The success of a business largely depends on its ability to execute its strategies and operations efficiently. A business operating system (BOS) is a set of processes, tools, and methodologies that help organizations optimize their operations and achieve their goals. In this article, we will explore the benefits of having a BOS and whether your company should have one.
What is a Business Operating System?
A BOS is a set of processes and tools that help businesses manage and optimize their operations. It provides a structured approach to managing workflows, communication, decision-making, and performance measurement. A BOS helps businesses standardize their operations and create a unified approach to achieving their goals. It typically includes components such as strategic planning, process mapping, performance measurement, and team communication.
Benefits of Having a BOS
- Standardization: A BOS helps businesses standardize their operations, which leads to increased efficiency and consistency. By having a standardized approach to managing workflows, businesses can ensure that their operations are consistent and optimized for maximum efficiency.
- Improved Communication: A BOS provides a structured approach to team communication. By having a centralized platform for communication, businesses can ensure that all team members are aligned and working towards the same goals.
- Better Decision-Making: A BOS provides a framework for decision-making, which helps businesses make informed and data-driven decisions. By having access to accurate and timely data, businesses can make decisions based on facts and insights, rather than intuition or guesswork.
- Increased Accountability: A BOS provides a system for performance measurement, which helps businesses hold team members accountable for their actions and results. By setting clear expectations and providing regular feedback, businesses can ensure that all team members are aligned and working towards the same goals.
- Scalability: A BOS provides a framework for managing growth and scalability. By having a standardized approach to managing operations, businesses can scale their operations without sacrificing efficiency or consistency.
Should Your Company Have a BOS?
Whether your company should have a BOS depends on several factors, including the size and complexity of your organization, the nature of your operations, and your strategic goals. However, in general, a BOS can benefit any organization that wants to optimize its operations and achieve its goals more efficiently.
If your company is experiencing challenges with managing workflows, communication, decision-making, or performance measurement, a BOS can help you address these challenges and achieve better results. A BOS provides a structured approach to managing operations, which can lead to increased efficiency, consistency, and alignment.
A business operating system can help businesses optimize their operations, improve communication, and achieve their goals more efficiently. Whether your company should have a BOS depends on several factors, but in general, a BOS can benefit any organization that wants to optimize its operations and achieve better results. By having a structured approach to managing workflows, communication, decision-making, and performance measurement, businesses can achieve increased efficiency, consistency, and alignment.
In this video, you will get answers to these questions:
- What Is a Business Operating System?
- What Are Popular Business Operating Systems?
- What is EOS?
- What is Traction: Get A Grip On Your Business?
- What is Scaling Up? What is Mastering the Rockefeller Habits, by Verne Harnish?
- What are Objectives and Key Results (OKRs)?
- What is E-Myth by Michael E. Gerber?
- What is 4 Disciplines of Execution by Sean Covey?
- What Is In a Business Operating System?
- Is A Business Operating System Essentially SOPs?
- What Size Company Should Have a Business Operating System?
- Will a Business Operating System Work For All Business Types?
- Can You Implement a Business Operating System on Your Own?
- Should You Implement A Business Operating System on Your Own?
- How Hard Is It to Implement a Business Operating System on Your Own?
- What Is the Best Process to Implement a Business Operating System on Your Own?
- How Do You Stay on Track?
- Who Can Help Your Business Implement an Operating System?
- How Much Does a Traction EOS Implementer Cost?
- Do I Mentor Companies Using Traction EOS Or Other Operating Systems?
- What Are the First Steps? (Learn, Hire, or Implement 1 Concept)
- How Can a Business Operating System Avoid Legal Problems?
- Where Can You Learn More?
Should your company have a business operating system? You will get the answer to that question today. You will also get the answer to a number of related questions like: What is a business operating system? What are popular business operating systems? What is in a business operating system? What size company should have a business operating system? Will a business operating system work for all types? Can you implement a business operating system on your own? Should you implement a business operating system on your own? How hard is it to implement a business operating system on your own? What is the best process to implement a business operating system? How do you stay on track? Who can help your business implement a business operating system? How much does a Traction EOS implementation cost? Do I mentor companies who are trying to implement Traction EOS or another operating system? What are the first steps to implementing an operating system? How can a business operating system avoid legal problems, and where can you learn more?
