A CEO COO partnership scales a company when the CEO owns strategic thinking and the COO orchestrates execution across people, processes, and priorities. Clear boundaries, mutual trust, and a shared operating rhythm give the founder room to protect the business’s unique strengths while the operating leader turns strategy into consistent results.
In this episode of The COO Solution Podcast, host Derek Fredrickson talks with Scaling Up founder and CEO Verne Harnish about building a strong CEO-COO pairing and scaling a company with less complexity and drama.
Take the Quiz: Find Out What Your Business Actually Needs
About This Episode
Scaling a business takes more than a great strategy. It requires the right leadership partnership, clear priorities, and an operating structure that turns ideas into consistent results.
Verne Harnish is the founder of Scaling Up, the founder of the Entrepreneurs’ Organization, and the author of Scaling Up and Mastering the Rockefeller Habits.
Derek and Verne discuss why the CEO is the strategist and the COO is the orchestrator, how founders can protect the unique soul of their businesses, and why effective execution requires both strong people leadership and well-defined processes.
Verne also shares lessons from decades of working with entrepreneurs, including how daily huddles, operational playbooks, and the four Scaling Up decisions help leadership teams grow with less complexity.
In This Episode
[00:30] The Strategist and the Orchestrator
Why CEOs must lead strategic thinking while COOs turn strategy into execution.
[03:31] Building a Successful CEO-COO Partnership
How trust, shared experience, and clear responsibilities strengthen the relationship.
[06:45] Protecting the Soul of the Business
Why founders need room to focus on what makes their company unique without disrupting operations.
[12:41] Running Your Business Like a Professional Sports Team
How playbooks, scoreboards, and training create consistent execution.
[17:14] Removing Obstacles Through Better Leadership
Why COOs must address unnecessary complexity, ineffective processes, and team challenges.
[24:57] The Four Decisions That Drive Scaling
Why People, Strategy, Execution, and Cash require the entire leadership team’s attention.
Why This Matters
A strong CEO-COO partnership allows founders to focus on strategy while operational leaders turn that vision into results.
Systems and boundaries don’t restrict growth. They create the structure that gives leaders and teams greater freedom.
Scaling requires both strong people leadership and disciplined execution, not one at the expense of the other.
The most effective leadership teams identify their biggest constraint and work together to address it.
Action Steps for Listeners
- Clarify your CEO-COO responsibilities. Define who leads strategic thinking and who owns execution planning.
- Protect your company’s unique strengths. Identify where the founder’s direct involvement adds the most value.
- Build your operational playbook. Establish clear processes, scoreboards, and training expectations.
- Start a daily huddle. Ask your team, “Where are you stuck?” and remove obstacles before they grow.
- Evaluate your four Scaling Up decisions. Identify whether People, Strategy, Execution, or Cash needs your leadership team’s attention most.
Resources & Links
Questions We’re Asked About CEO COO Partnerships
What is the difference between the CEO and COO when scaling a business?
The CEO owns strategic thinking: defining where the company is going and what makes it distinctive. The COO owns execution planning and the cross-functional processes that turn that strategy into consistent results.
What makes a CEO COO partnership successful?
A successful CEO COO partnership depends on trust, shared context, clear responsibilities, and respect for each leader’s lane. The relationship works best when both leaders can challenge each other while remaining aligned around the company’s strategy and priorities.
How should a founder choose the right COO?
Verne Harnish recommends looking first for someone the founder has already worked with and learned to trust, such as an internal leader, former colleague, or long-standing customer. The COO role is too central to rely only on a resume because the pair must understand each other’s strengths, weaknesses, and working styles.
Why is a daily huddle important for a scaling company?
A brief daily huddle helps a team identify where people are stuck and remove constraints before they grow. Frequent communication also gives leaders enough data points to see trends sooner and keep execution moving.
Which Scaling Up decision should a leadership team prioritize first?
People, Strategy, Execution, and Cash are equally necessary, like the four legs of a table. The leadership team should identify which area is currently weakest and focus together on strengthening that constraint.
New episodes drop soon. Subscribe to The COO Solution Podcast so you don’t miss one, and share this episode with a founder or CEO who is trying to scale without becoming the bottleneck.
