Why You Should Run Your Business on EOS (Or Not)

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week Shawn busy Paul DS and Laura Xander call on their own experiences to assess whether the EOS operating system as explained in Gino wiman's book traction lives up to its promise of freeing owners from frustration helping them put the right people on the right seats and generating all the scale they want Laura hired an implementor to install EOS in her business years ago Paul took more of a do-it-yourself approach picking and choosing from the book's suggestions and while Shawn hasn't tried EOS in his own business he has seen how it works in lots of his clients businesses as a result all three have strong opinions about what types of owners and what types of businesses are likely to do best with the OS Laura Fair example tells us I think it's helpful for people like me 10 years ago who just don't know what they're doing even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations will let owners know they are not alone in facing challenges in fact that's the whole idea behind the 21 hats Community engaging with other owners to get the kinds of insights only another entrepreneur can offer if you're interested in learning more step one is to sign up for a free trial of the Morning Report which highlights the most important news of the day for business owners so you don't have to go looking for it step two is to get on our slack Channel where you can ask questions get vendor recommendations and tap the wisdom of a very impressive impressive crowd just search the 21 hats Morning Report to subscribe joining me this week on the podcast our regulars Sean busy CEO of Kinesis which is based in Portland Oregon and works with small businesses on marketing culture and strategy Paul Downs CEO of Paul Downs cabinet makers which is based outside of Philadelphia and makes custom conference tables and Laura Xander who is CEO of Jimmy beans wool a digital yarn store based in Ino Nevada and mine TSH a yarn manufacturer and distributor based in Fort Worth Texas the episode is titled why you should run your business on EOS or not before we get started we've scheduled the third in our series of entrepreneurial fishbowls for Wednesday September 25th at 1 eastern time as you may recall in a fishbowl Chris Hutchinson of trebuchet group leads a business owner who is confronting a specific challenge through a brain storming process then we publish the conversation as a podcast if you're interested I'd love to have you join the brainstorm and help out a fellow entrepreneur in this case it's Bailey walram who is trying to decide whether to buy the family business from her parents just reply to any 21 hats morning report and I'll send you more info and now on to the show Welcome Sean Paul and Laura it's great to have you here I want to talk today about something that comes up a lot in my conversations with business owners but that we've never really addressed on the podcast which is eos the entrepreneurial operating system as you three all know it is in fact an operating system for businesses you can read about it in the book traction by Gino Wickman a lot of owners swear by it for those who are not familiar here's what Wickman promises the in the intro to his book what if I told you that by reading this book and applying its core principles you could eliminate all of your business related frustrations that you could have great employees at all levels who share your vision communicate with each other solve their own problems and demonstrate accountability that your organization could not only run seamlessly but also have the potential to scale up as large as you see fit that sounds pretty good all three of you have some experience with EOS and I'm eager to hear what it's been like for you Laura I I know you hired an implementor to help you get set up could you start by telling us what what drove you to give it a shot desperation I mean just pure like yeah just flailing um it was God eight years ago I think as when I hired an impl I had read the book really great resonated a ton and we had gone through a shift we had a general manager that we had let go and so I had this leadership team I'm going to put that in I've got air quotes going on um we had a leadership team and I was just I needed help to try to figure out how do I make this work you know with this team so until seven years ago we really had never hired anybody from the outside at an upper level so everybody was promoted from within everybody started either working in the retail store or pole packing ship you know shipping orders or in customer service and then they would you know we'd give them more resp responsibility and they'd work their way up into marketing or um you know management and I never I still don't I don't have the skills to train or coach a manager um and so I've got all these people in management positions that don't really know what they're doing and I can't really help them um and so we brought this guy in and thought you know let's give this a shot you know maybe if we have a system that'll solve all the issues which it did not how' It Go um you know I learned a lot um I still have the books uh and all the binders and all the information and you know we don't use the system on a daily basis the way that we did in the very beginning but the biggest lesson that I learned was that it doesn't matter how good of a system you have if you don't have the right people and then if you have the right people you don't need a system because the right people just kind kind of make it work at least in my case that's what I learned I learned a ton of really good lessons though about and they gave they had some really good tools you know in terms of they have what they call the the VTO which is the vision traction organizer in other words here's where we want to be you know let's all sit