Rating Qualities

8
Applicable

Rhythm
How to Achieve Breakthrough Execution and Accelerate Growth
Patrick Thean | Greenleaf Book Group © 2014

If you listen to most CEOs, you might think that strategic planning is a company’s most critical
business activity. Considering that, it’s ironic that most strategic plans end up gathering dust.
Serial entrepreneur Patrick Thean’s approach to strategic planning can help you transform this
sadly neglected but worthwhile exercise into practical, implementable and beneficial corporate
action. Thean’s engaging style showcases the basic common sense and easy application of his
tactics. He provides chapter-ending worksheets and numerous helpful, real-world examples.
getAbstract recommends Thean’s method to executives and managers – especially those at start-
ups and growth companies – who must forge, implement and execute plans successfully.

Take-Aways
• When growth companies reach a certain level of complexity, old management approaches no
longer work.
• At that point, organizations must focus on the future and not the past.
• Wise companies use the “Rhythm” approach to strategy. It has three parts:
• “Think Rhythm” is the process of strategizing, while “Plan Rhythm” involves developing a plan
to execute your strategy.
• “Do Rhythm” calls for implementing steps to meet your strategic goals.
• During planning, prioritize “winning moves” that will increase your revenues.
• Classify your potential actions as “red, yellow or green” (RYG); red indicates a “losing move”;
yellow moves are neutral; green moves produce revenue or growth.
• The Rhythm approach calls for two-day-long quarterly and annual planning meetings.
• Also hold “weekly adjustment” – not status – meetings for your team, as-needed adjustment
meetings with team members, and a “meeting with myself” for thinking.
• Monitor your progress by tracking key performance indicators (KPIs).

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 Summary

“Complexity Ceiling”

Companies that enjoy robust growth inevitably run into complexity ceilings that hamper
operations and make management difficult. These roadblocks tend to crop up at distinct
milestones – 50 staffers, 100 staffers, $15 million in sales, $100 million in sales – which vary in
their nature and timing from company to company. Such complexity barriers render previously
productive management practices ineffective. Super-hot firms begin to cool down, and soon
become indistinguishable from their stuck-in-the-mud competitors.

“Think about what your core customers really need, instead of why it is difficult to
take care of their needs, or how some of their needs may conflict with your products or
services.”

The “rhythm” for turning around this negative dynamic is simple, but seldom easy. Companies
must anticipate the future instead of focusing on metrics that measure the past. Those at the
highest level of management must ask probing questions about what lies ahead. This inquiry
helps your executive team think about – and prepare for – upcoming problems and opportunities.
Follow this overall rhythmic pattern to place your firm in the best possible position to cope with
the “ceilings of complexity” that growth companies inevitably face as they hit new milestones.
Once you orient to the future, you can adjust quickly to new challenges and bypass complexity.

“The funny thing about greatness is that as soon as you start to believe that you have
achieved it, you start to decline – hubris, biting off more than you can chew, less candor
and self-awareness.”

Forecast what the future may hold, plan for that scenario and work out the actions needed to
execute your plan. Don’t think of this as a process; it is a rhythm – “a habit that repeats”– that
helps you continually look forward and not backward. This rhythm encompasses three main
steps, but the steps are not linear. They occur simultaneously. Each week, your firm considers
its strategy and decides how to execute it for the upcoming week. Each week, you do the work
necessary to accomplish your objectives. The rhythm approach represents “fire prevention instead
of firefighting,” and its three components are:

1. “Think Rhythm” – Consider Your Strategy

The Think Rhythm component offers three main benefits: 1) You build your base for future
growth; 2) you conceive of a regular supply of “winning moves” to increase your sales and revenue;
and 3) you keep your employees focused on what they must do each week, each quarter and each
year to keep your winning moves advancing steadily. The Think Rhythm component puts your

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 strategy front and center for all employees. Working in a steady, smooth rhythm makes it easier
for you to spot specific areas of your business that need adjusting.

“Clarifying and communicating the elements of your strategy gives you a strong
foundation to scale your company.”

