambitious, because if you want to scale, you’ve got to be ambitious
    · Specific and measurable
    · Transparent

     

    Our Scaling Up course will help you establish a set of routines that ultimately set you free.

    The Rockefeller Habits checklist will help you reduce by 80 percent the time it takes to run your business ― giving you more time to grow it.

    We’ll help you get everyone aligned with your Vision Summary and show you how to use our tools to gamify the business.

    FAST goals will give you a repeatable routine to scale

    The results? You’ll see 2x cash flow, 3x profit of your industry average, and 10x company valuation.

    And, you’ll enjoy the climb.

     

    Why Be Different?

    John Ratliff, who now runs Scaling Up’s global coaching organization, scaled Appletree from one guy—him!—answering phones in a call center, to 650 employees in 24 locations. He also lowered turnover from the industry average of 200 percent down to 18 percent.

    To achieve success like that, look for your internal 10x advantage over the competition. When you find it ― and we’ll help you ― it’s a game-changer.

    John used Scaling Up tools in an industry with an average 4 percent profit and drove his company’s profit to over 21 percent. He sold his company for 14x earnings. If Scaling Up can achieve growth like that in the call center industry, we can help do it in your industry.

    The key was that John did everything differently. In our new course, John shares the details on how he applied every one of the Rockefeller Habits, particularly around pricing differently, to give you ideas for your business.

    Right now, the most important thing all of us have to do is continue to Scale Forward by making the four critical decisions that will 2X your cash flow and 10X your business value. Those decisions are around People, Strategy, Execution, and Cash. I’ll offer a hint and a hack for each of them.

     

     

    I. Scale Forward with People

    Who should you pursue?

    Hint: Start by getting the right people in the right seats.

    FACe is our Functional Accountability Chart. It lists all the seats in an organization. If you’re a startup entrepreneur, you’re filling all of those seats yourself.

    The essence of scaling up is how to delegate ― not abdicate—those responsibilities. To delegate successfully, the people in your organization must pass three tests:

     

    · They don’t need to be managed
    · They fit your culture
    · They WOW you!

     

    If an employee isn’t wowing you, they need more training, they’re in the wrong spot, or you need a different person.

    Hack:

    Marcus Buckingham says that while time management is important, time is limited. But energy is unlimited. If your team’s total energy is greater than the competition, that’s a market advantage.

    Increasing your team’s energy starts with everybody in your company playing to their strengths.

    Marcus defines a strength as a task that energizes you. If what you’re doing wears you out, it’s a weakness. Track the tasks you and your team love/loathe over a few weeks. What gives you energy; what wears you out? Then eliminate, automate, or delegate.

     

    As the leader, you're not playing checkers, you're playing chess

     

    Find and hire people who are different from you and brilliant at one distinct thing. That’s the person who will love doing what others loathe.

    Leverage your love/loathe lists to boost the energy of your organization.

    Bonus Hack: The most important question you'll ever ask

    I’m about to reveal the most important question I’ve ever asked as a leader. (And also as a parent.)

    Remember: People want finish lines and fun. When your team achieves a goal, celebrate it. But as you recognize their accomplishment, don’t tell them you know how hard they worked. They’ll just roll their eyes.

    Instead, let them tell the story by asking, “How did you do it?”

    the most important question you'll ever ask your team

    It’s the most important question you can ask. Ask it, then be quiet and let them tell their story.

    People learn more from their peers than their boss. And they work harder for their peers than their boss. Your role is to orchestrate that conversation.

     

     

    II. Scale Forward with Strategy

    Can you state your strategy simply?

    Hint: Stating your strategy simply doesn't mean it's a simple strategy.

    When you think of pizza delivery, which company comes to mind? And what’s their brand promise?

    As college students on four continents know, Domino’s Pizza delivers in 30 minutes or less—or it’s free. Domino’s owns the words pizza delivery.