down once a year talk about where we want to be in three years talk about what we need to do in the next year to get to where we want to be in 3 years and then let's break it down by quarter so those kinds of tools we still use and we're extremely extremely helpful absolutely worth it but you know this system is not a Panacea I mean if you don't have the right people you don't it doesn't matter it doesn't matter how good your freaking system is do you remember what it cost to hire an implementor and yeah a lot I mean it was like a lot a lot I maybe we spent 30 or 40,000 bucks like during the year that sounds about right yeah that's about right from what I've heard yeah they have a funny priceing model where they'll like charge per meeting it's like a $6,000 meeting although that may have changed since you've done it but yeah that that's in line with what I've heard too yeah I mean I could go back and look at my books and see but I I mean I just I remember it was you know the equivalent of hiring at the time anyway you know a full-time person um yeah so I mean it was a great it was a good experience I'm glad we did it I mean we learned a lot as I say it was cheaper than a Harvard Business Class so and I probably learned just as much would you consider trying it again or or what are you thinking about in terms of your we now have the right people and so that again that was the lesson is it doesn't matter how good I mean we can systematize we can have these you know weekly meetings monthly meetings you know all these check-ins have everything written out and da d d d and do all this stuff but if you don't have the right people in the right seats it just I mean it's exhausting so now we have the right people in the right seats and I'll give credit I mean a lot of that and that that's their terminology as well I think is rate people wrate seats I learned a lot you know I learned a lot about you know get it want it capacity like you know I learned a lot about trying to find the right people and realizing that again you just have to have people in there that are driven and that get it and that want it and that have the capacity to like do the work that you need them to do um and then these tools are secondary as opposed to you know if we're really struggling bringing these tools in to solve the problems well I have a question one of the one of the premises of the book is that you have a process to identify the right people and it's kind of implied I can't remember I've read it years ago that getting the right people is just part of the thing so did it help you to think about whether you had the right people and and did it initiate a process by which you replace the wrong people with the right people it's a great question um I think based on where I was in our business and you know just in my career if you will it did but it took a very long time um I kept beating my head against the wall thinking that maybe these are the right people I'm trying to use this system and I'm the wrong person you know so figuring out if somebody is the right person or not was hard you know especially when you have people that are tenured employees they know your business really really well I'm not a strong manager either so it's really hard for me to judge somebody else's you know it was I mean I've gotten better at it but it's hard for me to judge somebody else's management abilities so the answer is yes it did but it took a long time like years years it wasn't the quick fix that I had been hoping for you know not for 40,000 bucks well or that the book Promises right I mean that that intro paragraph Was I I had forgotten about it it's just like wow if only running a business were that easy yes yeah yeah I'm kind of curious um so if I think about like Sean eight years ago and you think about yourself eight years ago I was a pretty different person and different level of understanding of what it takes to run a business and I'm curious if you can you feel like you can give a fair assessment of the person that you partnered with to um kind of lead you through the process and and how skilled do you think that person was um the guy that we had I think was actually really skilled um I think he was a go-getter he was an entrepreneur you know he got it um he asked really good questions so yeah I mean I've seen some other ones that you know it's a little bit like you know a life coach um that uh maybe just drank the Kool-Aid but didn't really have the skills or didn't couldn't relate you know didn't understand and he actually is the one who would say I mean I'd call and I'm just like what the you know what the hell like I'm trying I'm using I'm doing this I'm doing this I'm doing this and it's still not working and he's like you don't have the right person MH you know you don't have the right person and that's what I needed I needed somebody to say objectively it doesn't matter if you use the system or not if you don't have the right people how far into it did he tell you that kind of like Cold Truth um you know it took a while probably six or nine months but I think part of that was because he needed to understand you know and get to know our business right yeah it makes a lot of sense yeah and yeah it's a tough thing too to come in from the outside and like know when can you tell an owner hey you got to get rid of this person versus you tell some owners that and then they end up firing you because it's very hard as a outside consultant to know where the politics are um oh interesting yeah okay I I've seen that you know many times um with uh prospects where it's really clear that they have some problems usually on the leadership team is where I see it because that's who I'm interfacing with and there's you know underqualified folks on the leadership team and you it's really difficult to be able to go in and say to the owner you know this person is holding you