THE ENTREPRENEURIAL
OPERATING SYSTEM
STRENGTHENING THE SIX KEY COMPONENTS
Every great system is made up of a core group of basic components. The same applies to a business. The Entrepreneurial Operating System (EOS) identifies Six Key Components of any organization. In the words of an EOS client, “I used to worry about 100 different things. Once I learned there were six components to my business and I focused on only those, those 100 different things I’d been worrying about went away. EOS made running the business simpler.”
You’re probably worrying needlessly about a hundred different things yourself. Let’s try to remove you from some of those worries by taking a wide-angle view of your business and its components. Below are the Six Key Components of any organization.
VISION
Successful business owners not only have compelling visions for their organizations, but also know how to communicate those visions to the people around them. They get everyone in the organization seeing the same clear image of where the business is going and how it’s going to get there. It sounds easy, but it’s not.
Are your staff all rowing in the same direction? Chances are they’re not. Some are rowing to the right, some are rowing to the left, and some probably aren’t rowing at all. If you met individually with each of your employees and asked them what the company’s vision was, you’d likely get a range of different answers.
The more clearly everyone can see your vision, the likelier you are to achieve it. Focus everyone’s energy toward one thing and amazing results will follow. In his book Focus, Al Ries illustrates the point in this way: The sun provides the earth with billions of kilowatts of energy, yet if you stand in it for an hour, the worst you will get is a little sunburn. On the other hand, a few watts of energy focused in one direction is all a laser beam needs to cut through diamonds.
In the Vision Component chapter, you will use a tool called The Vision/Traction Organizer (V/TO) to focus your people on one target and become like that laser beam. The tool simplifies strategic planning by distilling your vision into simple points that allow you to clearly define who you are as an organization, where you’re going and how you’ll get there. It will help you define your sweet spot as an organization and keep you focused on the areas in which you excel most. It will also define your marketing strategy and crystallize your 10-year target, three-year picture, and one-year plan. In addition, you’ll learn to effectively convey your vision to your staff and ensure that it’s embraced by everyone.
PEOPLE
Successful leaders surround themselves with great people. You can’t build a great company without help. EOS cuts through buzzwords such as “A players,” “platinum,” “100 percenters,” and “superstars” to provide a practical understanding of the two essential ingredients of any great team: the right people in the right seats.
Be truly honest with yourself. Are all of your people the right ones for their jobs? The reality is that some are probably hurting your cause more than helping. The People Analyzer tool in Chapter 4 will help identify the right people by teaching you how to determine who shares your core values. It will also teach you to simplify how you hire, fire, review, reward, and recognize people in your organization.
This process will prompt you to step back and look at your overall structure. You’ll ask yourself hard questions about the way your business is organized. You’ll also learn the power of the Accountability Chart, as well as how to structure your company the right way while clearly defining the roles and responsibilities within your organization.
Once you have the right structure in place, you’ll be able to focus on putting the right people in the right seats. There will be no gray area when you incorporate the next tool, GWC, which addresses the three absolutes for any good hire. They must get it, want it, and have the capacity to do it. Once you incorporate GWC into The People Analyzer, you’ll have a working tool that determines which people are the right ones and which people are in the right seats.
DATA
The best leaders rely on a handful of metrics to help manage their businesses. The Data Component frees you from the quagmire of managing personalities, egos, subjective issues, emotions, and intangibles by teaching you which metrics to focus on.
My business mentor, Sam Cupp, owned several companies totaling over $300 million in sales, including QEK Global Solutions, a worldwide fleet management company that he built into a $100-million business and then sold. He is one of the best businessmen I’ve ever met. I was blessed to have him take me under his wing at a young age and teach me everything he knew. Of all of that wisdom, the most useful thing he taught me was the power of managing my business through a Scorecard.
A Scorecard is a weekly report containing five to 15 high-level numbers for the organization. In the Data Component chapter, you will learn to create and implement this powerful tool into your company. It will enable you to have a pulse of your business on a weekly basis, predict future developments, and quickly identify when things have fallen off the track. Because you’re regularly reviewing the numbers, you’ll be able to quickly spot and solve problems as they come up as opposed to reacting to bad numbers in a financial statement long after the fact.
A Scorecard allows you to monitor your business no matter where you are. You won’t have to suffer from the uneasy feeling of not quite knowing what’s going on in your business, nor will you have to waste time asking a half dozen people for the real story. The answers will be right at your fingertips.
In addition to learning to create and implement your Scorecard, you will take your data management to the next level by learning to empower each person in your organization. Everyone will have a clear, meaningful, and manageable number that he or she is accountable for on a regular basis.
ISSUES
Issues are the obstacles that must be faced to execute your vision. Just as an individual’s success is directly proportionate to his or her ability to solve any issues that arise, the same holds true for a company.
One helpful by-product of strengthening the first three EOS components is transparency. Execute them properly and you will have created an open organization where there is nowhere to hide. As a result, you will smoke out issues that have been holding you back.
The good news is that, in the history of business, there has only ever been a handful of different kinds of issues. The same ones come up over and over again. In time, you will become an expert at identifying them and knocking them down. To the degree you can identify them, discuss them honestly in a healthy environment, and learn to eradicate them, you will achieve your vision.
Regardless of how long you’ve been plagued by your problems, the Issues Component represents a huge opportunity. In the bustle of day-to-day operations, most companies don’t invest the time required to adequately solve their issues. The irony is that by taking the time to address a problem, you will save two to 10 times that amount of time in the future.