Take the Quiz: Find Out What Your Business Actually Needs
Full Transcript
[00:04] Derek Fredrickson: I am really excited to welcome today’s guest Vern Harnish to the COO Solution podcast. If you have ever picked up Scaling up, you already know Vern. He is the founder of the entrepreneurs organization EO and he founded and chaired EO’s premier CEO program at MIT for 15 years, a program he still teaches to this day. He is the founder and CEO of Scaling Up, a global executive education and coaching company with over 300 partners on six continents and he has spent the past four decades helping companies scale more easily and with less drama. Verne is the author of Start to Scale, the Greatest Business Decisions of All Time and of course Scaling up, which has been translated into 28 languages and won eight major international book awards.
[01:20] Derek Fredrickson: His most recent books, Scaling Up Compensation and Super Players both hit number one in HR books on Amazon at release. Scaling up sits on the shelf of nearly every founder I work with and the four decisions in that book people Strategy, execution and cash are the same four areas where our fractional COOs spend most of their time inside client businesses. So this conversation is going right to the heart of what we do and today we are talking about CEO and COO pairing, why it is critical to a scaling venture and a proven practice for finding the right second in command. Let’s get into it.
[00:28] Verne Harnish: Derek, it’s good to be here.
[00:29] Derek Fredrickson: Good to be here with you. Right. So I consider you, Verne, if I can be completely direct, honestly, the GOAT, the greatest of all time when it comes to scaling companies, your books, your methodologies, your frameworks, your systems, and everything else. I want to dive into a few different lanes of our conversation today, especially around these four decisions that are the pillars of everything that you’ve done with scaling up. But I also want to maybe start and talk about the top the CEO and the COO dynamic. You refer to those two roles as the Strategist and the Orchestrator. Can you unpack that a little bit for us? What do you mean by Strategist and Orchestrator?
[01:07] Verne Harnish: Yeah, you know, if were to just look at an orchestra, Mozart wrote the music, and that’s really the job of the CEO, is to set the strategy, to write out, you know, to articulate what it is, you know, marketing strategy, equal strategy, kind of what’s our product price, place and promotion, or the threes. And then I got to turn it over. You know, Steve Jobs kind of creates the iPhone. Then I need toss it over to the transom to what was Tim Cook. Tim retired. And Tim’s job was to make sure we had 10 million phones show up on Monday at the right time at all of the stores that we had around the world. And so.
[01:48] Verne Harnish: So Mozart writes the music, and then you’ve got this conductor who then brings together the very best players that they can in order, you know, the first string, second string, third string, and sets the tone, doesn’t say much, and ultimately creates great music versus just a lot of noise. And that partnership is. Is beautiful. And. And another way to explain it, if you look at the term strategic planning, which I really think is a misnomer, there’s really two distinct activities and teams. There’s the strategic thinking, piece of strategic planning. That’s what the CEO owns. And they need to have a council to work on that and they’re not doing it alone and all of that lot behind that. But then there’s the execution planning of strategic planning and that’s what the COO owns.
[02:44] Verne Harnish: They own all the processes mainly that are cross functional, that are necessary then for us to deliver on that strategy.
[02:52] Derek Fredrickson: Yeah, wonderful. Perfectly said. I couldn’t have said it better myself, but I love the way that you described it. Strategist, Orchestrator. I believe the CEO, their job is to make it up, right? What’s the big idea? What’s the big future? And the job of that CEO, that second is, you know, command is the one that makes it real. They’re the ones that make it happen. And I think that kind of speaks a little bit to what you’re sharing. maybe with some examples, where have you seen that dynamic that kind of CEO-COO combination work incredibly well? And where have you seen it fail? Like when does that not succeed based on what you’ve described, but it just doesn’t actually take shape and get results.
[03:31] Verne Harnish: Yeah, let me actually address that second. You know where it doesn’t work is when the CEO head hunts in that person. My experience is 90% of the time that person and they’re so critical that they are somebody that they’ve already worked with for quite a while that they can read each other’s minds, that they’ve already been through the forming, storming, norming and so whether we work together at a previous company and we left and started this up, but we already knew each other’s style, strengths and weaknesses. It’s somebody that was inside the organization that has been able to move up into this position. It’s a customer, it’s a long standing customer that all of a sudden decides, hey, I really love what you guys do. Let me come over across the transom and join you.