back and you've got to get rid of them um without building a lot of trust so that that takes time yeah you yeah yeah yeah interesting I mean for me it was it's a little bit the opposite I mean I remember when I was working with Cliff Lauren and he would say this person is not the right person I'm like great done you know I don't have the self-confidence or the experience or whatever it is to know if I if they really are the right person or not I needed that outside person to you're not crazy like you're beating your head against the wall for a reason it's cuz blah blah blah but yeah I mean I can see that yeah I get that Paul if I'm not mistaken you kind of DIY a version of EOS uh what got you uh interested in doing that well I had seen one of the members of my vistage group be extremely successful with it as a matter of fact the guy who I think is the smartest one in the whole group and that's that's saying a lot implemented it pretty much by the book and he just had a great business which he recently sold for 25 million bucks and it was a company that does uh valuations of small businesses for SBA lenders and he grew it from I don't know two or three people all the way up to 20 some but what always caught me were were his margins he was taking home 25% of the gross which is astonishing do you think that was because of EOS that he had that kind of margin this guy would succeed no matter what but what's interesting is that he felt that it was helpful and so if you see someone who's really smart and has a has a lot of experience in running different businesses and he came from a background his family is from India and they immigrated to the United States and sort of the classic immigrant story and apparently in each generation the older ones would get together and figure out which of the nieces and nephews and grandkids was going to be capable of running a business and they got him started very early I think he was running uh like a some Wing Stop franchise or something at age 17 and then they bought him a couple of liquor stores and he ran these things and uh and it taught him a lot and then he started his own business and at the end of all that experience and help he's like I need EOS and then he got it and it worked out very well for him so you don't ignore that when you see it happening now when I read the book what I what I felt was that uh first of all I I gave my people the little quiz they have at the beginning and it's it's like I don't know 20 questions or whatever um and it gives you a score that's supposed to I believe demonstrate what a what a screw-up you are but it turns out that we were actually scoring in the you're doing great range so it's like okay um and I just didn't feel all that compelled to to then follow this book and you know do every single thing in it because apparently I was already doing a lot of the stuff in it and the one thing that I have never that I identified as a weakness then and still have a weakness now is laying out something like a five or 10e vision for the company because I'm not sure particularly back then exactly what it was going to be and I'm still a little uncomfortable projecting that I would rather have people focused on the nearer ter cuz honestly 10 years from now I better not be in this business and I don't think that's a big motivator for your team honestly like hey hey I'm planning to cash out and go smoke cigars on the beach and you people can stay here and keep working I don't know why that would motivate anybody so that's the one thing that I've really left out of it but read the book I think it's got a lot of valuable ideas in it and uh we have naturally over the years years had a lot of turnover from the team that I had at the time I read the book so I've kind of Incorporated those ideas of what a good employee looks like for a growing company when I try to hire is there anything in particular that you took from that experience that is still working for you well I think that that having the right people is is is critical and I have a pretty good idea of what kind of people that I want to hire and one of the things things that they talk about in the book is that the people who are with you at the beginning are unlikely to be suited to a bigger company and I think that that's absolutely true that at the beginning you don't know how to hire you just grab everybody who's who's happens to be around and often the kind of people who want to take a chance on a very small company have their reasons for it and that may not be something that translates into a bigger company but I think the one of the weaknesses of the book is like so much advice it's aiming at a type of company and a type of growth and a size of company that's just way Beyond where I'm ever going to get like I got 28 people right now so going from 12 people to 28 is a pretty big change but it's not the same as going from 12 to 200 and when you try to write a book and sell as many copies as you can it's not like the EOS for going from 12 to 20 people they're just trying to call it the EOS that fits all sizes and so some of that advice I think is harder to implement at certain places where a business may be because it's more generic and it's more talking about somewhat larger organizations Sean have you ever thought about implementing uh EOS yeah so um I have had a lot of experiences with EOS either through clients or friends I've probably seen it various versions of it done I don't know maybe a dozen times or so the other way I relate to it is is eos is actually a you might call it like a stepchild of the Rockefeller habits book by Vern Harish um so I got exposed to that through the entrepreneurs organization when I was in their accelerator program and I um implemented a lot of what Vern had to say the stuff around uh Mission and purpose and values we had done a lot of that already but um a lot of it got a lot