In the Issues Component chapter, you will learn how to use the Issues List at all levels in your organization, allowing you to compartmentalize and prioritize all issues. In addition, you’ll benefit by creating an open and honest culture where people feel safe to speak the truth and voice their concerns. You will then use the Issues Solving Track to eradicate these issues. This powerful tool is an efficient way to identify, discuss, and solve your organizational issues in a lasting and meaningful way.
By the end of the Issues Component chapter, you and your staff should understand how to identify various issues, create and manage an Issues List, and master the Issues Solving Track, taking you one step closer to building a problem-solving work environment.
PROCESS
Your processes are your Way of doing business. Successful organizations see their Way clearly and constantly refine it. Due to lack of knowledge, this secret ingredient in business is the most neglected of the Six Key Components. Most entrepreneurs don’t understand how powerful process can be, but when you apply it correctly, it works like magic, resulting in simplicity, scalability, efficiency, and profitability.
You will not get your company to the next level by keeping your processes in your head and winging it as you go. Ask yourself: Have you documented the way you want everything done in your organization? Do your people know what processes they are following and why? Are they all executing the required procedures uniformly? Are they skipping steps? By deciding what the process is and training everyone to follow it, you will enhance your troubleshooting abilities, reduce your errors, improve efficiency, and increase your bottom line.
In the Process Component chapter, we will identify, address, and document each of your core processes using the Three-Step Process Documenter. This tool will help you crystallize your business model by capturing the blueprint for the machine you aspire to build in a single document. From there, you will learn how to get your staff to understand the value of these processes and begin to follow them.
By the end of the journey, your processes will be clearly identified, documented, understood, and followed by everyone in your organization.
TRACTION
In the end, the most successful business leaders are the ones with traction. They execute well, and they know how to bring focus, accountability, and discipline to their organization.
Due to fear and lack of discipline, the Traction Component is typically most organizations’ weakest link. The inability to make a business vision a reality is epidemic. Consider it a new take on an old quote: Vision without traction is merely hallucination. All over the world, business consultants frequently conduct multiple-day strategic planning sessions and charge tens of thousands of dollars for teaching what is theoretically great material. The downside is that after making you feel warm and fuzzy about your direction, these same consultants rarely teach how to bring your vision down to the ground and make it work in the real world.
How would you rate the accountability throughout your organization on a scale of 1 to 10? Most new clients that start The EOS Process rate their accountability somewhere around 4. Gaining traction requires two disciplines. First, everyone in the organization should have Rocks, which are clear 90-day priorities designed to keep them focused on what is most important. The second discipline requires implementing what is called a Meeting Pulse at all levels in the organization, which will keep everyone focused, aligned, and in communication.
In the Traction Component chapter, you will first learn how to set Rocks so that everyone will know what they are accountable for in the coming 90 days. Next, you’ll learn how to implement a Meeting Pulse. While most people feel that meetings are a waste of time, they are necessary and useful tools. As part of the component, you’ll learn how to make meetings enjoyable, productive, and worthwhile. The Level 10 Meeting Agenda is a tool that will help you get to the core of what makes for great meetings, namely conflict and resolution.
By the end of Chapter 8, everyone in your organization should know how to establish and achieve their Rocks. They’ll also be engaging in effective, productive meetings using the tried and true Level 10 Meeting Agenda.
Now that we know what the Six Key Components are, we need to assess where your company is right now. The Organizational Checkup at the end of this chapter will tell you exactly where you are on this path. You can also fill out the questionnaire online at www.eosworldwide.com /checkup. Several of the terms won’t be clear to you yet, but in a short time you’ll know exactly what they mean. Fill out the questionnaire and use the attached key to get your results.
You’ll be coming back to this checkup on a routine basis. The goal is to make progress every 90 days. Each time you fill out the checkup, your overall percentage should increase. It’s unreasonable to think that you’ll jump from 20 percent to 80 percent overnight, but you will make steady progress.
In summary, successful businesses operate with a crystal clear vision that is shared by everyone. They have the right people in the right seats. They have a pulse on their operations by watching and managing a handful of numbers on a weekly basis. They identify and solve issues promptly in an open and honest environment. They document their processes and ensure that they are followed by everyone. They establish priorities for each employee and ensure that a high level of trust, communication, and accountability exists on each team.
The Six Key Components together make up The EOS Model. Most organizations operate below 50 percent. If they succeed, it’s in spite of themselves. Although it’s nearly impossible to reach 100 percent in every component, achieving over 80 percent will turn your company into a well-oiled machine. All the things you’ve been worrying about will simply fall into place, and the common frustrations that have been plaguing you will go away.
Now that the big picture is clear, let’s begin the journey. But before we dive headfirst into the nuts and bolts of the first component, you’ll have to free yourself from the bad habits and unhealthy practices that are holding you back. This is called letting go of the vine.
ORGANIZATIONAL CHECKUP
For each statement below, rank your business on a scale of 1 to 5 where 1 is weak and 5 is strong.
%.SCORING RESULTS
If your score falls between:
20 and 34% |
Please read on. This book will change your life. |
35 and 49% |
You are normal. But would you prefer normal or great? |
50 and 64% |
You are above average, but there is still room for improvement. |
65 and 79% |
You are well above average. |
80 and 100% |
This is where most EOS clients end up. |