[04:23] Verne Harnish: I mean there’s somebody that I worked with at a previous job that had nothing to do with what we’re doing now, but we had a chance to work together. And I understand this relationship is probably the most important of all on the executive team that you’ve got to be able to read each other’s minds as part of the process and in a way stay out of each other’s lanes. That’s why what hasn’t worked, you know, even Bill Gates tried it. Derek was the office of the CEO and so the only place I saw it work as co CEO is at Sapient Jerry Berg and Stuart Moore, but they were very clear. Jerry was the outside guy. He was in front of the customer making sales. He would do the press conferences, do the media interview. Stuart was the guy inside.
[05:17] Verne Harnish: And he made sure then that, you know, we knew our core values, that they were put in place, were hiring the right people, they were going through the boot camp. All of the to do’s, the how you’ve got to deliver on what is that strategy. Even though as co CEOs of course they help set the strategy together. And again, we’re not expecting the CEO to do this alone, but to make sure they stay in their lanes.
[05:44] Derek Fredrickson: Yeah, I get that. I think sometimes I believe that as a second-in-command, that Chief Operating Officer, they’re like that strategic thought partner, right? They are the person that the CEO can trust, that can rely on to kind of ideate, to share, to kind of vent, to express without judgment. But then also they’ve got the faith, trust and confidence that somebody is there that’s wired to execute, like to land the plane, to then go and make it happen and to kind of implement that. I always say from ideation to implementation. So I think that dynamic speaks really well when you’ve got the full understanding. And I think what you’re sharing as well is that also when the COO knows that’s their lane and they enjoy that. They love that. They love to be in the backstage.
[06:25] Derek Fredrickson: They love to be the ones that I say it’s like the Wizard at the Wizard of Oz, right? They’re doing everything behind the curtain to make that happen. What’s your feeling about that? Do you feel like part of the dynamic is that the CEO knows themselves? The CEO knows themselves, but the CEO is very comfortable in that lane and in that execution role and they own it fully. Is that your kind of take on it as well?
[06:45] Verne Harnish: It is. I mean the word own, it only is. You know, these boundaries are more fuzzy than that. We like to articulate. But the latest book I’m writing on is about the Soul of the Organization. And where I see there ends up being conflict is there is this aspect of the business. We’re calling it the soul, the heart and soul, the peanut butter and jelly, the, you know, the jellies that feel good, purpose, but it’s the peanut butter holds it all together. There is an aspect of the business that the CEO, the founder, the creator will maintain a deep dive, will continue to micromanage. We’ll get labeled irrational, unreasonable, maniacal, crazy about.
[07:31] Verne Harnish: And the CEO, we think by finally naming it and being able to put our finger on it, we can help the CEO stay in their soul lane, what we’re calling the soul lane. But there will be this aspect where the COO has got to be comfortable letting the CEO, particularly of our founder creator, do these deep dives to micromanage every word in an ad, or the design of every screw head being lined up inside the iPhone, or, you know, spending six months every morning making sure the Apple store, even, you know, even AI, Apple’s headquarters, Steve Jobs maniacal that only white oak that was raised in winter environments so there weren’t knots and that there were no transoms at all in that million square foot facility that could drive certain CEOs crazy. Yet Steve didn’t care at all about who was manufacturing.
[08:30] Verne Harnish: You know, Foxconn was the outsourced relationship and Tim Cook was able to really manage that. So we’re helping CEOs understand what is their soul lane and giving COOs kind of an understanding so that when their CEO does a deep dive, seems to go crazy, be maniacal and obsessive about a few things that they’ve got some language and understanding around that. Otherwise you end up with that conflict.
[08:59] Derek Fredrickson: Yeah. Otherwise it’s all in water. I think some of the best dynamics that I’ve seen in my experience I say it’s the job of the COO to meet the CEO where they are, give them the lane to ideate, to create, to, like I said, make it up, maybe with some guardrails, maybe with some boundaries. But if you come from a perspective of, oh gosh, this is another crazy idea, oh gosh, we’ve got so much other stuff to do. When are we going to be able to get this finished and completed? And if you bring that energy to the CEO, it may stifle their ideation and feel like I create, I can’t ideate. And that’s not fun for them. They don’t feel energized, they don’t feel excited. Do you see that as well?
