What does business growth expert Verne Harnish recommend to keep your business growing once it’s up and running? What are the keys to the successful implementation of your growth plan?
In Scaling Up, Verne Harnish discusses what it takes to navigate an organization through the growth process. Once you’ve established a strong foundation, he offers four things you should do to guide the implementation of your scaling-up strategy.
Continue reading to learn these four keys from Verne Harnish.
Growth Plan Implementation: Insights from Verne Harnish
By now, you have most of the pieces in place to begin growing, expanding, and making progress toward your ambitious goal. You’ve defined your vision, crafted a multiyear strategy to bring it to fruition, and put the right team in place to make it all happen.
But even after doing all that, you as the leader can’t just walk away and assume that the entire operation will run on its own. You need to be on the ground to guide implementation of the scaling-up plan. Verne Harnish writes that there are four keys to this:
- Promote accountability by making sure every function and process is assigned to an individual.
- Set intermediate goals to secure company buy-in and learn valuable lessons as you go.
- Track your progress with KPIs.
- Think beyond just profits by looking toward maintaining healthy cash flow.
#1: Promote Accountability
Verne Harnish writes that effective systems of personnel management are essential to successful implementation of the strategy. Crucially, people must be accountable for the processes and functions that they touch.
With every core function and process, assign responsibility for it to a single person. They own it now. Everything that gets done in your company should have a return address—someone who owns that function, takes the fall if things go wrong, and whom people at your company know to reach out to if they have problems in that area. But while every function should be accountable to one person, and no function should lack someone who’s accountable for it, no single person should have too many responsibilities.
|High-Performing Teams and Accountability|
In The Five Dysfunctions of a Team, Patrick Lencioni writes that a willingness to hold peers to high performance standards is a crucial characteristic of high-functioning teams. They are able to do this because everyone is clear on what is expected of themselves and their teammates and is comfortable being vulnerable and sharing feedback.
When there is a lack of accountability, Lencioni argues, teams encourage low standards and force the leader to become the sole source of discipline. He recommends that teams engage in constructive peer pressure by publishing team goals and standards and instituting regular process reviews. They can also receive team rewards, which motivates teams to work together and point out individuals who aren’t pulling their weight.
#2: Set Intermediate Goals
Verne Harnish writes that you need to set smaller, intermediate goals on the path to larger goals toward the fulfillment of the vision. Since your main goal is likely a multiyear effort, your intermediate goals should be broken up into monthly, quarterly, and yearly benchmarks. This is crucial to successful implementation, because these intermediate goals—and the public celebration of them when they’re met or exceeded—helps secure buy-in and align the entire company with the vision. When people see genuine progress being made, it makes it far easier for them to get on board with the vision and see their individual roles and responsibilities as part of a company-wide strategy to make that vision a reality.
#3: Track Your Progress With KPIs
Verne Harnish writes that you can’t implement what you don’t measure. Since every important function in your company now has a specific person assigned to it (and responsible for it), you should make ample use of key performance indicators (KPIs). These are stats that get to the heart of whether a department, functional area, or specific individual is pulling their weight.
#4: Maintain Cash Flow
Verne Harnish warns that all your visionary and strategic thinking might come to nothing if you don’t maintain adequate cash flow.
When implementing a growth strategy, many companies find that growth does not pay for itself. In fact, growth can quickly act as a drain on cash reserves. And that’s a problem, because you need cash to meet your payroll, finance debt obligations, meet daily operating expenses, as well as to finance new projects and invest in new customer acquisition.
In general, Verne Harnish writes, you should strive to have two full months’ worth of operating expenses in cash. Anything less, and you’re leaving your company seriously exposed in the case of a cash crunch from unforeseen expenses or a sudden loss in sales.
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Here's what you'll find in our full Scaling Up summary:
- Advice on how to guide your company as it grows from a small company to a large firm
- Why founders need to eventually give up some of their input and power
- How to build an all-star team—from senior leadership to rank-and-file