In 2002, Verne Harnish published his book “Mastering the Rockefeller Habits.” At the time, I was transitioning from “mega-project” management into business management and this book made a huge impact on how I run a business.
I never thought too much about it at the time but now as I reflect on how I have led organizations (businesses and not-for-profits), I constantly leverage all of the ten Rockefeller habits that Harnish outlines in his book.
I find it interesting that the organizations that “bought into” the “Rockefeller system” with me performed well over time even though we may have experienced some tough periods in the market. Conversely, the organizations that just could not get aligned around the system, were not able to experience the same levels of success.
So, what are these intriguing habits?
Hiroshi Mikitani, CEO of Rakuten, an electronic commerce and internet company based in Tokyo, established what he dubbed the rule of 3 and 10 to guide his company through periods of extreme growth.
Although this rule was created for companies that are growing very quickly, it applies to all companies as they progress through these major growth milestones.
The Rule – “Everything breaks at multiples of 3 and powers of 10”
Over the last seven weeks, I introduced my Ebook 12 Steps to Business Transformation and I defined the first 7 of the 12 transformational steps. This week we are going to talk about the Operations Engine.
Defining your Operations Engine is step 8 in my new Ebook “12 Steps to Business Transformation.”
The Operations Engine is the power plant or dynamo of your business! This is where your products and services are created and produced. It is where all your operating processes and procedures live. It includes everything from recruiting to facility management, cash flow to business systems, products and services production to supply chain management.
It is the unique combination of these hundreds or thousands of components that defines your Operations Engine, what it produces and how efficiently it runs. So, basically, your Operations Engine will make or break your business.
“If we sense that our structures are rigid, inflexible, or bureaucratic, we must bust them open – without destroying ourselves in the process.” – Ed Catmull
To be successful in today’s highly competitive marketplace, your business must be flexible, innovative and customer friendly. Businesses that are inflexible and difficult to do business with are destined to fail.
Quite a few years ago, I was called by a client and asked to take over an engineering project that they had awarded to one of our competitors. This competitor was not meeting the requirements of the contract and not delivering on schedule or on budget. Once I got involved with the project and did some investigating, I discovered the biggest reason for their failure was they were stuck using their rigid project execution processes that added cost and complexity without returning any value. This competitor was stuck in their rigid, inflexible and bureaucratic structure and could not find a way to break out of it even though they were self-destructing!
Nassim Taleb has written a book entitled Antifragile: Things That Gain from Disorder in which he basically defines fragile, robust and anti-fragile as;
- Fragile – things that are harmed by volatility (e.g., glass bowl, economy, etc.)
- Robust – things that are not harmed or helped by volatility (e.g., a rock)
- Anti-fragile – things that thrive and improve with volatility (e.g., athletes with exercise gain strength and skill, entrepreneurs gain experience and resilience, etc.)
You can find a good summary of the concepts in his book in this video interview at http://www.fooledbyrandomness.com/ .
According to Taleb, the more we interfere with systems to prop them up and eliminate unpredictability and try to smooth things out (i.e., take out the booms and busts of an economy) the more fragile and unstable that system gets. He uses the US economy extensively as an example and illustrates how bailing it out with programs like Quantitive Easing has really only made it that much more volatile and unstable. He states that “man-made complex systems tend to develop cascades and runaway chains of reactions that decrease, even eliminate, predictability and cause outsized events.” Essentially, as the systems that man creates grow larger, they become so complex we cannot control them. In fact, our attempts to control them only make them more volatile and likely to self destruct through a runaway chain of reactions.