[09:35] Derek Fredrickson: When the CEO sometimes challenges as maybe a little bit too more of the no machine, then yes, we can make that happen, we’ll figure out a way, etc.
[09:42] Verne Harnish: Yeah, well, that is, that creative tension that’s necessary and the COO has to appreciate that at the end of the day, the final decision is the CEO. everybody was against opening up stores. Even the media said that, you know, Gateway had just failed having retail stores. Nobody should go this way, the board said. But Steve’s like, yeah, but we’re going to. And you know, that can be tough for a COO to deal with. And on the flip side, it’s not just the CEO’s idea to ideate. There are some deep dives that need to be allowed to take that feel very operational, that feel micromanaging, like, but not in all areas.
[10:38] Verne Harnish: And so it’s understanding that one area that the COO is going to allow the CEO to be weird, to be crazy and maniacal about and understand that is critical. Otherwise you end up with something that’s lost the magic just because we’ve leaned out all of it, including the magic, which is on the flip side. The COO needs to be just eat, live, breathe and sleep process in every aspect of the organization.
[11:09] Derek Fredrickson: Otherwise, I love that I may have to think about that eat, live and breathe process. Yeah, it’s so true. Again, sometimes what I share to a founder CEO, I don’t think they jump out of bed in the morning and say, I want more structure, I want process, I want systems. It sounds like a box, but I think when they realize that’s actually a thing that’s going to help them scale their company and they don’t have to be the one to set it up and run it. It’s very freeing because now they feel like, I want it, but I don’t need to be the one to execute or run it or build it. And I think that’s where the CEO is, doing what the CEO naturally doesn’t want and enjoy doing and vice versa. Right.
[11:48] Derek Fredrickson: That COO likes to be backstage. They like to be the one that’s kind of, you know, pulling the levers, but not having to be, you know, the big risk taker, the big kind of front stage symbol of the company, if you will.
[11:59] Verne Harnish: Yeah, well, and I, I really like the point that you made, Derek. Boundaries actually create freedom. You know, in an example that we use, you know, you’ve got a bunch of second graders on a playground bordered by a bunch of busy streets. If there’s no fences, then the CEO who’s trying to just keep everybody safe and organized has got to keep everybody huddled in the center. They themselves can’t even look away for a moment or some kids out in the street. But you put up fences and you have a few just rules of the playground that you’ve got everybody following. Now the kids are free to play right up to the edge and you’ve got the freedom to look away at your phone for a moment without knowing and it’s going to get hurt.
[12:41] Verne Harnish: And the example we’ve been using particularly with COOs, is to run the company as if it were a professional sports team. I mean, that has been the best performing asset class in the 21st century. And everything that we know that makes for a great pro team is what COOs need to install. That starts with the playbook. You know, no great team worth its salt is just running plays willy-nilly. They come in with a well defined playbook that the CEO obviously doesn’t have the patience obviously to manifest. Scoreboards. Everybody knows the score in the organization. I know if I had a good day or a good week and I know what I need to do in the next 24 hours to make that better. We’ve got to make sure we have a training camp.
[13:35] Verne Harnish: You know, Danaher, which has been the best performing Fortune 500 company up until Larry Culp left and now has turned around ge, they’ve got a three-week boot camp training camp that the executive teams of the companies they hire have to go through. And so, and that’s what Stuart Moore really the COO type at Sapient put in Place at 70 employees, was a boot camp. So that we made sure that when we brought on new employees, we got them up to the Sapient way we do business within a week. So when we sent them out in the field, the folks in the field didn’t have to try to train those people. There’s everything we’ve learned about what it takes to run a great professional sports team.
[14:19] Verne Harnish: And by the way, that’s what Tom Meredith, Michael Dell’s first real CEO Michael was, you know, got him the numbers he needed daily to make better decisions, put in the processes and the like in order to be able to. Because Michael had just had grown broke. He’d gone from zero to a billion in seven years and was broke. And they fired everybody but Michael and brought in his first C real COO, CFO Tom Meredith. Even to the point where they ran their factories like professional sports teams. They would play football in the last quarter, kind of November 1st to January 31st, and they’d have a Super Bowl and then they would play basketball and then they would play baseball and they would play hockey. So they literally ran the organization like a professional sports team.