I am Aaron Hall, an attorney for business owners and entrepreneurial companies. If you are a business owner, I create these videos to give you educational information to discuss with your attorney or your other professional advisors, so you can spot issues and grow a great company. If you don’t yet have my free cheat sheet, “Seven Common Legal Mistakes Made by New Businesses,” you can download it at aaronhall.com/free/. If you don’t have it yet, go ahead and just get that at aaronhall.com/free/. You sign up; we will email you that PDF right away.
What Is a Business Operating System?
A business operating system is essentially an accountability system so that what you plan to do has a process. Breaking that down into steps has a process, making sure people know what they are supposed to be doing and have an accountability system for them and a feedback loop to you so that you, as the business owner, know that things are getting done, and you see what that progress is. You will also know if there are problems and what needs to be addressed.
So, a business operating system is essentially having a system in place to operate your organization. It is a written step-by-step process so that you achieve the goals that you, as the visionary, have laid out for your business. We will get into a little more detail in a moment.
What Are Popular Business Operating Systems?
But first, you are probably wondering, What are popular business operating systems? Well, the one that opened my eyes to this whole world was EOS, which stands for the Entrepreneurial Operating System. I learned about it from a book called, Traction: Get A Grip On Your Business by Gino Wickman. And many people consider Traction to be the Bible of entrepreneurial or business operating systems.
EOS Worldwide is the owner of the EOS trademark, which stands for Entrepreneurial Operating System. Traction: Get A Grip On Your Business is, in my mind, one of the best operating systems for small companies. But let’s talk about some of the others. There is Scaling Up by Verne Harnish. Another book of his is Mastering the Rockefeller Habits, which has a very similar operating system presented in a different way with some different terminology, but again, very similar to Traction or EOS by Gino Wickman.
Another popular operating system is OKR or Objectives and Key Results. Another popular one, E-Myth by Michael Gerber. E-Myth is a book, or a series of books, that talks about the importance of thinking about your business as a system or even as a franchise that can be separated from you as the owner. It was one of the first books that I am aware of that helped business owners think about their company as an operation separate from themselves. So think about if you run a bakery. Well, you may be the baker, and the person meeting with customers, and the person who runs the cash register. But in order for a bakery to truly have value that is separate from its owner, you need to think of it as a separate operation. The different people that go in those seats, and the process for hiring those folks, training them in, holding them accountable, and then tying that into your financial system. So, E-Myth really started a movement of thinking about your business in the form of processes. Or at least that is the first book that I saw that encouraged business owners to transition from operating in the day-to-day of their business to thinking of their business as an operating system. Verne Harish basically said to think of your business as something that can be repeated with a different operator, a person different from yourself. So, get everything in your head into writing.
Personally, what I did not love about E-Myth is that I felt like it left the reader saying, “I love this. I want to do this, but not exactly knowing how.” And that is where Traction: Get A Grip On Your Business came in. That is a book that gives you the nuts and bolts of how to do it. Another great book that talks about an operating system is, Four Disciplines of Execution by Sean Covey. However, I don’t think it is as comprehensive of a system. It really is just focusing on a couple of key components, just like OKRs or Objectives and Key Results. So again, I highly recommend Traction: Get A Grip On Your Business, which talks about how to implement the entrepreneurial operating system discussed by author Gino Wickman.
What Is In a Business Operating System?
All right, so what is in a business operating system? If you Google “Traction EOS pie chart,” you will see some of the subjects I am going to talk about today. Basically, the entrepreneurial operating system has six pieces of a pie. The first one is the people section, which is broken down into two parts. You need to identify the right people. So the people who have the qualifications and the core values that you have also look at the world with the same respect and life goals. They have those core values, that lifestyle philosophy. And then the second part of having the right people is making sure they are in the right seats. So, making sure they have the qualifications for the specific duties that they are doing. And how do you do that? That is broken down in the book, Traction: Get A Grip On Your Business.
