Scaling Up Naturally: Verne Harnish on Geoversity, Leadership, and the Future of Business.

Verne HARNISH (21:35)
They don't have to rely on any experts. They can trust their neighbor and they can see it with their own eyes. The length, the depth of the roots and the quality of the produce and the yields. I mean, you know, in one season and that's why it's been able to grow exponentially. The other thing that they do number two is they nurture kind of the hive creativity. So it's interesting, Harley Davidson,

a while back, got rid of their major ad agency and they chose a small agency in Boulder, Colorado, where I lived just before coming back to Barcelona. And what this agency guessed was that there was probably a lot of Harley owner group, hog members who are top ad agency executives. And so what they did is they said, hey, why don't we put up a contest and whoever can come up with the most creative ways

to promote Harley Davidson's, then we'll produce those. Now, as a result, what did that creative cost Harley Davidson? Zero. And one of the things that we know, according to Dan Pink in his book, Drive, that uncommissioned art is always much more creative than commissioned art. And so if all you're doing is commissioning one ad agency,

Jim James (22:43)
Zero. Yeah.

Verne HARNISH (23:01)
all you're getting is access to their handful of creatives. Here, Harley was able to tap into the collective intelligence and creativity of the entire tribe. So one of the guys that we hosted on a virtual summit we did on this Geoversity topic was my buddy Rob McCune. So Rob bought a gold mine in Vancouver, or up in Canada. He lives in Vancouver and he hires

15 of the smartest geologists the world could buy and he hired the top one to be the leader Jim they couldn't find an ounce of gold and in fact when Rob went down and interviewed the 15 geologists, what was inhibiting it was the guy he brought in as the leader the expert who knew it all didn't want to listen to anybody. That's the problem power corrupts.

Absolute power corrupts absolutely. That's what gets in our way of transcending our consciousness if you've read any of those kind of books. And so here's what Rob did instead. He said, you know, I'm going to turn it over to the crowd, to the tribe. So we put up all the geological data they had and he put together what was called the Gold Corp Challenge. Any team around the world that could find, find a clever way

Jim James (24:07)
Yeah.

Verne HARNISH (24:26)
of modeling our data in a way no one else had ever thought of. If you can find six million ounces of gold, you'll win a half a million Canadian dollars. Months later, a thousand submissions from teams all over the world. You couldn't hire those people. Two teams that teamed up in Australia, about as far away from Canada as you can be, won and split the prize. It was a team in

Sydney and a team in Perth who by the way the leaders of those two companies happened to bump into each other in the waiting room of a big mining operation in Canada. Look, mean mining in Australia is more sophisticated than probably anyplace else in the world. They said did you see this crazy guy in Canada's Gold Corp challenge? He goes yeah. He said why don't we team up and see if we can win it? Well they did and Jim they found six

Jim James (25:21)
Hmm.

Verne HARNISH (25:25)
billion dollars worth of gold now what Rob has done is he's now built building a mine down in Chile and He has actually hired on his team an architect. He's hired on his team designers He's turning this mine into a tourist attraction What it because we do need the mining but how do we do it in an ecologically and beautiful way

Jim James (25:28)
Thank

you

Verne HARNISH (25:53)
that it becomes a tourist attraction instead of an eyesore that it's giving back instead of completely taking away. So Rob's been able to tap into the collective intelligence of the crowd in order to do this. Now, the third principle is that we have to rely on reciprocity and sharing. You know, I don't know about you, but I use TripAdvisor to find a good restaurant. So I feel compelled to

share back. I owe it to the tribe for me to share my honest opinion to prevent somebody from making a mistake and believing the hype that might be on Facebook or Instagram. And so that reciprocity and sharing is critical. What does it mean? You can't be a pig. You can't be somebody who hoards information as a power play. And that was one of the early things that McKinsey

had to really come to grips with. You fourth have to rely on distributed leadership. So if you look at the structure of an ant colony, it's three ant teams with a team lead. And the team lead is chosen at birth for their willingness to share information, not hoard information. And so if you look at a hive, it really only has three layers.

Team members, team leads, the sergeants that are the ones that win wars, not the generals. And then you've got a queen. And by the way, I remind men it's a queen, not a king. Yeah. It is. It's the end of men, I think, in terms of our approach. And that's it. And that's what Cisco, for instance, is studying to restructure

Jim James (27:35)
That's right. Same with the bees, right? It's the queen bee.