[15:20] Derek Fredrickson: Amazing. Thank you, Verne. I have a question. I want to take this just one step further. I’m curious on your thoughts on this. So what we’re saying is that some of the best traits of a really good COO, I call them the hard skills, like the planning, the execution, the, the accountability, the, you know, the management, the leadership, etc. And then there’s this other component which I call the softer skills. It’s empathy. It’s kind of emotional intelligence. It’s have a difficult conversation with the founder or maybe a supportive conversation with the team member. They kind of have to not just be all about, you know, deadline and project and execution. I think they also need to kind of step into this other lane. What’s your feeling about that?
[16:03] Verne Harnish: Well, we like to kind of keep a business simple in its structure. Look, at the end of the day, you’re just trying to get people to do stuff. And so in order to deliver on the strategy that has been set, and we’re just people trying to serve other people. I mean, that’s all a company is. And if we have a good company, we can attract good people. If we have a great company, we can attract great people. And so there is the “people side.” I’ve got to navigate between the needs of the customers, the employees, and the shareholders. And so I’ve got to have all of those people skills that you’re talking about, both the CEO, put the whole leadership team needs to. And then I’ve got to have the process side. We got to make or buy it, right?
[16:50] Verne Harnish: We got to sell it, right. And we got to keep good records. Right. And so I’ve got to be able to balance between keeping all the people happy and making sure all the processes are running smoothly. And that’s why you’ve got to have both components there, particularly when you’re the one orchestrating the execution of that strategy.
[17:11] Derek Fredrickson: Yeah, it’s a balance of both.
[17:14] Verne Harnish: And by the way, we can tell you why the folks in the organization are disengaged and unenergetic and not delivering, because you’re making me work with dumb people and you’re making me do dumb stuff. And so if I were really to simplify the COO’s job, it is to have the kind of daily intel, and that comes from the daily huddle, which even this new book, Super Teams, that made to the Harvard Business Review. My colleague Ron Friedman, he and I will be on the stage at the Inc 5000 conference in a couple of weeks, our book Super Players is coming out in kind of compliment to super teams.
[17:54] Verne Harnish: You know, at the end of the day, the job of the COO is to have the kind of intel daily and weekly to know that these are the dumb people we’ve got to, you know, customers we got to stop doing business with. First thing Tom Meredith did was run those waterfall graphs and said, Mike, we’re doing a lot of dumb business and Michael’s smart enough that if he had the data he could see it and then let’s stop doing all the dumb stuff in the organization. So the COO’s job is to identify and get rid of the dumb within the organization. And that could be a training issue or an onboarding issue to stupid step in a process that shouldn’t be automated in the first place.
[18:40] Derek Fredrickson: I love that. That just cuts right to the chase and crystallizes it to that one phrase. That’sgreat. With your permission, Verne, I’d love to just kind of, for a moment or two, step back. You know, I, like I said in the beginning, I, I’ve known you for, you know, well over 15 years. You know, your books, your trainings, everything you’ve impact in so many different lanes. Can you just share a little bit about how you got started? Like what brought you into this space of kind of focusing on, you know, scaling companies and business growth and professional development. Like just describe a little bit of how you, where you were and what brought you to, you know, the books, the programs, the speaking, etc. I think it’s a fascinating story, if you don’t mind.
[19:21] Verne Harnish: Yeah. So I had been in business with my dad since I was 15, helped build a company, about 12 million while I was in college and then had a chance to found the Young Entrepreneurs Organization. We’re ready to celebrate. It’s now called EO. Its 40th anniversary next year. And YPO had an executive program at Harvard. They would not partner with us as EO, so I went next door to MIT and in 1991 I launched a program that today is called the entrepreneurial master’s program EMP. And I ran it for 15 years and I had a chance to move there, you know, about a thousand CEOs, founders, EO members through that three year program. And I had one goal. There was a lot of information on how to start up a company. You know, today we have an incubator on almost every corner.