The second of the six pieces in the pie chart is vision. There are eight questions to figure out what is your vision for the business. And how do you make sure that it is shared by all the people in the company so they all have that same vision on where they are going? There is an old saying from the Bible, “Without a vision, the people perish.” And without a vision in the company that is shared by everyone, the company will go in different directions, or the people in it will, and it will struggle, and it won’t have the same Traction.
The next, or third, category is data. Make sure that you as an owner have a feedback loop between what is happening, you know about it, know what the results are, and you are able to measure it, and this is the second part of this—whether the data aligns with your expectations. And if it doesn’t, what is happening? Do you need to change something, change the system, etc?
So, have that feedback loop. And then Traction talks about how to set that up with routine meetings in management where you have certain information presented to management on an ongoing basis, so you can make sure you are getting Traction in the company. Processes: make sure that all your important processes are documented and followed by everyone. That is the fourth category. Fifth, issues: make sure that if there are any issues or problems in the business, they are getting on a list and they are being dealt with. The Traction process is called IDS: Identify, Discuss, Solve. And then the sixth category in the EOS system is Traction; make sure that you have established quarterly goals which Traction calls rocks, but quarterly goals towards your one-year goals, two-year goals, and ten-year goals. So, you have broken those big goals down into quarterly goals or rocks, and then you have a regular routine, or pulse, in meetings to review those with the company. So, that is what is in a business operating system like EOS, discussed in the book, Traction by Gino Wickman.
Is a Business Operating System Essentially SOPs?
All right, is a business operating system essentially SOPs or Standard Operating Procedures? I think you could definitely characterize it that way. But there is a little bit of a different emphasis. Standard operating procedures are typically a list of procedures in a company that people reference from time to time. Whereas, an operating system is the full pulse of the company. It is the marching orders of the company. For example, the leadership team is reviewing, on a weekly basis, issues: how are we progressing towards our goals and talking through those important key parts of the business? So, yes, it is a standard operating procedure, but it also is so much more than that.
Will a Business Operating System Work For All Business Types?
I believe that there are going to be some business types that have some limitations. I think all businesses can benefit from most with an operating system like EOS, but not every business. For example, it is my understanding that law firms can struggle with implementing an operating system. And here is why: Often law firms are not run generally like a single business. It is actually a different business for each of the partners who are rainmakers. You may have them all under the same brand, but you are essentially having small businesses with a partner where each partner has their own values, their own goals, their own procedures, and they might even have their own team. And so when you have that, you can actually implement a business operating system in each of those mini-businesses. But you may have great trouble implementing an operating system for the entire firm. Real estate agents, I understand, are similar to this.
You might have a large real estate organization, but they don’t necessarily have the same values, the same operating procedures, or the same way of bringing in clients. And so sure, at the large organization or umbrella organization level, you might be able to implement 80% of a business operating system, but often not a hundred percent. Why? Because ownership and power and leverage are divested from a central operating hub or management to the individual real estate agents who are actually running their own small businesses.
So, in my opinion, it is still worth trying to implement. But understand that certain things, certain parts of an operating system, might just not be possible in an organization where you actually have many businesses. So that is going to be law firms with partners running their own practice areas; it is going to be large organizations that have multiple departments that are somewhat disconnected from each other. And here is what I mean: I am not talking about accounting and marketing, I am talking about an entire business division that has its own customers, its own products or services, and its own marketing plan, which may be very different from a different division. That is where an operating system like Traction EOS may struggle, at least if you are trying to implement it company-wide.
What Size Company Should Have a Business Operating System?
Generally, my rule of thumb is once there are more than eight employees, that is typically when you need to start having documents for your procedures. And by the time the business gets to eight employees or more, the business owner starts becoming a little further removed from the front lines of the business, because now the responsibility has been delegated to those eight employees. And the business owner is relying on the employees to report back regarding what is happening on the front lines of the business. That is where a business operating system can be very helpful, specifically because it provides a feedback loop for information to get back to the business owner. It also allows the business owner’s vision, plans, training, and proven processes to be pushed to the front lines to ensure that the business owner is not too disconnected, and the employees are not too disconnected from the business owner. Certainly, by 15 or 20 employees, you need to have some operating system in place.