Verne HARNISH (27:49)
how you organize humans to serve other humans. That's all we're trying to do. And the hive and the ant colony does it slightly better than we do with our top down kind of militaristic command and control approach that's driven by the masculine for generations. And all it's done is put a goddess in war.

Jim James (28:13)
So it's interesting and underpinning, it seems all of that is the technology of communication becoming ubiquitous, right? That actually the common theme to all of this, whether it's the pheromones, is that the democratization of information means that you're not tied to the location or the individual. As you say, you can reach out to people in, around the world to get a problem solved and they come together for that project and then dissipate.

Verne HARNISH (28:27)
That's right.

Yes.

That's right.

Yeah, you know, my mentor, Tom Peters, who was kind enough to endorse my first book, he was really the first to say that all future work will be organized like the movie industry. If you think about it, this never before ever assembled group

of independent contractors all over the world, actors, actresses, know, cameramen, micro, yeah, whatever sound come together. You see the list at the end of a movie. It's a mile long. And then they, they spend a hundred million dollars over a year. And then they make or break it over a weekend, you know, and then you disband.

And you come back together in a different form and shape to do it again. But that is why freedom of speech is so sacred. Anyone who wants to stop what they think are the crazy ideas, that's the problem. I trust us to figure it out more than our leaders.

And so that's what really, if you want to look at the election in the United States was ultimately all about, which was what Elon Musk is pushing. We've got to maintain our ability to communicate freely with each other as individuals and not be controlled by others. And that's what's critical for the health of a hive or tribe.

Jim James (30:18)
And it sounds as well that's critical for the planet too, Verne, if we have the collective understanding about what we're doing to the planet, you know, bringing us back a little bit to the diversity that what you're doing is creating a hive of information activity that people can go to and, you know, and get skills and then go out around the world and then build their own projects, presumably as well, right? Which is what you're also doing.

Verne HARNISH (30:26)
That's right.

Yes.

Yes.

You got it. And then the fifth principle is that these systems, Jim, are regenerative. And that's a very precise word. It's in a way the opposite of resilient. If there were two words that made me throw up in my mouth over the pandemic, it was every time I heard the word expert. Expert says, I knew we were being fed a bill of goods. I would rather trust

the hive than any expert. Number two, every time I heard the word resilient, I just, it depressed me. Because what resilience, what resilience implies, and here's the analogy. Let's say you're a superhero and you've got this shield. If it's a resilient shield, then as it's taking hits, it's breaking down, but

Jim James (31:24)
Why? Why does resilience,

Verne HARNISH (31:40)
What you hope is it lasts long enough and you last long enough to survive that battle and then heal yourself, repair yourself to go, you know, do it again. A regenerative shield is one that as it takes hits, it gets stronger. And that's what Mother Nature does. She gets stronger, not weaker, from the chaos,

from these episodes. People say, all right, give me a practical example as a human. Well, let's start with our bones. The whole challenge of getting to Mars is our muscles and our bones will atrophy because they're not under stress. They're not under that chaos. And you know what happens the minute your bones, you quit lifting weights and whatever, they get brittle and you break your hip and you're done for in the next 24 months.

The only way you strengthen a muscle is by tearing it. Then it gets stronger. You are stronger at the broken places, not weaker. The same with our immune system. It's that old adage that the farmer kids are healthier than the city kids. And so all of these antibiotics soaks and all of those have done nothing but weaken our immune system instead of what nature gave us, which are these natural attacks

which are designed to make us stronger instead of weaker. So we were designed to be regenerative. So was nature. And so our goal is how do we build regenerative organizations that get stronger from all of this chaos instead of just trying to resist and survive.

Jim James (33:28)
And I think you've got on your website at geoversity.org how the land has grown back again. Right. And that's wonderful how with some time and some care and attention, Mother Nature does come back in the same way that human nature is, as you say, to come back and maybe in a different form, but stronger again. Verne, now you're moving forward with the geoversity and

that work, where do you see if there's a piece of advice for people? Because you're saying now we're moving from the hierarchical traditional model, which of will cause some challenges for some societies like China, is traditionally and politically around the Confucian model. For entrepreneurs today, what do you give as advice? Because if it's like following the crowd and all

Verne HARNISH (34:13)
Yes.

Yes.

