Hyperfocus and a 100% Solution to Win a Niche Market Monopoly

Jan 2, 2020

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Verne Harnish, founder of the world-renowned Entrepreneurs' Organization (EO) and CEO of Scaling Up, a global executive education/ coaching company, has spent the past three decades helping companies scale up. Credentials?

15-year chair/instructor at EO's "Birthing of Giants" CEO development program (held at MIT)
Authored best-seller, Mastering the Rockefeller Habits (published in 2002 and translated into 9 languages)
Authored Scaling Up: How a Few Companies Make It and the Rest Don't (published in 2014 and winner of 8 major international book awards)
Grew Entrepreneurs' Organization (EO) to over 14,000 members worldwide
Chairs annual ScaleUp Summits (in collaboration with Bloomberg) and grew Scaling Up to over 180 partners on six continents)

Verne, citing John D. Rockefeller's biography, Titan, believes that hyperfocus is critical to business success. He gave the example of Arnie Malham, a longstanding EO member, who wanted to be a marketing/ advertising agency. Focus? Advertising and marketing for law firms. More focus? Personal injury law firms –Intense focus? Personal injury law firms in NFL cities, large cities with the sophistication of billboarding and radio. Hyperfocus? To work for one personal injury law firm per NFL city, making a simple promise: "I'm going to make you No. 1 in that market." Then, provide a 100% solution.

In this interview, Verne talks about the four numbers it takes to grow a company: revenue, gross margin, profit, and cash – each significant at a different growth stage.

From startup to that first million dollars, the most important number is revenue. It's not about fixing the logo or the website, Verne says, just "Sell like hell," and then when you get to a million, fix those other things.

From a million to $10 million, the most important thing is cash . . . because growing 10x will take a lot of cash. The cash model, the timing of incoming and outgoing cash, has to work.

From $8 or $10 million to $40 million, gross margins are critical. As companies start adding middle management and infrastructure, costs will increase, and gross margins will start to slip.
When a company is at the $30-40 million level, the most important number is profit consistency, because that is what the market expects.

At the organizational level, Verne claims there is one routine that will drive things further faster than any other – daily meetings to ensure organizational alignment on the task that needs to be done that day.

Verne invests privately in a number of scale-ups and is a member of the International Brotherhood of Magicians – so business-wise, or recreationally . . . he spends a lot of time doing "magic." He available on his company's website at Scalingup.com, on the company's new media site at Scaleups.com, and by email is verne@scalingup.com.