more focused when we started working on that and I found you know having a system that we were were operating on was a pretty effective way to help uh scale the company uh but I guess also I think Paul's touching on some of my experience too is that it is a bit of a one-size uh fits all and um what I've observed from those who've done it is it's a it's it's truly an operating system it's not a strategic system um it's not a marketing system it's not a business model system so if you're going to it looking for those types of solutions it's not really a good fit for that um so if you have a business with a clearly defined customer it's scalable um the market wants what you're selling like your like Paul's friend it can be really good for that because you're you're really looking to implify the thing that's already working well Sean could you define that sure explain what it does in terms of an operating system the thing you say that it's it's best debt right what does it give a business it's giving you a a rhythm and a way of working that is designed around repeatability measurement and growth it's really about amplifying the things that work more ideally more effectively now I I have a lot of I have a lot of complaints about how it goes about doing that um I think it's pretty simplistic in a lot of ways but generally it's it's about amplifying known things so if you know what you need to do and you know that you know what type of people are there to do it it's really oriented for that um and so businesses that are built like that say like manufacturing you know where you're making the same thing over and over again it can be a good system for that um because then you can really start to identify you know where your strengths and weak weaknesses are within the system because it's really designed to help you pinpoint where the problems are and to resolve those problems Paul did you find it helpful with that uh no because I was I was already kind of doing it well and actually Paul's not a manufacturer people people call Paul a manufacturer and that's not correct Paul's a value shop Paul Paul builds custom solutions for Unique clients and there are consistencies like Paul has to sand the wood and Paul to take raw material and pl it down but he's not making the same thing over and over again so but he he's a custom manufacturer well no no the the the distinction that Sean's making is pretty good because we're very very different from a factory and actually my buddy who had the SBA lending uh program was much more like a factory because every valuation sort of had came in from the same place came from a bank in the form of some packet of information the same things needed to be done to it and the output was always the same so there were variations in what each company looked like but they developed a method that could be uh executed by people with a certain amount of training but they didn't have to be Geniuses and that's one of the reasons why the business was so successful and so profitable they figured out how to do one thing over and over and over again and they put all the customization not in the hands of the people doing the work but in the hands of the customers I had him evaluate my business because I wanted reasons anyway reasons I like that yeah and and so I went through the process and what it was is the I got a questionnaire which is clearly the same questionnaire they gave everybody now I had to do a bunch of work to answer it but I was transforming my own information experience whatever into their format so that by the time their analysts got to uh producing the valuation it was pretty much boilerplate yeah yeah I think that when you were describing your your friend Paul I was like oh EOS is perfect for that type of business I I I knew a guy who ran one of those businesses and and anytime you have a business that's really systems and process oriented where you know kind of the inputs and the outputs are really similar that's where the system like EOS can work pretty well for you um but if you think about the stuff Paul does the customer is highly variable the end product varies a lot sure it sits on the floor in a room but but that's about it you know sometimes and yeah so maybe right yeah so and similar to my clients you know every client I have is different every solution they need is different and so I think if if anybody's listening to this and they're trying to decide is eos right for me I would say that the further you are on the Spectrum towards consistent outputs inputs process then it will probably help you improve some of those things and become more efficient and more profitable and more scalable if you're on the other end of the spectrum I tend to believe that EOS is probably not the best answer for that you know folks will argue with me on it but but I I kind of put EOS in the same book as the emyth as you know really oriented around process and systems will solve your life and you know I think businesses are more complex than these books make them out to be and so that's where I have a little bit of a hangup with them I've had clients that have done it and honestly clients that have gone through EOS and or have DIY EOS those are my favorite ones because the DIY guys like Paul they know what to pick out of it that's helpful and then they ditch the stuff that's not I think it's helpful Sean for people like me um 10 years ago who just don't know what the they're doing you know and so just to have some sort of starting point some you know it's like a getting a really cool planner you know so just even having like you know it's like going to school and you get this binder with here's how you can do X Y and Z and you start with doing it all and then over you know after some time you let go of the things that aren't serving you and that just don't make sense because your business is too fluid or you know it's too