Jim James (34:27)
sort of clusters coming together and falling apart. It's upending the way that we've been taught to build organizations. So what's your advice?

Verne HARNISH (34:38)
That you first need to build an organization that taps into the collective intelligence of all of your people, not just yours as the CEO, founder, and the senior team. So example, one of my heroes, he's an anarchist. He actually studied anarchy at the University of Michigan, is this beautiful sage named Ari Weinzweig. Now Ari owns Zingerman's Deli. It's in Ann Arbor, Michigan.

It's considered probably one of the best delis in the US, if not the world. Ari does $80 million in revenue from one location. And he does it with about 800 students that he hires from the University of Michigan in Ann Arbor. And what he's done is he's built a company where the 800.

All of them contribute their collective intelligence, their creative insights, their leadership to his deli, which is why he's been able to take a little startup location to 80 million and be the first company in the United States to adopt a system that was birthed in the UK and creating a kind of a trust driven firm that can never be sold.

So it's becoming employee owned, but it's a higher level trust that means that none of the employee owners can ever put it up for sale. So it's going to continue in perpetuity like an ant colony or a beehive. And so Ari's figured out a way to make sure that all 800, that he's continually moving through as they graduate

are helping to fuel the growth of his both fuel the growth and maintenance of his beautiful organization. So that's first from an internal perspective. The external perspective is there's a book out. We just hosted him at our CEO summit at Harvard, VJ Govindur on VJ is a professor at Dartmouth. He was the one that first studied that companies that figured out how to deliver services to the bottom of the pyramid like in India

Jim James (36:33)
Good.

Verne HARNISH (36:55)
then are able to sell to the first world. If you can figure out how to do it cheaply, then now you've got a solution for everybody else. He's got a new book called Fusion Strategy. And I really encourage everybody to read it, watch his videos online. And what he's saying is this, the companies that are winning big are those that are continuing to collect data, information from their customers after the sale.

So for instance, what's the largest movie studio in the world today?

Jim James (37:33)
Is it the MGM? Be the Amazon one maybe, is it?

Verne HARNISH (37:36)
It is Netflix. 20 billion a year. And why have they raced to be number one and so successful? Because unlike the movie studios that will utilize a lot of information up until the movie is released, Netflix is continuing to collect data, intel, intelligence.

from all of its customers. What did you watch? When did you watch it? What do you like? They can tell all of that, which helps them then predict what would likely be the next hit. And so VJ outlines how all companies, including John Deere tractors, are now collecting data

way after the sale is made and using that data to continue to support the farmers coming back to farmers. For instance, they got the ability now to have technology that is able to apply an insecticide if it's needed in a pinpoint way as opposed to spraying an entire field. Both that reduces dramatically the costs to the farmer and again is much more friendly.

To Mother Nature. So in short, it's who can tap in to the broader collective intelligence of the planet and that's what Rob McCune did to find six billion ounces of gold. That's what Caterpillar Tractor is doing and the new generations of tractors and that's what Netflix is doing in order to now race to become the largest movie studio in the world.

Jim James (39:16)
Verne, what a fascinating set of insights that you've brought as always, I expect nothing less. You know, it always brings such new perspectives talking to you because you've taken it up another level and you've managed to bring both this biodiversity element and then map it into what companies need to do and entrepreneurs need to do to stay relevant and to survive. Our role is going to be quite different, isn't it, as entrepreneurs

as really as you say, understanding collective intelligence, understanding where things are going and be a facilitator, not necessarily a dictator anymore.

Verne HARNISH (39:55)
Jim, I love that, facilitator instead of dictator is precisely the translation of what it is that we're doing. And again, I want to remind the listeners here, the real guru here is Tamsin Woolley Barker in her book, Teeming. And I really encourage you to take a look at that book.

Jim James (40:14)
We'll put a link to Tamsin's book in the show notes. Verne, you have a new book out. Do you want to just give a shout out to that and then let people know how they can get hold of you?

Verne HARNISH (40:25)
Good. Well, we've the original book is called Scaling Up. And so you can just go to scalingup.com. My email is verne@scalingupcom. We try to make it really easy for people to remember. And the new book is Start to Scale. So a easier starter book than scaling up is really the graduate course. The undergrad you need for the rest of your employees is this book came out October 8th, Start to Scale.

Jim James (40:52)
Start to scale. You've sort of given us the postgraduate first. I had the scaling up book first of all and now start to scale sounds like where I need to go back to as I start to build a different business with this unnoticed entrepreneur.

