Crazy Backstory; No Try, Only Do; Brand/Culture Assessment; Be Incredible!
June 22, 2017
Bezos’ Insight; Gladwell’s Omission; Mind-Hack; Two Resilience Questions; CEO Boot Camp
July 6, 2017

Whole Foods Fail?; Employees First?; Ego is the Enemy?; Uber’s Mess?

"…insights for scaleups"


Interacting with Customers? — does your website give clients an opportunity to interact with a person? If not, see below, but first…

Ego is the Enemy? — Ryan Holiday is the new Tim Ferriss. And at age 30, he already has several runaway best sellers including Ego is the Enemy, The Obstacle is the Way, and The Daily Stoic. I'm stoked that Holiday is keynoting our fall ScaleUp Summit Oct 17 – 18, St. Louis. More below, but second…

Where Whole Foods Messed Up? — Amazon's (brilliant) purchase of Whole Foods has wreaked havoc with many companies and industries. And though the price Amazon paid is less than one times Whole Food's revenue, less than what most private companies are worth, who can say that John Mackey, the founder and CEO, failed when he built and sold a firm for almost $14 billion! And he gets to stay on and lead his baby! Overall, it's been an impressive run so far.

Employees First? — Yet Mackey's "forced" sale of the company has made several people question the validity of the conscious capitalism movement since he was the movement's co-founder. My take? The "employee first idea" is a flaw. Notes this Fast Company article:

…Bill George, who wrote the foreword to Conscious Capitalism, thinks Mackey forgot about two key stakeholders: customers and shareholders. Whole Foods' performance on Wall Street was sluggish, prices remained too high, and Mackey was too preachy about his food choices: he didn't give people what they wanted when they wanted it.

George, a veteran Harvard prof and author, goes on to explain precisely what Mackey missed. Please take two minutes to scan down through this important article.

All Stakeholders Must Be Happy? — it was Harvard Professor John Kotter's breakthrough research, as reported in his book Corporate Culture and Performance, that answered the question for me. Tracking over 200 firms for more than a decade he found that companies which equally focused on the employees, customers, and shareholders crushed, by a factor of 3 to 1, those firms which took a position that placed one ahead of the rest. This research became the basis for today's "balanced scorecard" where firms like Marriott hold their general managers to three key metrics – employee happiness, customer delight, and financial performance. Thus, Bill George, a dear friend of John Mackey's, is right. Whole Foods forgot about two key stakeholders in putting employees first and that has been a fundamental flaw in its strategy. I think it's a critical lesson for all businesses, especially those in the conscious capitalism camp.

Uber's Similar Mess? Bain's top strategist, Chris Zook (who recently keynoted our ScaleUp Summit), co-authored an HBR piece this week which further examines why Uber and many of the "unicorns" have stumbled. In a study of 28 since 2011, nearly two in three died or stumbled. Notes Zook and James Allen, his co-author:

The skills that help founders get their company to take off also are the opposite of those needed to sustain new growth. Founders focus on speed, ignore good process, and relish breaking the rules of the industry they are trying to disrupt. They cut corners, ignore detractors, and avoid naysayers. Their Herculean efforts are responsible for the firm's creation, but also its chaos. Once the company reaches cruising altitude, its leaders need to listen more to competing voices and invest more time in emerging stakeholders.

In short, "what got you here won't get you there" to borrow the title of Marshall Goldsmith's book. Making the transition from entrepreneur to CEO is critical – and the same for the rest of the senior leadership team.

Unscalable Founder? Chris Zook and James Allen, in their book The Founder's Dilemma, details four barriers to scaling. In the HBR article, they note:

One of these is what we called the unscalable founder. We believe the founder's mentality is a strategic asset. Nurtured correctly, it can help a company achieve scale insurgency – a company with the benefits of both size and agility. But many individual founders aren't scalable. Individual founders can become a barrier to growth if they are unable to let go of the details and micromanage, or fail to build a cohesive team around them, or allow hubris to get in their way. We found 37% of executives at growing companies described the unscalable founder as a major barrier to their success.

Again, in my experience this is not just an issue for the founder but for the entire extended leadership team. Anytime a leader, anywhere in the organization, fails to let go, build an A-player and healthy team, and/or becomes hubris, the results are going to be less than optimal. Please take 3 minutes to read Zook and Allen's HBR article — or in 10 seconds go to the end of the article and review the five questions they suggest will determine the health and scalability of the organization. Ego is the enemy and the obstacle is the way!

The Daily Stoic — which brings me back to Ryan Holiday. Marcus Aurelius, wealthiest Roman and ruler of the empire, didn't have time for 10-day retreats to meditate on the meaning of life (not that I'm not a fan of these) – he had a kingdom and a family to serve 24/7. Thus was born stoicism. Most of the ideas come from Aurelius' private diary – his daily reflections on leading and living. Holiday has compiled these ideas, with short and brilliant commentary, into a book called The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living. I've enjoyed reading each daily meditation since the book was released last October. SPro (ScaleUpPro) and book club members should receive the book this week. Then come hear Holiday share wisdom from his various books at the fall ScaleUp Summit in St. Louis Oct 17 – 18. He's not to be missed!

Are Your Online Customers Walking Away? — Your website is like a shop. If there are no sales people to help your online customers, they will walk away to a competitor. LiveAdmins, which Gazelles has used for over a decade, helps businesses proactively greet online customers and engage them in conversation. The multilingual chat services offered by LiveAdmins are provided round the clock, ensuring needs of all visitors are taken care of. LiveAdmins has helped companies across all industries significantly increase sales and enhance visitor experience for over a decade.

EXITING: Thinking about selling the business for $40 million or more? Want to get 25% to 200% more than you thought? Request the whitepaper from the Exit Strategies Summit at Harvard from Denise Richmond at (610) 299-6466 or email at [email protected]


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Verne Harnish
Verne Harnish
Verne Harnish is founder of the world-renowned Entrepreneurs’ Organization (EO) and chaired for fifteen years EO’s premiere CEO program, the “Birthing of Giants” and WEO’s “Advanced Business” executive program both held at MIT. Founder and CEO of Gazelles, a global executive education and coaching company with over 150 coaching partners on six continents, Verne has spent the past three decades helping companies scale-up. The “Growth Guy” syndicated columnist, he’s also the Venture columnist for FORTUNE magazine. He’s the author of Scaling Up (Rockefeller Habits 2.0); Mastering the Rockefeller Habits; and along with the editors of Fortune, authored The Greatest Business Decisions of All Times," for which Jim Collins wrote the foreword. Verne also chairs FORTUNE Magazine’s annual Leadership and Growth Summits and serves on several boards including chairman of The Riordan Clinic and the newly launched Geoversity. He is an investor in many scale-ups. A father of four, he enjoys piano, tennis, and magic as a card-carrying member of the International Brotherhood of Magicians.