The Big Interview: Leaders need to be learners

Verne Harnish is the founder of Entrepreneur’s Organization and Gazelles and the Association of Collegiate Entrepreneurs. He serves as the Co-Founder and Principal of Gazelles Growth Institute and as the Founder and Chief Executive Officer of Gazelles, Inc., a strategic planning and "executive education" company. A ‘Growth Guy’ syndicated columnist, Verne is also a Venture columnist for the Fortune magazine. He has authored the bestseller ‘Mastering the Rockefeller Habits’ and ‘Scaling Up’, and both have won several international book awards. 

Verne Harnish has dedicated almost 34 years of his career helping entrepreneurs grow their businesses. This feature presents Verne’s insights on the fundamental truths of scaling up, the barriers to scale & how to overcome them. 

I belong to a family of entrepreneurs. My father and even my grandparents owned their own businesses. My dad owned a high-tech firm in the late 1960s and early 1970s. Due to recession in 1973, my dad lost his business, after which we moved from Colorado to Kansas where we started up an appliance repair business. At the age of 15, I was helping my dad to sell appliances. But it was the experience of my dad losing his business that made me decide to help other entrepreneurs succeed in their ventures. While I was graduating, I helped to run a $12 million company and when I completed graduation, I had already gained seven years of experience in doing business. Moving ahead in 1983, I co-founded the Association of Collegiate Entrepreneurs, which led to creation of the Young Entrepreneurs’ Organization in 1987. In 1991, I joined Massachusetts Institute of Technology where I chaired ‘Birthing of Giants’ leadership program and also created Entrepreneurial Master’s Program. Still, I pursue my interest of helping entrepreneurs in whatever way I can with full passion and vigor. 

The one fundamental commonality that I observed after my encounters with several entrepreneurs was their unbelievable thirst or hunger to learn. I would like to cite few examples of incredible leaders who showed similar traits, for example, Rudy Karsan, who is Grand Poobah at Karlani Capital is one of the most ferocious readers. He was always inquisitive and was never hesitant in asking questions. The notion that “leaders are learners” is critical. And successful people need to inspire others to read and learn. This desire to learn is innate and can also be developed. It is a combination of both. I read somewhere that if one decides to give up their time on social media, they can read equivalent of 200 books a year. I personally think somewhere in the middle is the right balance. 

To keep things flowing, an organization needs a scalable infrastructure whether better phone systems, structured spaces, upgraded information-technology systems etc. In India, infrastructure has been a challenge in India yet companies have done well despite inadequate business infrastructure. Marketing is the fundamental functional weakness that holds companies back from scaling-up. If an organization has a strong marketing person as a part of the startup team, such companies scale much faster. This is the function that Steve Jobs chaired. You need a strong marketing function not just to attract customers but you need to attract talent, investors and attention by media.

The key is first to set aside an hour per week for marketing meetings separate from sales. From startups to companies with several thousand employees, I see a lot of them missing this particular routine. So having well-functioning separate marketing department is very crucial. Another great barrier is ‘Ego’, when we assume that we know it all, we resist approaching for help. So a great suggestion for all entrepreneurs is that whenever you face an opportunity or challenge, take a piece of paper out and write the name of every person you think can help you. Then you approach them for help. It can solve great problems. 

For scaling up, companies need to emphasize on the four key decisions areas — people, strategy, execution and cash management, which every company must get right. You need to surround yourself with the right people to make your life easy. You need to attract the right talent, select the right talent and learn ways to keep the right talent within your business. Then comes the strategy, if you don’t nail your strategy well, then you are going to waste next four to five years on execution. It is important for entrepreneurs to figure out what they are absolutely best at. A big mistake which people usually make is that they try to be everything to everybody. So entrepreneurs need to realize that they don’t need all the customers, they only need most profitable customers. Execution comprises a set of 10 habits like making sure you are hearing from your customers every week and also your employees. Another great habit is Daily Huddles which help in driving the business around. With technology, adopting this practice is not difficult. Daily huddles help you identify the blockages or roadblocks for next 12 to 24 hours so that you can deal with them and divert your attention where it is needed the most. The idea is to clear the path every day. Leaders need to spend 10 percent of their week in meetings to run their company and not get involved too much in meetings. Cash is another important component that you cannot just run out. The key is to get your customers to fund you. 

First of all, I feel that HR needs to get rid of the word ‘Human Resource’, and use words like ‘People Development’. HR really needs to focus on hiring quality candidates and work closely with the marketing team to ensure that they have good reputation in the marketplace, so that they are able to attract quality talent for varied positions in the company. The second thing is that HR really needs to start working closely with the IT as they play a crucial role in building the organization and providing information to employees for good decision making. So HR and IT need to work together closely to help the organization make better decisions. 

(The interview has been compiled from a conversation with Verne Harnish during the SME Virtual conference ‘Creating the right path for SMEs to get into a big league’.)