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The Rockefeller habits

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Verne Harnish, business guru and owner says there’s plenty to learn from the habits of US legend J.D. Rockefeller

A US expert advises small business entrepreneurs hell-bent on creating fast-growth companies that they should take their lessons from a big business legend who outearned Microsoft's Bill Gates by a factor of four — J.D. Rockefeller.

“Rockefeller holds the record as the wealthiest entrepreneur ever,” says Verne Harnish, founder of the Young Entrepreneurs Organisation, now called the Entrepreneurs Organisation.

“He trumps Gates by a factor of four in comparison, measured by wealth as a percentage of US GDP.”

A former sales director turned business educator, Harnish also founded the Association of Collegiate Entrepreneurs and is chief executive of Gazelles, which serves as an outsourced corporate university for mid-sized firms.

His “faculty” includes many of the who's who of business experts, including the likes of Jim Collins, who wrote the best-seller From Good to Great and marketing guru Seth Godin, who penned Purple Cow.

Harnish's book, Mastering the Rockefeller Habits: What you Must do to Increase the Value of your Fast-growth Firm has been translated into Spanish, Chinese, Japanese and Korean. He was named one of the Top 10 Minds in Small Business by Fortune Small Business Magazine.

Harnish was born in Wichita, Kansas.

“I launched ACE in Wichita, the home of Frank and Dan Carney's Pizza Hut as well as Tom Devlin, who founded Rent-A-Centre,” Harnish says.

“The late Willard Garvey, from one of the richest families in the US at the time, was a mentor and many other successful entrepreneurs in Wichita taught annually in a program I helped organise back in the early 1980s.”

Despite their influence Harnish believes entrepreneurs can learn most from J.D. Rockefeller who, he says, made his wealth in the second stage of a new “technology”.

“He avoided the short-lived boom and bust of oil refineries just after the discovery of oil in Titusville, Pennsylvania,” he says. “He cleaned up after the dust settled.”

Harnish says we're in the same second wave right now, after the dotcom boom and bust of the late 1990s, which was characterised by people who should have known better losing the one thing Rockefeller had in spades.

“The key to Rockefeller's success, in one word, was discipline,” Harnish says. “An accountant by training, a devout Baptist, he was a very disciplined business operator. You wouldn't have wanted to party with J.D.”

James Stevens, founder of online florist Roses Only, has attended Verne Harnish's seminars and insists he has had profound effects on his business. Stevens says he took three marketing employees to his first seminar with Harnish and during the day was told his chief problem would be revealed that night.

“At dinner Verne pointed out the obvious: I didn't have a chief operations officer,” Stevens says. “I was doing too much and some of my marketing people were doing some of the tasks of an operations officer. I went out the next week and advertised for one and he has been fantastic.”

Harnish also struck a chord with Stevens, saying “you can't carry B-grade players”.

“I reckon you need to take key people to listen to Verne,” Stevens says. “We had a key executive who was not performing and after the seminar all three of my employees raised the issue of our poor-performing B-grader.”

When interviewed, the worker in question admitted he wasn't happy and offered to walk, along with his entitlements.

“The value of these changes to my business in efficiency gains alone was about $300,000,” Stevens says. “We've also become dogmatic about our key performance indicator -- the number of deliveries. We watch them daily and weekly and celebrate when we exceed them.”

Asked what entrepreneurs or business owners regularly get wrong, Harnish says he never likes to say entrepreneurs are wrong. “They just have more lessons to learn,” he says. “Entrepreneurs have the most expensive MBAs on the planet, paying ten of thousands to get hard-earned wisdom.”

Entrepreneurs have to say no more often to avoid the distractions of the opportunities that they see everywhere, he says. They need to understand the complexity of their business, which needs to be systemised.

“Probably the most important hire most entrepreneurs can make is then right number-two person who will help them organise their business,“ he says. “The only fatal mistake they make is running out of cash.”

That's why managers are worth their weight in gold.

Published on: Wednesday, November 04, 2009

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