Can You Implement a Business Operating System on Your Own?
You certainly can. It just will take a longer period of time. I tried to implement it on my own in a law firm we were operating, and it just took a lot longer. It probably took a couple of years to mostly implement EOS in our law firm.
Should You Implement A Business Operating System on Your Own?
Should you implement an operating system on your own? Well, I think that depends on whether you can have more time or more money to allocate to something like this, and how much that will pay back. For example, let’s say it costs you $40,000 to hire an implementer to come in, so that is a consultant who would come in and work on your business. Do you have $40,000? And if you invest that $40,000 and you start getting more Traction on your goals by the end of the year, will you make substantially more than $40,000? If so, I think that is a good justification to hire an implementer to work on this as soon as possible. An operating system will help you get Traction and grow much quicker. And I say grow, but I mean in the direction you want to grow. Maybe that is profits, maybe it is the number of employees, or maybe it is the number of offices. Maybe it is the influence or reach with your customers. Whatever goals that you set out, an operating system will help you get there quicker. But it is tough to implement because it is a lot of new procedures and new learning with some bumps and mistakes along the way.
An implementer can help you in significant ways because the implementer can focus on running the systems and running the meetings. For example, facilitating those meetings while you, as the owner, work on your part as the owner casting the vision, talking about the methodologies that work, and talking about the ideas that work. It is hard for you as an owner to learn a new operating system, try to implement or facilitate that, train the team on that, and then also do your part as the owner of casting the vision and talking about the other processes and goals, etc. I tried to do it, and we had an implementer come in a couple of times. They are expensive, and so it is difficult to know whether to justify that. And I really think it depends on the size of your company and whether you have the money for it. So, my rule of thumb is if you can generate substantially more than $40,000 to $50,000 in profits in a year by having an implementer, I would say that could be a very good option for you.
How Hard Is It to Implement a Business Operating System on Your Own?
The concepts are not hard, but it is simply hard to be the one facilitating a new system, which is what an operating system is, while also fulfilling your role as the owner, answering all of the questions, and filling in the system with the substance that is unique to your business.
What Is the Best Process to Implement a Business Operating System on Your Own?
I would start with a few, like one or two, I should say, exercises. Get those running well, and then expand to the next one. So, don’t try to take it all on at once because it is just simply too many processes to figure out. Do one, master it for a month or two, and then move on to the next one. And that is what we did. Actually, we tried to implement it all at once, and it was very frustrating and wasn’t working. But when we implemented one exercise, or one discipline, or one process at a time, that is when we started getting Traction. It took a couple of years to self-implement. Whereas, if we had an implementer, we probably would have been fully implemented in six months to a year.
How Do You Stay on Track?
Well, the best-operating systems have a process, so you keep revisiting them. Are you staying on track? For example, in EOS, you have weekly meetings where you are reviewing your one-year goals, your quarterly goals, any issues, any data, metrics, or scorecard that you have developed to know how you are doing on leading indicators and lagging indicators. Let me pause for a moment and explain what that means. In EOS, each week, you are going to look at your scorecard. This is a scorecard you have created. It might have lagging indicators about the success of your business.
So an example of this would be profits. How much profit or money have we brought into the bank? That is a lagging indicator because the signal is delayed from the time you did the action. All right, so what is a leading indicator? Well, a leading indicator is something that you are able to see very quickly on how you are doing, and it leads to money, or profits, or the actual goals that you are trying to achieve. For example, if you have a social media channel, you might look at how many videos are getting produced each week. They might not even have been published, but they are produced. That is a leading indicator because it shows if you are on track to actually get the interaction with customers or clients through social media later. So, first leading indicator, how many videos did you produce this week? The second one might be how many were edited or how many were published. The third might be how many views you had. And so, whether something is a leading or lagging indicator is not as big a deal. What is important is that you are not just looking at data that has come in at the end of the line, but rather, you are looking at what are the things we need to do now. Maybe it is sales calls, for example, that will eventually result in achieving our goals. So, how do you stay on track? It is by reviewing your scorecard, your metrics, and dealing with any issues that may come up on an ongoing or routine basis.