Verne HARNISH (40:57)
Yeah. Yeah.

Yeah, you got it.

Good. And by the way, one of the things that drives me crazy, Jim, I don't know if you're a golfer or a tennis player, but yeah. So how often do you have to review the fundamentals as a tennis player? Like every stroke, every, and same with golf. Yet in our world, people say,

Jim James (41:13)
Tennis used to be, yeah.

Every stroke, yeah.

Verne HARNISH (41:27)
I read that book ten years ago as if you mastered it with one reading I'm I'm going through Elon Musk's Musk's book the one that Walter Isaacson wrote for a fourth time I mean there's such wisdom in a guy that has done what he's done with SpaceX and Tesla and the rest I'm going through Walter Isaacson's book on Steve Jobs for a second time and picking up so many ideas that I missed

the first time. I'd rather, you know, your listeners pick a handful of books and continue to review those like the grip you do on a golf or your grip on a tennis racket and swing. It's the fundamentals that we've got to continue to review.

Jim James (42:13)
And Verne, it's interesting to say that because the other thing is, of course, when we read a book at a different time in our own lives, we've got a different perspective because our own experiences have changed as well, right? So when we read a book 20 years ago, when I read your book, first of all, I was in a very different place, both physically and logistically to reading it today with today's experience and so on.

Verne HARNISH (42:37)
Well, it's that idea that you can't cross the same river twice. You know, it's and by the way, that was one of the big changes I made from the old additions to the new. We had this old analogy coming back to nature. We'll finish up with maybe this. You know, it was this idea that we're going to plant a flag on Everest, the big hairy audacious goal, and we're going to crawl our way up that mountain. We're going to take that hill, which is a very militaristic kind of idea.

And then I came to realize, which way does nature move? She's not trying to move up that mountain. She's moving down. And by the way, which way has civilization moved? There's nobody that lives up there. We all live along the coast where the water has ended, not where it began. And so I literally in these books took that old climbing a mountain and put a big stop sign through it

and said that analogy is dead. That was last century. What we have to do is really flow more naturally, get in the flow like a river would make its way from Everest to the ocean. And so again, nature, I think, has pointed a much smarter way for us to go up the hill or flow down. Down's easy.

Jim James (43:58)
Yeah. Yeah. And I think, Verne, as we all get sort of longer in life too, we realize that some of those slightly more burdensome going against gravity experiences, they're kind of counterproductive and actually getting closer to nature and closer to the things that matter. As you say, you know, the P &L, the new, you know, peace and love on the balance sheet actually becomes the real wealth, doesn't it? That the other things are kind of transient and the cost of them actually can outweigh

Verne HARNISH (44:08)
Yes.

You got it.

is not.

Jim James (44:27)
what we thought was the benefit of them. So, and one of the benefits of long relationships is it's wonderful to be able to have you again in conversation. Verne Harnish, a pleasure. Thank you for accepting my invitation to come on the show.

Verne HARNISH (44:29)
for sure.

And Jim, thank you for taking our conversation this direction. It was unexpected, but a lot of fun.

Jim James (44:49)
Good, yeah, I know I kind of trapped you on the let's talk about your book. And then I was looking about what Verne's doing with Geoverse, and it's like, no one's really talked about that part of Verne. And yet it's such a valuable part of who you are, but also a valuable part of what we need to talk about in the world as well. And that you're leading that conversation as you have with entrepreneurship. But now marrying some of the merits of entrepreneurship with nature seems like

what we all need to be thinking about now is we need to heal and to grow to the next level. So Verne, thank you for accepting my invitation and yeah, and following me on this conversation as well, I was really delighted you wanted to that. So thank you.

Verne HARNISH (45:27)
Jim, thank you for your maturity and insight to take it this way.

Jim James (45:32)
It's absolutely my pleasure. Well, for everyone who's been listening, Verne Harnish is a legend in his own lifetime and you can find his details, just get in. But of course, I'll put his links in the show notes. If you've enjoyed this show, please do leave a review and share it with a fellow UnNoticed Entrepreneur and do check out geoversity.org. It looks amazing and it looks also like the kind of inspiration that we all need going forward. So thank you so much for joining me, Jim James.

Verne HARNISH (45:41)
Yeah.

Jim James (46:01)
And until we meet again, just encourage you to keep on