[20:15] Verne Harnish: I have an MBA that’s supposed to teach you how to run a big company. I don’t know about that. But there wasn’t anything about what it took to grow a company so startup and grown up. But there wasn’t anything on how to actually scale. So I took a decade and hosted every celebrity CEO I could, every author that I could, and I began to discern what became these 10 Rockefeller habits in a book that I wrote then in 2002 called Mastering the Rockefeller Habits. But the problem I saw with the MIT program is were only educating the CEO and they would run back from the program and they would drive their company crazy, including their CEO. And the company began to resent, oh my gosh, our CEO’s going off and they’re going come back all weirded out.
[21:07] Verne Harnish: You know, let’s just give this a couple weeks. This too shall pass. And it really culminated in who became later a business partner, John Ratliff. John was running call centers and he was really a great student. And he would go back and his team would look at him like he had three heads. So he’d come back to the class, he’d get all excited again, he’d run back and I’m like, I’m going to put together a workshop. First time I ever offered it outside of the Washington D.C. area. He piled on his leadership team in a van and came down with what money he had. It was at the old Xerox training center. It was like a step bunker if he ever had a chance to attend it or visit it.
[21:49] Verne Harnish: And it’s a three day program where I’m going to take his team and other teams through what I took him through and about three hours including Kevin o’ Connor as coo. Look at John. And like, John, we got to do this stuff. And John, like, I’m going to ring your guys neck. I’ve been wanting to try to do this for the last two years and I realized that we’ve got to educate everybody, not just the CEO. Otherwise all we do is throw more burden on and monkey on the back of the CEO. So anyway, that’s when I launched what became Gazelles. Later we changed the name to Scaling Up. And today 300 coaching partners, six continents, couple thousand clients in any one day. We’re helping, you know, scale easier with less drama. That’s, that’s our focus.
[22:43] Derek Fredrickson: That’s great. I love it. Thank you for that. I was in EO New York for a bit of time and I live here in Paris, France. And I recently rejoined the Paris chapter. It’s a small chapter, but it’s growing in numbers and it’s again kind of full circle to know that I’ve connected with the originator of what is now this major international global Entrepreneurs’ Organization. It’s a, real supplement to how I am as a leader, as a founder, as a CEO. And so it’s a great, great organization. Thank you for that. And I still also refer to that daily huddle that was one of the things in the very beginning from mastering the Rockefeller habits I, we shared it with our clients in situations when it can really move the needle. So that was a greatsuggestion.
[23:32] Verne Harnish: Yeah, well, and by the way, I was really happy with that. You know there’s a lot of pop science out there, pseudoscience. But Ron Friedman really did the research around super teams, these teams and really today all we are is a team of teams just getting work done. And I was pleasantly just delighted that his research found at the heart of the most successful, what he called super teams was the daily huddle. And he said the question that was at the heart of it was: where are you stuck? And really what it does, it really emphasizes that importance of continuous improvement on a daily basis. And in this AI driven world it’s whoever move faster wins. And if you want to move faster, you have to pulse faster.
[24:22] Verne Harnish: And you need, as any great COO knows, you need six data points to see a trend. If I’m only looking at numbers, once a month it’s going to take me a half a year, once a week it’s going to take me a month and a half. But if I hear it daily, I know exactly in a week what it is, where we need to go next in order to constraint in the business. So I was happy that the science continues to bear out the absolute importance of this five, six, seven minutes a day, which is all necessary to really power super teams.
[24:57] Derek Fredrickson: Yeah, for sure. In scaling up, you talk about the four quadrants people, strategy, execution, cash, of those four people, strategy, execution cash, which is the one that the CEO should focus on first? Is there one that’s the most important from their lane and then conversely, which is the most important one for the CEO? Do they kind of collectively own and are working on all four or there’s one that’s higher priority depending on who they are, CEO or CEO?
[25:28] Verne Harnish: Yeah, well, IDO actually did some, you know, quantitative research around it and they wanted to know first of all which one of those four legs was most critical to the success of the ventures they had funded and launched. And what they found out, surprisingly is all four were equal. You can’t have it. It’s like a four legged table. But what’s most important is that the senior team, the CEO with the COO and everybody align around at this moment. This is the one we need to focus on. So it’s not so much, you know, you could say that, you know, the CEO owns strategy and the CEO owns execution and the CFO owns cash and you know, head of HR owns people. But that would be way too simplistic and not actually the way that it works for it.