custom or whatever it is but I mean it was really help if you just don't really even know where to start and there were so many books out there like that I mean I remember I remember searching you know just like God how this thing is out of control you know I don't know how to handle this which um I think the irony and we haven't talked about this yet is that part of EOS is about the distinction between the Visionary and the integrator right so you've got this Visionary who usually starts the business you know they're the wacky one that's thinking up all these crazy ideas and are optimistic and blah blah blah and the Visionary me is the one who is searching and trying to figure out how do I Wrangle this business that I've created you know and Wrangle all these people and put something kind of into place but I'm not the right the Visionary is not the right person to put the system into place you know you that's the whole point is that you need an integrator you need somebody who is really good AT Systems you know and really good at being consistent and following through and you know for somebody I'm going to throw Jay out there like somebody like Jay or somebody like me we're not good at that that's not you know I mean EOS was really fun for two months but now let me go find another book and another system and I'm going to try that one out and then I'm going to try something else out and um so learning I think you know another thing that was very valuable was having that mirror um and having these definitions of these two types of people you know and understanding that hey it's it's just it's not my role it's not my genetic code it's not my temperament like I'm not an integrator I'm not the person that's going to manage the day-to-day and the details and I'm not the one who is going to make sure that our meeting format is the same every week like I mean it sounds silly but like that's a real struggle for me cuz I get bored I'm like we're using the same freaking meeting format like every week oh my God why don't we mix it up a little let's move this one up and this one down and and that's that's not helpful actually I think if if you don't if you are starting a business and you really haven't had much help from outside that distinction between the integrator and the Visionary is one of the best things in the book yeah because totally it's it's so true that you need both of them now after reading the book what I thought was I can do both of those and I can and I I think that what's unusual about me is that I'm I'm very good at integrating like I'm very detail oriented could do all that stuff but I'm also capable of getting up there and giving a great speech and get everybody rahah it's just an unusual skill set and okay I'm bragging but whatever that's that's what I can do I'm tall too nothing's going to change so just what I can do and so I didn't feel the need to really implement the book because it kind of implies that you're likely to be one or the other which in my experience is true most leaders are one or the other and if you're missing the ability to do whatever you can't you know whichever one of those you're not it is very difficult to get a company to grow so that's something that's worth looking at and Laura is admitting she's not an integrator you know great now you know that and and uh so I think that that's that's worth looking at it's funny for us um what I didn't realize so my husband Doug and I have worked together I mean we met at work we've always worked together even when we worked at different companies we would do projects on the side and you know we just make a really good team and then we had a kid and once we had the kid then all of a sudden we couldn't work you know 24 hours a day seven days a week the way that we did before so we had to kind of you know split up a little bit and that's when the hit the fan is I didn't I didn't realize it but he was my integrator he's the adult in the room you know it's kind of what we say he was my integrator and so together it worked really really well and all of the sudden you know he's kind of out of the picture some or more so and it took me years to find a replacement you know to find a different Doug and once I did that was the missing piece you know um but it was nice to be able to put kind of words to it and to be like oh this is why you know I mean that's even a relationship at home you know I'm the dreamer and he's the one who actually does as the adulting Laura if I have my timeline right it sounds like you went through this uh EOS process before you bought your manufacturing business am I right about that correct yes correct we went through this in about 2016 it was 2016 do you think it would have been more helpful uh if you had had the manufacturing business at the time do you think about trying to implement it there now that you do have it no no um why not I think a little to Sean's point you know the manufacturing business that we bought already had its own systems in place in general and the workforce is not an EOS Workforce you know we're not it's you know it's not this is really geared towards like academic college educated you know like my team down there would just laugh and they're like what a waste of time you know like you guys why are we spending all the I mean they hate meetings they're like why are we spending all this time in meetings we want to work we want to get stuff done I mean the helpful part is you know the one-year strategy or here's what our goals are like here's what we're pushing towards here's what we think we want to be in three years you know that stuff was helpful but no um not at all Laura I'm kind of curious um do you see yourself as a manufacturer or do you see how do you think about yourself like Paul clearly is like I'm not a manufacturer I I know I'm not I'm just sort of curious how you see yourself do you see yourself