What are the Rockefeller Habits (and why use them)?
Mastering the Rockefeller Habits to Scale Up your business
There’s a reason why I rate Mastering the Rockefeller Habits. I’ve seen first-hand the difference they make to businesses. It’s no exaggeration to say they changed my life. Thank you, Verne Harnish.
The Rockefeller Habits were instrumental in the stratospheric growth of Rackspace, taking the company from zero to £30m in only five years in the UK. At the time I was MD, working alongside the Chairman, Graham Weston. He’d been on the original MIT programme ‘Birthing of Giants’ presented by Verne Harnish and introduced the Rockefeller Habits as his preferred execution framework for scaling up.
I was blown away by how using the Mastering the Rockefeller Habits allowed us to focus on the things that mattered. So much so, that I went on to use them as MD of both IT Lab and Peer 1. In both companies, they were instrumental in our rapid, sustained growth. Now, I use them as the basis of my coaching practice, introducing clients to the tools that I found worked so well for me.
It’s important to remember that the Rockefeller Habits are an execution framework so there are certain things to work out before you start. Your strategy, cash flow and core customer amongst others. But if you’ve defined these well, the Rockefeller Habits will give you practical ways to realise your ambitions.
Often, my client’s executive team have some Rockefeller Habits in place already. However, their true power comes from mastering them all successfully. By working our way through, I can assess which Rockefeller Habit is likely to have the biggest impact on the business. This can then be the priority for the first quarter, providing a great way to prioritise and review activity.
I lead regular workshops introducing CEOs to the power of using the Rockefeller Habits to scale up their companies – join me for the next one.
So what are the Rockefeller Habits?
1. The executive team is healthy and aligned
Verne Harnish told me this Rockefeller Habit is number one for a reason, the rest can be tacked in any order. This is the fundamental building block on which all the other Rockefeller Habits are built. Without this, you can forget it! One of my fundamental management principles is that your company will never perform better than its leadership team. Some of my recent blogs have focused on how to supercharge executive teams and the things that make them powerful. That’s because this is so important. Everything comes down from the top so you need to spend time and resources on getting this right.
Make sure your top team understand and are comfortable with each other. In my view, the best tool for this is the Gallup Strengths Finder because it’s more useful in a team context. It’s much more individualised than Myers-Briggs and focuses on strengths rather than weaknesses.
The executive team also needs a weekly, if not daily, meeting rhythm and a commitment to learning and education. With many of my clients, I introduce a set book every quarter and also take them to summits and courses – in fact, I’ve just got back from a Scale-Up Summit in the USA which I attended with some of my clients.
2. Everyone is aligned with the #1 thing that needs to be accomplished this quarter to move the company forward
Does your business do too much and deliver too little? So often, I ask this question when I visit new clients and the answer is seldom ‘No, we focus on doing one thing well and then move onto the next thing’. More likely that they’ve become swamped by endless lists and failing to understand the difference between urgent and important work.
This is all about focus and clarity. When I think back to my time at Rackspace, this Rockefeller Habit was what we got really good at and our competitors didn’t. Just saying ‘No’ to all the time-wasting things that were barriers to us moving forwards. We worked out what we were going to do and put up boards to track progress daily – think the Blue Peter totaliser! We focused our resources on our #1 priority.
It’s important to drill down into the practicalities of how to achieve your goal. Say you’ve decided you’re going to improve your customer experience. How? Well, you’re going to use NPS. OK – how? You’re going to do it using email. Does that cover all customers or some? Um – the high-value customers. How are you going to measure it etc. etc? Keep drilling down until you’ve got to what you’re going to do today and tomorrow. That’s the level of detail you need and then a single person needs to be accountable for completing these actions.
Leading indicators are important, giving a sense of progress at the right pace to hit the goal. Everything needs to be measurable. What is the one number you’re going to move? What does success look like? To move that number, you need to identify three to five things and who owns them. Without accountability, nothing will happen.
Make sure that your theme for the quarter means something and benefits both your staff and customers. For example, you may decide you want to improve the customer experience around a particular product because you know this would reduce the in-bound volume of customer complaints. This would then free up 20% of staff time which you could allocate to learning and development. Tell this good news story so people can see how everything links together.
3. Communication rhythm is established and information moves through the organisation accurately and quickly.
Rhythms – something I talk about all the time! They’re so important. Daily, weekly, monthly, quarterly – set a meeting cycle and commit to it. If your teams are meeting in a daily huddle, they get the chance to share, collaborate and build trust. You’re looking for the stucks that come up time and time again. These are the things that are getting in the way of your organisation moving forwards.
Recently, I was talking on the Melting Pot podcast to Nic Marks of FridayPulse.com which is a great tool that measures happiness as a way of driving employee engagement. It works by asking staff, every Friday, how happy they’ve been that week at work, calling out any irritations, stucks or stresses that have annoyed them. Then, every Monday morning, the team reviews the results, going through any problems. This regular rhythm can be extremely useful.
Important in Mastering the Rockefeller Habits is bringing on middle managers. It’s a fact that employees derive 85% of their employee engagement at work through their team, so it’s really important not to neglect middle managers. The executive team will always have a better view of core values and strategy and they need to share this through monthly meetings with the middle management layer.
4. Every facet of the organisation has a person assigned with accountability for ensuring goals are met
Ah yes – accountability. This vital component for growth come from Mastering the Rockefeller Habits. To help my clients, I use the Function Accountability Chart which is different from a traditional org chart. Some key areas fall outside the functional remit of people’s roles and we look at who will own these cross-functional processes.