[26:22] Verne Harnish: at any one time one of those legs is weaker than the other three. And because everything’s cross functional in nature and that’s what the COO has to continue to emphasize, we got to all go over and grab a hold of that leg and get it fixed. So all four matters. The whole senior team needs to be focused on all four. But you choose one that is the priority right now, just given where the organization is right now.
[26:56] Derek Fredrickson: Yeah, okay, that makes sense.
[26:58] Verne Harnish: I didn’t make this stuff up. You know, we have a lot of competitors that make stuff up. This is rooted in Jim Collins research, you know, right people doing the right things. Right people. Strategy, execution, cash. We even have a two minute video. Tim Cook, when he was interviewed by the dean at Duke who had just taken over his DNA and was asking Tim, as CEO of Apple, how do you think about your job? And he said, I think about, I have three things, people. Strategy, execution. Now they’ve got plenty of cash and valuation. But, but there was this precise language. We, we don’t need to over complicate it if that’s how Tim Cook thinks about running what was a 5 trillion valued company.
[27:48] Derek Fredrickson: Yeah, makes sense. It’s almost like the way I’m looking at it, because I’ve been familiar with this for a long time, is that if you’re focusing on people, strategy and execution, the output would be really good. Cash as an example, because if you do those things well, then you know, the output is having a profitable, you know, revenue generating organization and company that’s growing and scaling. So it makes perfect sense.
[28:10] Verne Harnish: Though I’ll mention when Michael Dell brought in Tom Meredith, their issue was cash The first thing Tom Meredith did was bring in the waterfall graphs. Found out they were doing 40% of the stuff they were doing was dumb. And they got that turned around right away. And Tom focused on improving their cash conversion cycle so that they had more cash as they grew than less. That was significant to Michael’s ability to be able to scale was to get that cash conversion cycle right. So it’s not cash just isn’t as important. Generally, once you’re a Fortune 500 company, you got generally plenty of it. But man, as you’re scaling, growth sucks cash. And finally, Jim Collins in my favorite book of his, Great by Choice, finally addressed it.
[29:04] Verne Harnish: He had been studying Fortune 500 up to that point, which is why I don’t think cash got on his radar. But when he decided and his roots are entrepreneurship at Stanford, when he looked at us mere mortals, my favorite chapter in that book is Rol Return on Luck. And he said the key companies that scale the greatness had 3 to 10x the cash that their competitor either had it or access to it. That allowed them to weather the bad storms and take advantage when there was good storms out there. So it’s not only an outcome. I see the COO crunching down around cash. If we’re not going to make payroll on Friday, it’s not just the CFO’s job to make sure that happens.
[29:54] Derek Fredrickson: Yeah. Excellent. Lovely, verne. I want to honor your time and I really appreciate the conversation that we had today. Our audience of founders and CEOs that are growing and scaling companies from low multiple seven figures to mid multiple eight figures are probably asking themselves, how can I tap into more of this brilliant brain of verne Harnish? Where can people find you? Of course we’ll put a bunch of links for your books, your programs, your companies in the show notes, but where is the best place? I know you’ve got some books coming up to for people to find out more about you and how to. Yeah, just explore more about your knowledge.
[30:27] Verne Harnish: Derek, thank you. Yeah, we try to keep it simple. Go to Scaling up the name of the book, the name of our company, scalingup.com and I do have a Friday insight that goes out a little bit like Tim Ferriss’s Five Bullet Friday. And you know the tens of thousands of CEOs and executives reading it generally find one good idea every week that is helpful and that’s how you scale is get 1% better every week. Compound interest is your friend. So it’s free and hopefully that way you’ll stay in our universe.
[31:01] Derek Fredrickson: Yeah. And I read it every single week it’s amazing. I really do recommend it, so thank you, Derek. Thank you, verne. Really appreciate you being on the show. Thank you for your time. And we’ll see you next time on the COO Solution podcast. Thanks, everybody.
[31:12] Verne Harnish: Got it. Take care.