as a creative company do you see yourself as a problem solving company um that's a great question uh well now where we're at now with all of the companies that we have purchased um we are now a retail company we're an e-commerce company we are a Distribution Company and some of the products that we distribute not all of them but some of the products we distribute we also manufacture so so you're like vertically integrated we are um yep yeah so you're more like an apple without most of the zeros yeah yeah guess part of the reason I asked this is that um you know if you think about a company like apple they have manufacturing right which really benefits from you know all of Tim Cook's genius operations and all that but there also they're an innovation company too right exactly they're constantly innovating constantly innovating and this is where I think EOS is really um not it's not its strength has been my observation that it if you're a company that really Prides itself on creativity and Innovation and I mean you talk about you know educated employees so but I just sort of think of it as like do you have employees who really have a lot of agency and autonomy yes and if so I I find that some of the ways that EOS talks about employees is a little simplistic y there you go that's a great way to describe it yeah yeah my my team would go full Revolt if I tried to do any yeah it's a little bureaucratic you know I mean it's very slow moving um in some ways it feels a little cumbersome you know it feels like you're handcuffed a little bit but we're also talking about if you were to implement this in 100% the way that they talk about it and I doubt that was his goal I mean he's probably like here's all the things you could do we recognize that if you can if 50% of this stuff sticks and makes sense for your business then you're ahead of where you were yeah oh that's true most business books yeah yeah exactly one sentence out of it you're doing pretty well yeah the other thing about the book is that it was written in a pre pre preo time so some of the techniques probably don't translate as well to a remote Workforce MH and I know for a fact that a lot of them don't translate to a blue collar Workforce so um why is that Paul well just like Laura said a lot of blue collar workers do not particularly care to be confronted by some high futin theories about what they you know what work should mean to them um I my my theory based on my Workforce which is still pretty pretty uh select group of workers from the blue collar pool is that you should just be able to go home at the at the end of the day and forget about your work and enjoy yourself and and there's sort of a you need to be this kind of person vibe to the book that I think would be taken as an insult to a lot of people because they judge themselves by their ability to do work not think about work 100% it's a little elitist it's a little elitist and which is not surprising because it's aimed at the boss and let's face it most bosses are more educated blah blah blah but I just think that the basic idea of an operating system is valid but you realize that you really have you you have to temperate for what you're actually doing and who you are and who you work with and one other thing which is kind of implied in the book and I've I've heard stated more explicitly is when they talk about having the right people you know like if they're not exactly as you wish them to be just get rid of and that's that's a an attitude towards human beings that I find very offensive and i' I've heard vistage speakers who took it to the to the logical extreme of if your people aren't A+ players just fire them you know like to hell with them and I just you know like how many A+ players are there particularly wandering around trying to make conference tables zero so you have to make do with people as they are and and that often means being willing to accommodate a little more in terms of individual personalities variations backgrounds what have you then these books would have you do they think okay there's always someone better out there let's just go find them and it's similar in a way to watching my kids uh try to find dates on on tindersex not that great it's like that's not how it works you just have someone you you know like I met my wife in college and we just make it work like you you you have to take you have to be willing to ride the rough patches and and and that's how you actually I think get the most out of a Workforce or you're most likely to get the most out of the workforce because it's most likely that you're going to have a group of people that each has something great and something bad about them so learning how to do that as opposed to leaning on a system that just tells you to weed everybody out I mean if you were really honest with yourself you'd probably be sitting at home and alone because nobody's perfect so true so why would you do really nice yeah this is really one of my big big problems with it is it's abdicating leadership for um a checkbox right it's saying do they do this do they do this this if no fire and and I really believe like great leadership is the ability to cultivate and grow people and develop them and I've seen it I've seen it in action and part of the reason I I promoted you know somebody on my team to the president role is like I watched her work and I was like Jesus she's a really good leader she was able to do things with employees that I was never able to do and a system would have told me to just fire those people and I it's just watching that in action and and understanding like how constrained we are in terms of available Workforce this is another piece is like you know it was written before the pandemic it was a also written you know before this you know kind of great resignation and you know shortage of Labor and I I think it's really out of touch when it comes