One person is all too often in multiple boxes. Take the Chief Customer Officer as an example or even anyone accountable for client adiction. Mostly there isn’t one in the organisations I coach. This function is being covered by a number of people, so no-one is really doing it well. It needs to be assigned. We’ll also go down the balance sheet and allocate someone to each of the main items. This gives clarity for who has overall accountability for each step.
And if there’s no internal expertise for the capability you’ve targeted? Then create an advisory board and bring people in.
5. Ongoing employee input is collected to identify obstacles and opportunities
Yes! This is what managers should be doing, week in, week out. Regular one-to-ones with their team based on a ‘Stop, Start, Continue’ approach. And make sure they don’t do them all on the same day of the month – they need to spread them out! These meetings allow for feedback in both directions about progress and development.
Your executive team needs to commit to talking to at least one member of staff from a different team every week. Say there’s six of you in the SLT. It means every time you get together for your weekly team meeting, you’ll be able to share six conversations with employees on the front line – a much more informed executive meeting! This will give a much better overview of the stucks and enable you to get the sand out of people’s shoes much quicker.
6. Reporting and analysis of customer feedback data is as frequent and accurate as financial data
My preferred measure for customer satisfaction is Net Promoter Score® (NPS). It’s a perfect metric, enabling you to grow your business through word of mouth. By implementing this and running it on a quarterly and annual cycle, you can keep tabs on your company’s performance and have accurate data when you most need it. I love the external perspective it gives, benchmarking your performance against your competitors.
You want a monthly NPS that’s measured using a 3-month moving average. This will take out any monthly distortion and give you a sense of whether it’s going up or down. I find people get obsessed with the number. It doesn’t particularly matter to me. It’s more about how we feel we’re doing. Is it trending in the right direction?
It’s best to split NPS out by customer cohort. At Peer 1, our top 5% of customers were responsible for 60% of our revenue. So, we needed to measure NPS for them specifically and this was the number we focused on.
7. Core Values and Purpose are alive in the organisation.
Alive is the key word here. I’ve written about the importance of Core Values and Purpose before. Many organisations spend time coming up with core values and then put them on some literature or on the wall and forget about them. Very few will actually ‘live’ them.
How do you do this? Make sure that the core values are built into hiring, firing and promotion. Use them to give praise as well as reprimands. Include them in the everyday vocab of your company. The work we did at Peer 1 Hosting was a great example and one I often refer to when I’m talking to clients about building core values into the fabric of an organisation. We used our values to create a leadership development framework. It meant that when someone sought a promotion, we could measure them on their job performance and also show the path to them developing as a leader. Depending on seniority, there were different expectations of behaviour, all linked back to the relevant core value.
If you’re wanting to embed your core values into your company, my advice is to pick one and focus on it for the next quarter.
8. Employees can articulate the key components of the company’s strategy accurately.
The key components here are the BHAG (Big Hairy Audacious Goal), Core Customer and the Three Brand Promises.
Lots of companies I speak with about Mastering the Rockefeller Habits say they don’t have a BHAG. But it’s so important for engagement, focus and motivation in your staff. Often, they also say they don’t have one core customer. In fact, they have several! This was one of our challenges at Peer 1. It was amazing. Someone in the Executive Team would say ‘Customer’ and everyone was thinking of a different ‘Customer’. We had 13,400 customers! Were we talking Linux, VMWare or Windows? Or the big customers we wanted to land in the next 12 months? Or the smaller ones with less than $1000 a month to spend? As a result, we did a big piece of work to hone it down. It took time but eventually, we defined our core customer. This gave us real clarity.
Defining your brand promises, with their corresponding guarantees, is also incredibly powerful. At Rackspace, our brand promises were 1. ‘Zero downtime network’ 2. ‘Answer the phone in 3 rings or less’ and 3. ‘Fix your hardware in under 4 hours’. If we failed to deliver it costs us money. This was our catalytic mechanism of guarantee for our clients – our skin was in the game.
9. All employees can answer quantitatively whether they had a good day or week
One of the key elements in Mastering the Rockefeller Habits is every employee being able to answer question one of the Gallup Q12 – Do you know what is expected of you at work? Seldom do I find an organisation where this is true. Staff need to know what’s expected of them at work and this needs to be linked to OKRs, objectives and measurable key results, that tie in with the overall theme for the quarter.
Measuring engagement in staff – another of my big pieces of advice. It’s so important. I always advise using the Gallup Q12 for this. It’s such a good metric. So good, I devoted an entire blog to what it can do for your business!
Coaching is central to staff engagement. Introduce a peer coaching programme in your business – they’re really easy to do and cost nothing but a small amount of time. They’re also a great enabler of other things, helping to unlock some of the other Rockefeller Habits.
10. The company’s plans and performance are visible to everyone
Successful companies have scoreboards everywhere – monitors in reception, screens showing results, totaliser boards… They come up with inventive ways to display their core values, making sure they’re not annoying or hackneyed. At Rackspace, we created a logo for each one of our values. If we caught someone doing the right thing, we’d say thanks then write it on a post-it note and stick it on the wall, right next to the value they’d embodied.
Make sure you have a system in place for tracking. I use MGS (Metronome Growth Systems) and my clients can cascade this all the way through their organisation. This was created by a guest on the Melting Pot podcast, Shannon Susko, an entrepreneur who’s found that companies who fully embrace it are growing 30% faster than those who don’t. It’s all about holding yourself accountable. Putting together a plan, inputting the data and measuring it every day.
So there they are. Mastering the Rockefeller Habits. Pure gold for any growing business. If you’d like to talk about introducing them to your business, get in touch or attend the next CEO workshop.
Written by business coach Dominic Monkhouse. Find out more about his work here.