Who Can Help Your Business Implement an Operating System?
Well, if you want to do something like EOS, you go to EOS Worldwide, and you can find trained and certified EOS implementers. These are people who have paid to have access to the training. They have gone to some training, and they usually have access then to ongoing videos and support. It is kind of showing that they are committed to this methodology and understand it well. Usually, implementers will provide a free meeting because they believe in giving first. It allows you to essentially sample their expertise and their personality, and so I usually recommend you find two or three implementers and meet with them to really figure out who is the right fit for you and your company. And you will find that there are many different styles of implementers, just like there are many styles of attorneys, business owners, or salespeople.
How Much Does a Traction EOS Implementer Cost?
Usually, it is about $6,000 per day. Some are a few thousand more, some might be a couple thousand less. And generally, you are paying for them on a monthly or quarterly basis. So, having them come once a month or once a quarter is fairly common.
Do I Mentor Companies Using Traction EOS Or Other Operating Systems?
You might be wondering, do I mentor companies who are implementing EOS or another operating system? No, I stick to my lane, which is legal. Helping business owners avoid legal trouble for their business and set themselves up for legal success. There are other people who are experts in business operating systems, and they are going to be the best ones to serve you.
What Are the First Steps? (Learn, Hire, or Implement 1 Concept)
All right, what are the first steps? Well, I would recommend getting Traction: Get A Grip On Your Business by Gino Wickman. In my opinion, that one is the best. And just start working through it and start trying to implement one or two of the concepts in it. And then, at some point, you may say it is time to bring on a professional to help us implement that. But in the beginning, get the book, and learn about it. It is an easy read. I remember sitting on the floor in a hallway in a church, reading the book, Traction: Get A Grip On Your Business, as one of my daughters was in some sort of dance class through community ed. So, it is an easy read. You can find those, steal those little moments, and it is a game changer. It really is an operating system that takes you from having to figure out everything about business to finally taking the best practices that successful companies use. By the way, I have never encountered a successful company that is not on some sort of operating system. It might be a homegrown operating system, or it might be something they have developed themselves, but often it was refined over many years. And you don’t need to wait many years to figure this out on your own. Now you have books like Traction: Get A Grip On Your Business
How can a business operating system avoid legal problems? The significant problems that can destroy a company through lawsuits or other legal risks can often be mitigated by a solid checklist. This allows you to revisit how are we doing in different categories and do we have any risk or exposure in those categories. If you don’t yet have the free cheat sheet that I give out, “The Seven Common Legal Mistakes Made by Businesses,” make sure you get that, at least. That is at aaronhall.com/free. And I use this YouTube channel to talk about a lot of the mistakes and pitfalls, and problems that have destroyed businesses so you can learn from those lessons and avoid them yourself. So you are welcome to subscribe to this channel if you want to learn more about legal problems that can be avoided with a solid business operating system. And at some point in the future, I anticipate I will probably provide some sort of additional training with my entire checklist that I go through with my clients. That is a checklist to preemptively avoid problems and avoid the risks that can destroy business. If you want to learn more about that, I will provide a link down below.
Where Can You Learn More?
All right. Where can you learn more? Well, in the description box below, you will see some links to additional resources. If you find those helpful and you would like other videos like this, you are welcome to subscribe here. You are welcome to give it a thumbs up or a thumbs down, depending on whether this was helpful to you.
Again, I am not a master at business operating systems. But, I do always recommend that my business owner clients implement an operating system. And if you are not sure which one, go with something like Traction: Get A Grip On Your Business. That is one of the easiest ones to implement early on, and there is a lot of support from other businesses throughout the country. In Minnesota alone, there are at least a thousand businesses; I am guessing maybe even 10,000 that are using the EOS operating system discussed in Traction: Get A Grip On Your Business. All right, thank you for watching today, and I look forward to seeing you on the next video.