Think Rhythm requires that you personally set aside time for actual thinking – just thinking.
Over time – as long as a year – hold weekly strategy meetings with your team members, leading
up to “two-day annual and quarterly sessions” for strategizing. On the first day, plan your
strategy. On the second day, plan how you will implement and execute that strategy. Focus your
strategic planning on how to build up your company and how to create winning moves that will
increase “revenues and growth.” Be ambitious in your planning. Adopt “Big, Hairy, Audacious
Goals” (BHAG), which author Jim Collins describes in Built to Last. Once you choose your plan,
communicate it to everyone involved.

“It is hard to quantify the opportunity costs of staying with losing moves but it is huge.”

Consider this example of a winning move. In the past, when you wanted to rent a DVD, you might
have gone to a Blockbuster store to pick it up. Just one problem: You had to return it to the same
Blockbuster location where you rented it. Redbox changed the game by allowing customers to
return DVDs to any of their outlets or automated kiosks. Redbox fulfilled an unmet need; try to
identify such a need that you can satisfy for your customers. This may be your winning move.
Develop winning moves in five steps:

• “Name your winning move” – Maintain focus and communicate your plan to each and
everyone of your employees.
• “Find the ‘who’” – People inside and outside of your organization possess expertise in the
area of your winning move. Find out who they are and tap into their knowledge.
• “Develop revenue projections” – Forecast earnings for the next “three to five years.”
• “Identify and test assumptions” – Use “real-world data” to thoroughly test each
assumption underlying your revenue projections.
• “Adjust” – Assumption testing does not guarantee that your plans will work, so adopt an
“adjust-and-test pattern” until your research suggests that your plan is: 1) “confirmed and
ready”; 2) a real winner; 3) workable in the future but not ready today; or 4) a loser you should
discard.

“If everyone on the team does not agree on the path forward, execution will go poorly
because you won’t be aligned.”

To line up a winning move, trust that “the right questions will lead you to the right answers.”
As you brainstorm, prioritize action plans based on how they will contribute to revenue growth
and how easily you can execute them. Adopt the “red, yellow, green” (“RYG”) system of “success-
criteria” to determine which potential moves are winners or losers:

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 • Red – These losing moves do not deliver sufficient revenue growth.
• Yellow – These winning moves are expensive or difficult, but produce substantial impact and
can differentiate your firm.
• Green – These winning moves deliver a big punch and are simple to accomplish. They require
minimal resources and accrue high revenue growth.

2. “Plan Rhythm” – Determine How to Execute Your Strategy

The Plan Rhythm component helps your firm set priorities. It works only if your employees
understand these priorities and align their activities to fulfill them. When you create annual and
quarterly plans, include specific action outlines showing how you and your team will achieve your
objectives. Each year and each quarter, develop a motivating vision that works with your action
plans to help your employees attain their shared goals.

“You are now managing people who manage people who manage the people who
actually get work done.”

Use “metrics and tracking tools” that enable your staff members to monitor their progress and
make necessary adjustments. Regard every quarter as a 13-week opportunity to advance your
strategy. Ask if all your team members understand the firm’s goals. Do they understand their
individual roles? Can they make any requisite adjustments in their tasks? Do they have the
necessary metrics to monitor their progress?

“I would caution leaders to commit to the process completely, but take it one step at a
time. Focus on doing one thing, get it right, then start working on something else.”

In 1999, Ram Charan wrote in Fortune magazine that some CEOs fail not because they are poor
strategizers but because they are poor at executing their strategies. You must create a strong
“execution plan” that everyone in the company understands. Each employee should be able to
communicate the company’s story clearly.

“If you don’t make progress toward your annual goals every single quarter you will have
a lousy year.”

When you run planning meetings, focus on setting firm goals and clear agendas. Use facilitators.
Start out positive. Discuss the important issues, and set aside the tangential ones. Don’t let small
issues – “baby elephants” – grow into major roadblocks – “seven-ton elephants.” Shut down your
meetings when you see attendees becoming tired.

“Every quarter, after the executive team meets for two days to come up with their
quarterly plan, they meet with the greater management team, including directors,
managers and supervisors.”

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 Use the two-step “Time Machine exercise” in your planning. First, “view the present from the
future,” that is, write the vision you have of your firm in the future. Then, “share your destination
postcards.” Include phrasing that gets everyone excited about what the future will look like.