to that um so I I'm I'm with Paul on that 100% so just to tie this up if someone listening to this is wondering whether EOS might be right for them is there one question or two questions you would suggest they ask themselves to determine if they should give this a shot well I'll jump in like if you're starting from nothing any system is helpful exactly yep yep same page sure if you've already been through five systems don't do it because when you go to explain this to your people they're just going to roll their eyes like sh flavor of the month now we can ignore this too but I think that there's always value in filling in blank spots in your knowledge and when I joined vistage like after being in business for almost quarter Century I had like no knowledge about anything I didn't know anything so any kind of theory is useful in that in that situation 100% And if you've started a business and you're you're struggling and you've never had Management training and blah blah blah blah you like go sure read it it can't hurt you if nothing else you'll learn about the two things leadership needs to do leadership needs to be Visionary and Leadership needs to understand how to actually execute and if it's can't happen in one PE person it has to happen in two people or more but that that's a really valuable idea and then the other thing is confronting the idea that some of your people may not be suitable for whatever next phase you're about to enter is also a valuable idea so those two things I think are worth it and if you if you got nothing and you want something at the end of the day it's not a bad program yeah I think there was like you were saying with the people part of it it gave me some acronyms you know that I could fall back on that are still embedded in my brain you know that the gwc get it want it capacity and so as I'm thinking about you know is this person the right person are they in the right seat blah blah blah I can just immediately say okay wait do they get it like are they intellectually you know do they get it do they do they want it do they have the drive and then you know do they have the bandwidth and the capacity to take something on and that really helps me like all these little teeny there a lot of little tools like that um that help me kind of as I'm going going through the process of figuring out are people in the right spot are they the right person but they're not in the right spot and that's where we especially when you have a promote from within culture you know you end up with a lot of people that are the right people that are in the wrong seat you know you try them in this seat then you try them in that seat and then you try them over there and so this has helped I think almost contrary to a little bit contrary to what Shawn was saying in terms of just fire them this has helped me actually not fire people as quickly because I'm like okay wait a minute are they a culture fit like do they you know are do they want it um then we just need to find the right spot for them and what does that look like and what does that process look like yeah I think what what you you both said is is really good insights for somebody trying to evaluate this and I think the simplest thing for me is to just ask yourself the question is what is the problem I'm trying to solve and if the problem I'm trying to solve is one of scale and operational excellence um I think EOS can be a pretty good system for that if the problem is strategy if the problem is product Market fit problem is marketing if the problem is uh culture I actually don't think it actually has a great answer for culture agreed I know I know people will disagree with me on this one but I think if there are any of those like complex um you know almost like intellectual challenges that you know there's not a simple switch for I think think there are better answers out there at least that's been my observation with with clients that we work with well and I like the idea um it's if you need structure like for me part of what I was looking for was structure so if you're in this spot where you're the Visionary and perhaps you don't have great structure and management skills then this is a crutch that you can use until you get that integrator into place because and what has happened with us is that's exactly what we did I mean because I don't have those integration skills um or the desire to do that I needed to use this until I found somebody that had skills and then that's when we kind of let some of this EOS stuff go um as far as like being strict about it because this integrator I brought in she has her own way of doing things so I'm not going to force this system on her you know just because that's what I read about and cuz that's what I like no I want her to be able to do her thing and do it her way Sean like you had said though you know the person that that you've got that's just a rock star but it gave us a springboard you know and it you know for some reason she leaves or takes off or whatever then I probably will fall back on this a little bit more because I just I need to you know or just hire another one like this is the thing you know the concept that sounds easy the the integrator idea I've actually I named it something different a long time ago I just called it the lieutenant a really strong second who is operationally focused who can like crazy is Paul's spot on it is probably 5% of entrepreneurs that are like Paul where they can like their brain is weird enough that it can do both um and it's probably 95% who actually need a strong number two and that's a powerful combination um and it has been my experience that when you get that strong number two you want to give them agency so that they can build their systems as opposed to imposing exactly a system on um but you know everybody has a different flavor and some people love that stuff and that's cool too