    In Scaling Up, we’ll take you through our 7 Strata of Strategy tool. It’s a game changer because if you don’t get your strategy right, the next few years of execution won’t be effective. You need to nail this.

     

    the 7 strata tool gets your entire company aligned

     

    We’ll share seven components to help you build an industry-dominating strategy:

     

    1. Own a Word or Two. These few words should describe your underlying strategy.

    2. Declare a Brand Promise. Pick three things you’ll excel at. Ultimately, you want to focus on profit share, not market share.

    3. Establish a Catalytic Mechanism. Back your brand promise up with a guarantee.

    4. Create a One-Phrase Strategy. Southwest Airlines does this beautifully with “Wheels Up.”

    5. Outline Differentiating Activities. Don, an HVAC contractor in Tampa, narrowed his niche. His company does plumbing, electrical, and HVAC ― but only for new construction, and only for multi-family units. They say “no” to everything else! He’s become the go-to guy, made it formulaic, and scaled to $30 million in revenue.

    6. Establish Your “X Factor.” This factor is usually hidden from the marketplace, and we’ll discuss it in detail during the course.

    7. Measure “Profit per X” and BHAG (Big Hairy Audacious Goal). Boiling your profit down to a single metric represents your unique view on the market. The key to scaling is when the unit measure of your BHAG is the same as for your Profit per X.

    Hint: Find a way to sub-brand your difference.

    Basement Systems describes what they do as: “All things Basementy.” They created, and became known for, this unique catchphrase.

    Ask yourself: What memorable sub-brand can you create around your niche or difference?

     

     

    III. Scale Forward with Execution

    Are you relentless with your repeatability?

    Hint: When it comes to execution, relentless repeatability is the name of the game.

    Horizon Services is a cooling-heating-plumbing company in Pennsylvania. Every company in their industry knows the little things that lead to success. But Horizon Services executes them consistently. For example, when a technician comes to your door, they should knock, not ring. Why? Because strangers ring But friends knock. Then, the technician should step back two paces so they don’t crowd the customer. And booties! They always wear booties in the house.

    Customers love their service because they relentlessly execute all of the little things that add up to a great customer experience. We’ll teach you how to make that happen in your company.

    The Rockefeller Habits Checklist is the single most powerful tool to foster alignment on your team. It’s a checklist. If you were a pilot, you wouldn’t take off without a checklist. And you shouldn’t do so while piloting your company, either!

    Hack: People love trophies.

    In sports, trophies are a huge part of the ceremony of celebration. When a team wins The Stanley Cup, every player’s name is engraved on the cup. It even comes with a handler and white gloves!

    Each player gets that cup to celebrate with for one day. The celebration is so important that the winning players get to choose anywhere in the world that they can take the cup to celebrate. Often, they’ll just ship it to them.

     

    the stanley cup trophy that all players get to take home when they WIN

     

    There is power in the symbols that signal victory. That’s because people want Finish Lines and they want Fun.
    Another alumni of ours, COE Furniture Distributors, partnered with a local sports team. Every week, employees choose one of their peers to get the Helmet Award. That employee gets tickets to a game and lunch with the players! It’s a symbol of success ― and it works. Though company revenue dropped 90% in April, they’re up 20% for the year!

    COE’s CEO emailed: “It was the Rockefeller Habits fundamentals that saw us through.”

    What are the trophies in your organization?

     

     

    IV. Scale Forward with Cash

    Cash is king. But how can you improve cash flow during a recession?

    Hint: Look at the four P’s of marketing: Product, Price, Place, and Promotion.

    Three of them cost you money before you make money. But pricing adds profit to the bottom line and improves your cash position immediately.

    But we often get pricing wrong, even in a B2B environment. That’s because we’re not selling to businesses. We’re selling to people.

    People are not logical; they are psychological. And we’ll show you how to use that to your advantage.

    For example, Adrian Wall’s restaurant, Famous Joe’s, brings a taste of New York to Shanghai, China.