Successful planning meetings follow four steps: 1) Establish objectives, 2) discuss pertinent
information, 3) debate issues and 4) get everyone to agree to a final plan. Each quarter:

• Identify “a main thing” – Set a top, overall priority. Focus on what truly counts.
• “Develop three to five company priorities” – Assign a priority to each one of the
executive team members.
• “Develop three to five executive team member priorities” – Make each person take
responsibility for his or her priorities.
• “Develop three to five priorities for every department” – Departments should act on
the priorities that executives hand down, and should create their own specific internal priorities
that facilitate achieving departmental goals.
• “Develop three to five priorities for every employee” – Every employee should have
“one or two priorities” specific to his or her job and daily tasks.

“I believe that teaching self-accountability in a low-drama way is one way that leaders
become multipliers.”

Every unit and every individual has a job to do. Once your prioritization is complete, you need to
prepare your plans and be sure that they are ready to be put into effect by running them through
four tests:

• “Financial test” – Your plan must accomplish your firm’s monetary goals.
• “Focus test” – Your plan must have a “main focus” that all employees understand.
• “Energy test” – Sufficient priorities must align to support the firm’s main goals.
• “Accountability test” – Every priority must include its own “success criteria.”

“You never want your growth rate to be slower than the rate of growth of your industry.”

Establish the right key performance indicators (KPIs). Include “leading indicators” that focus on
the future and “results indicators” that report on what occurs. Leading indicators can help you
push performance. To develop your leading indicators:

1. “Identify the problem” – Think about the business issue you seek to resolve.
2. “Clarify the desired result”– Quantify the goal. For example, by what percent should your
firm grow?
3. “Dig deeper with questions” – Clarify the problem and your plan; this requires asking
hard, original questions that delve into an issue.
4. “Drive results” – Determine what actions you must emphasize and how to measure your
progress.

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 3. “Do Rhythm” – Carry Out the Actions that Fulfill Your Strategic Plan

This step holds employees accountable for attaining their goals and enables them to adjust their
activities to stay on track. Flexible, rapid adjustments enable staffers to reach their goals on time.
The Do Rhythm component encourages quality brainstorming to develop new options.

“‘We don’t have time’ really means that a strategy for growth was not important
enough.”

Set up a weekly Do Rhythm for everyone. Change your weekly status meetings to “weekly
adjustment meetings” in which you and your team members “realign and focus.” Set up weekly
meetings with yourself – a 30-minute session to review what took place last week and to plan
your priorities for the upcoming week. Hold special adjustment meetings with particular team
members to solve specific problems. Target the adjustments you need to make to stay on track.

“Never dismiss your gut just because other, more experienced people tell you everything
is OK.”

Set up KPI dashboards for all employees. Start with a few months of giving them “get out of jail
free cards,” because they must become comfortable with these tools to understand that they
generate no negative consequences. Classify all performance indicators with the RYG system.
Create a fallback plan – an “agreed-upon adjustment” – for the critical components of your overall
plan. Activate your “Plan B” if things get offtrack.

“The ImageFIRST Way”

Led by CEO Jeff Berstein, ImageFIRST – a US-based provider of laundry services to health care
facilities – operates with the right rhythm, a beat that aids execution. According to Berstein, “Our
business may seem simple, but it seems like it is harder to accomplish our goals than it used
to be.” Before ImageFIRST became a rhythm company, it could not effectively adjust to meet
complexity challenges. However, it has doubled its revenues in five years since first implementing
the rhythm approach.

Rhythm enabled all ImageFIRST employees to understand the company. The organization
established four basic principles of operation, the ImageFIRST Way: ImageFIRST cares about,
and is loyal to, its customers. Its employees strive to be the best. The company focuses on growth
and delivers great profits. As it adjusted and adapted to the marketplace, ImageFIRST eventually
shifted its second tenet to become its main operating principle.

This employee-oriented change paid off handsomely. ImageFIRST now routinely gets “love
letters from clients” who appreciate dealing with extraordinarily effective employees. It has
gained a notable competitive advantage in its sector. “We have been able to make these rhythms

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 a part of our culture from quarter to quarter,” says ImageFIRST CFO Jim Malandra. “They have
given us a framework to be more disciplined and focused. The way the business runs now is very
methodical.”

About the Author

Patrick Thean has started several companies. As CEO, he guided Metasys to 151 on the Inc. 500
roster. He is also CEO and co-founder of Gazelles Systems and the creator of Rhythm software.

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