IN TOUCH : How to breed gazelles

The health of country’s economy is measured by its quota of ‘gazelles’ – companies that are growing at least 20 percent year for four years in row. That’s according to Verne Harnish, American founder of two high profile entrepreneurship organisations (Young Entrepreneurs Organisation and Association of Collegiate Entrepreneurs) – and an expert on gazelles and growth.
In New Zealand recently he says the recipe is “discipline”. “There’s an impression that this is somehow the antithesis of the entrepreneurial spirit and in some sense the New Zealand lifestyle – but you can have both. There is this sense that you have to trade off lifestyle if you’re going to get on the growth bandwagon but you don’t. Once you put some disciplines in place, the routine sets you free and you can be more creative.”
That might mean letting go some control and one of the most important decisions business entrepreneur can make is their choice of ‘number two’ – someone who “enjoys and embraces routine while you can continue generating activity”, says Harnish.
His recipes for success are based on the management style of John D Rockefeller and outlined in his book: Mastering the Rockefeller Habits*. He says managers have four decision levers: cash, people, strategy and execution.
“These are the four aspects of business you have to get right and we can run high level diagnostic on these. Take cash, for example – the first law of organisational gravity is that growth sucks cash. The diagnostic for that is relatively easy – if you’re struggling to make payroll on Friday, that’s top of the line. If you don’t get that fixed, nothing else matters.”
Diagnostics for people issues are around happiness. “Are you having fun? Usually it’s the relationship issues that determine whether or not you enjoy the ride. You need to get clear what you love doing, what you’re good at and don’t get sucked in every day by the opportunities that swirl around you.
“Strategy – the indicator there is whether you’re growing. You have to get your business model nailed and we say if you can’t state it in sentence, then you probably haven’t figured it out.
“Execution – if you’ve nailed the strategy you’re growing but then you get to about three times the size and find you’re actually making less nett money than you were three years ago – and you’re working harder. And you thought scale was going to get you some economies. That’s when you know you have an execution problem.”
His book also outlines three winning habits: priorities (while few rules remain consistent with firm’s core values and long-term goals, others change regularly); data (key metrics for both long and short term); and rhythm (a well-organised set of meetings to keep everyone aligned and accountable).
Harnish thinks one of the hurdles to growth for New Zealand companies is that to grow they “have to venture out of this paradise” and it’s important that we honour those who do.
“People do look to role models and it’s very aspirational to celebrate those companies who are getting out there globally and doing it really well. That’s at macro level. Then at micro level it’s case of giving them the tools that help them handle expansion.”
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