    In most restaurants, the dishes are listed from least to most expensive as you read down the menu. So how do you get people to order more expensive items?

     

    People do not buy logically

     

    By simply reversing the order of items, revenue will increase ― without changing the prices, the dishes, or the wines.

    When Adrian reversed the order of his menu, revenue increased by 16 percent!

    Hint:

    Another great pricing strategy is the good-better-best approach. When Dell EMC went from a single price for after-sales services to a tiered approach, revenue jumped 300 percent!

     

    the good better best pricing approach

     

    The year 2020 has brought distinct challenges to the business environment, but we can show you the right tools and techniques to overcome them.

    To address the changing business landscape, I went into the recording studio in August to completely refresh the course! Our Scaling Up Master Business Course gives real-world examples of how implementing our tools will help your company grow―this year and every year.

     

     

    What the Scaling Up Master Business Course Delivers

    Our Scaling Up 2020 Crisis Edition course will help your company be at its best to fuel the global recovery.

    When you pull your A-Team together, organize around a simply stated vision, and put the Rockefeller Habits in place, you’ll start to scale. That’s when you’ll see results just like our alumni.

     

    the a team and the vision make the scale work

     

    Here’s what you’ll accomplish when you put our system in place:

    · Significantly increase your personal effectiveness and moral stability, even during tough times
    · Optimize your company’s cash strategy in a shaky economy
    · Adapt your company’s strategy to new market realities
    · Set up strategies to grow even during turbulent times
    · Clarify your brand promise, core values, and purpose
    · Establish your short-term and long term goals
    · Create rhythm-based communication systems
    · Revitalize your business and grow despite the crisis

     

    You can’t think your way through the challenges 2020 has brought.

    You’re going to have to talk and act your way toward accomplishing new things. We’ll help you do so with passion, purpose, and persistence.

    Keep scaling!

     

     

    Join Scaling Up Master Business Course

    If you’re looking for extra support to implement your winning strategy to help you thrive into 2020, then now is the best time to join our revamped Scaling Up Master Business Course.

    su blog horizontal cta banner course


    Based on the key pillars of Scaling Up, this program is designed to help your organization adopt a new strategy quickly and efficiently. All the Scaling Up tools can be studied and implemented virtually – and we’re providing extra assistance by bringing in guest speakers, more live sessions, and an even stronger community support system than before.

    Now is not the time to be alone. Surviving the crisis requires us to learn and stick together. Learn more about how we will help you practically scale your business with the Scaling Up Master Business Course so you can learn how to manage chaos and get aligned to thrive in 2021!

    Verne Harnish

    Verne Harnish

    Verne Harnish is founder of the world-renowned Entrepreneurs' Organization (EO) and chaired for fifteen years EO's premiere CEO program, the "Birthing of Giants" and WEO's "Advanced Business" executive program both held at MIT.

    Founder and CEO of Gazelles, a global executive education and coaching company with over 150 coaching partners on six continents, Verne has spent the past three decades helping companies scale-up.

    The "Growth Guy" syndicated columnist, he's also the Venture columnist for FORTUNE magazine. He’s the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored "The Greatest Business Decisions of All Times", for which Jim Collins wrote the foreword.

    Verne also chairs FORTUNE Magazine's annual Leadership and Growth Summits and serves on several boards including chairman of The Riordan Clinic and the newly launched Geoversity.

    Nombrado por la revista FORTUNE Small Business como uno de los “Top 10 Minds in Small Business”, empresario, autor y columnista de la revista FORTUNE, Verne Harnish, es un consultor de gestión muy buscado, especializada en liderazgo, planificación estratégica y el crecimiento del negocio. Su libro, “Dominando los Hábitos de Rockefeller: qué debe hacer para acrecentar el valor de su empresa en rápido crecimiento” ha sido traducido al español, chino, japonés y coreano. Verne es también el fundador de EO, la Organización de Empresarios (http://www.eonetwork.org), y el CEO de Gazelles Inc.