Scaling Up Magazine Scaling Up Magazine April 2018 - Page 23

SPRING 2018 differentiates you from your competition. EXECUTION Are all processes running without drama and driving industry-leading profitability? In the largest investment in an e-commerce company in Canadian history, Coastal.com, a Vancouver-based eyewear company, was purchased by Essilor, one of the world’s largest lens manufacturers, for CAD$430 million in 2014. Roger Hardy, founder and CEO, credits the disciplined execution of the Rockefeller Habits with these stellar results. Case in point: Some German industrialists sat in on Coastal.com’s daily executive team huddle while the company’s leaders stood up and reported on their critical numbers. The executives discussed quickly their key opportunities, issues, highlights, problems, and threats. “They were blown away with our operational efficiencies and knowledge of the business,” Hardy noted. Hardy’s team also introduced the Net Promoter System (NPS) to the company to measure how likely customers were to recommend it to others and to single out a few, from over 2 million, who indicated they were not raving fans, so the senior team could call them. These weekly conversations with customers, debriefed at the weekly huddle, gave Hardy and his leadership team a “gut feel” for the market that drives ongoing improvements. One change caused revenues to jump 60% in one market. More recently, Coastal. com tapped into the innovative ideas of its employees in its own Shark Tank type of competition. Implementing those ideas generated another 15% lift on Coastal.com’s revenues in 2013. Coastal.com excels at execution precisely because it listens to customers and employees; has a meeting rhythm to discuss and implement quickly what’s being learned; and a process for setting priorities from all this VERNE HARNISH input. This excellence in execution continues to wow customers, engage employees, and deliver stunning financial results for the shareholders. In Scaling Up, you can find the Rockefeller Habits Checklist. Take a few minutes to go through it. Don’t worry if you don’t have many items checked. Neither did Hardy’s executives when they attended their first Rockefeller Habits workshop. “It gave me a blueprint on how to run a team in a successful way and is a key part of why we have achieved $200 million in sales while keeping everyone aligned and heading in the same direction,” says Hardy. Hardy advises CEOs to review the Checklist every three months. “You’re not going to get it perfect every quarter,” he says. “It’s a work in progress. It forces you, though, to be objective and to realize there are blind spots. Like a pilot taking off, you don’t want to forget to lift the landing gear. It may be the things you take for granted that can hurt you the most. A Checklist is a good way of reminding you what’s missing.” Jim Collins and Morten T. Hansen, in their book Great by Choice: Uncertainty, Chaos and Luck – Why Some Thrive Despite Them All, note: “Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.” We couldn’t agree more and hope you’ll consciously choose to implement the 10 Rockefeller Habits detailed in Scaling Up to guide you in Execution. Tip: In driving Execution, implement three key habits: Set a handful of Priorities (the fewer the better); gather qualitative and quantitative Data daily and review weekly to guide decisions and establish an effective daily, weekly, monthly, quarterly and annual meeting Rhythm to keep everyone in the loop. Those who pulse faster, grow faster. 23 CASH Do you have consistent sources of cash, ideally generated internally, to fuel the growth of your business? You can get by with decent People, Strategy and Execution, but not a day without Cash. Cash becomes even more critical as the business scales up since “growth sucks cash.” The key is innovating ways to generate sufficient profit and cash flow internally so you don’t have to turn to banks (or sharks!) to fuel your growth. Costco, the fast-growing warehouse retailer, is a prime example. Co-founder Jim Sinegal made a bold move in charging a membership fee for people to shop at his stores. Today, those fees account for 75% of Costco’s profit ($2.3 billion of $3 billion in pre-tax earnings in 2013) and, as a group, bring in enough money to finance all new stores. Great companies, by choice, keep three to 10 times the cash reserves of their competitors, Collins and Hansen revealed in Great by Choice: Uncertainty, Chaos, and Luck –Why Some Thrive Despite Them All. That allows growth firms to weather the storms, and that is why Bill Gates, from the very A beginning, IT'S ONLY DRY mandated that Microsoft always keep a year’s worth of PIECE operating expenses in the bank. This OF BREAD is a lesson Gazelles has heeded since YET out TO SOME IT running of cash in the aftermath of 9/11. If you’ve ever experienced the MEANS MUCH. painful reality of SO not being able to make payroll, you’ll never want to face it again. Tip: In managing Cash, don’t run out of it! This means paying as much attention to how every decision affects your cash flow as you would to revenue and profitability. With the right fundamentals in mind, you’re ready to start climbing. And there's no better time to refocus on them than at the ScaleUp Summit.