yeah well and it also depends on size I mean you know when we were smaller I could be the number one and the number two I mean we couldn't afford to have a second person you know or as I'm like for me in our growth path um as I take on new businesses or take on new projects I am the number one and the number two for a little while you know as I dig into it as I figure out what's going on CU then I can figure out who's going to be the the one to come over and like help with stuff so if you only have three people I wouldn't freaking bother I don't know what do you what do you all think in terms of what's the right size to where one could both afford it and realize the value of it that's a great question uh I mean it depends on on a lot more than just like size and people size and revenues I would say size and profitability if you have enough money that you can swing 40 Grand and go for it and uh my buddy who implemented it his company was the same size as mine but he was making 10 times the profits and SE I know you're saying I'm not a manufacturer but I I do have some aspects of manufacturing like I got to buy materials machines do stuff like that cost a lot of money so he didn't have any of that all he had to do was run an office space and hire some some interns and often running so he was able to generate huge grossy margins and and so it was worth it to him cuz when he started off doing it he was running himself ragged he had the integrator his buddy would work with him in multiple companies and so he was able to get the company up and running and then really concentrate on growing the market and becoming a thought leader in the industry and and start a bunch of other stuff and so that worked out great for him and we both started at the same Revenue point about 4 million but I was never going to spend 40 Grand on that even though when you think about it 40,000 I mean what's that a used Toyota it's it's that's a lot no but if you can't see how spending some money would improve your life sometimes you just got to spend the money yeah you do but there's opportunity cost like in some of the businesses that we've taken on I have watched small businesses over engineer um and spend too much money on stuff that is negatively impacting their bottom line and they're not getting the value out of it I mean if you're going to spend 40 Grand you better get something out of it you know it better allow you to scale I mean I I think 40 Grand is a is a pretty pretty cheap investment um for you know even if even if all the 40 Grand did was made sure your leadership team had a functional meeting rhythms and was looking at the right kpis that's worth way more than 40 Grand well you can get that for for $100 by buying five copies of the book giving it to yeah but you know sometimes you do need that outside person you know like some groups need that help uh and I I've seen this over and over again like I've seen businesses where they're just spinning and spinning and spinning and you can tell them what to do but until there's somebody in the room facilitating and pointing and holding people accountable they struggle and sometimes that's what that that's what the tax is because they're not weird like you Paul I mean I mean that in a good way let me ask a related question uh along those lines what size do you think a business should be before the Visionary entrepreneur decides to hire the integrator as a number two I would say anything past about 15 employees because that's when it becomes a little too much for one person to handle and do anything else does that sound right Sean Laura I mean I got lucky in that my lieutenant she joined us as employee like number five or six and but not as an not as number two no no although I did H the title I gave her and she hated it and I don't blame her was execution team leader like like I was like she say it sounds like I'm killing people and I'm like well I want you to kill the projects and make them happen yeah so she she was quote unquote billable right she was not purely overhead in terms of um a cost structure and so I sort of split her time between doing client work and also so you know implementing Moving Systems forward within the company and and so I think that was super advant I mean that's when we were growing 340% a year and we crossed you know the million dollar threshold and then the $2 million that combo was super powerful and we DIY uh basically Rockefeller habits which is like I said is is a slightly different version of traction and so we could not have afforded another per another 40,000 for an outside person but hiring that person before 15 definitely um but but you just have to have them do other things it can't just be 100% operations the model doesn't support it financially all right this was great my thanks to Shan busy Paul DS and Laura Xander have a great week everyone one thing before you go everything we do at 21 hats is created by entrepreneurs for entrepreneurs to help us all learn together if you get get something out of listening to these podcast episodes consider joining the conversation you can do so by joining the 21 hats sounding board a slack Channel where you can tap the wisdom of a very smart crowd or by becoming a founding member and joining our monthly Zoom Forum where you can be part of conversations much like the ones we have on the podcast you can sign up for both by subscribing to the morning report if you have any questions you can email me at Lauren ln21 hats.com and if you get some out of this podcast or out of the morning report please tell a friend tell an enemy tell every business owner you know your word of mouth owner to owner will always be the most effective way to build this community for all of us thank you it means a lot this episode was produced by another entrepreneur Jess staron founder of blank word Productions thanks for listening everyone [Music]