If you’ve ever wondered the right steps to go through to self implement the Entrepreneurial Operating System (EOS) this video is for you. I talk to EOS Implementer and SAAS entrepreneur Jeff Schafer. By the end of this video, you’ll know the exact steps to get moving. We cover how to get the process moving with the essentials, and when to take the next step to start building out your quarterly operating rhythms.

Full transcript below

How to Get Started with EOS

Scott Levy:

So, we're talking about how companies can get started and feel comfortable that they're truly running the foundational tools of EOS and they're doing enough to be able to say, "Yeah, we run on EOS." Where does someone actually start? To double-click on that more, do they need to go fill in the vision component first? What I see a lot of people do is say, "Let's start running Level 10™s," and they'll kind of go from Level 10™ to defining some rocks, and then they'll go think about vision. Is there an order of operations you think you really ought to go through? Should they be following the focus days and vision-building days? Should they be following that cadence of, we're gonna do these steps, no matter what?

Jeff Schafer:

I would work on setting rocks, the scorecard and the Level 10™ meeting pulse. Do those for at least a couple months before you start building your plan, your V/TO™. It's very hard for a lot of analytical folks to start without a plan; how do we know how we're going to execute if we don't have a plan?

That's part of the unique genius of the process. Everybody will agree to go along and answer the questions in the VTO if you bring them all in a room and say, let's answer these questions. But if you actually work together, fight together, IDS and solve issues together, or maybe even get a coach to call you out on things, if you work together for a few months, a couple months, and then start asking those questions, you're gonna get better answers. You're gonna get better alignment, because ultimately, EOS helps you focus so that you don't have to spend energy doing everything. The very best answers are focused and get everybody aligned 100% on where you're going and how you're going to get there. You're going to go further, faster, with less energy. But if you just get everybody in a room and say we've got four hours, 90 minutes, eight hours - doesn't matter how much time - we've got this much time to answer those questions. Go! … without that experience and background of fighting together, you are not going to answer those questions. Or, it'll be all one person's answers, which means not everybody's bought in, which means you're only working on one cylinder.

Scott Levy:

So the themes I'm hearing there are, you have to get that visibility in place. What are our priorities? What are our issues? Then, get that rhythm in place of meeting on a regular basis, every week running a Level 10™, and asking, how are we performing on these? That starts to surface more of the issues and create more clarity because you're in there, in the trenches, feeling the different pains. Then, that helps feed your overall vision and planning.

Jeff Schafer:

It feeds that massively. Imagine you set your core values in a new company, and people are saying that it’s hard to find new people. With EOS, you hire and fire based on those core values. That’s a big commitment. So, you’re going to just one day decide with some people who you’ve never done this with before: can we just set our core values in such a way that tomorrow, we will fire based on it or hire based on it? You better have some background work.

The background work is issue-solving together, and following a process, a system, believing in it, and maybe experiencing some wins and losses together. You go through that journey together, and now you’re in a better position to say things like, I don’t know if that’s a core value, maybe it’s more like this. That’s where the real work gets done. That’s where the real foundation for staying focused is set.

Scott Levy:

I really like that because it puts you right into, "Let's get these rhythms moving." That helps you identify who’s committed. That’s going to help you see where the friction points are versus just trying to remember and look back. You’re actually experiencing it, and you can observe as you go through it. That sounds like a great approach.

How to Set Rocks

Scott Levy:

The two items I took down there are going ahead and setting the rocks, and then the issue-solving track. Those are two areas I hear a lot of questions about. How do you go about setting those rocks? You’re not doing the one-year goals yet if I hear you correctly?

Jeff Schafer:

In part of the EOS proven process, we set rocks before we even set our annual goal. Our annual plan is one of the question in the V/TO™. Don’t even ask that question until you’ve done a bit of work together. You come together and basically ask: what are all the things we need to do in the next 90 days? Everybody answers, and they’ll give you many answers. The most important things are usually numerous, but then we ask the big question: for the entire company, what are the three to seven most important things? There may be things that this department needs to do, that individual needs to do, but what must the company achieve, do or die? Revenue marks or whatever it needs to do. We discuss and debate - some of my clients call it aggressive fellowship - we do that until we get it down to three to seven. Sometimes, we look at that list and it’s hard, because you just want it all. Sometimes, you can combine things and that turns into a discussion. Sometimes, I just ask them, where do your eyes go? What’s something you can’t let go of because it has to be done?

In this discussion, we find a lot of the things there can wait. As painful as it is, we can’t do this in the next 90 days. What I’m describing is really awkward for people, it’s uncomfortable. But it’s growth. It’s growth in them going from being reactive to whatever is happening to them, to being able to predict what will happen next. When I ask you what the most important thing is, I’m really asking about the next 90 days - where do you want to be? They know they want everything, but they’re only going to be able to handle a few things. Which few things must we have?

Scott Levy:

I like that because it forces commitment. This is ongoing- it’s not like you set these and everything just goes fine. There's a continual temptation to add: “We need to work on more!” I know our team feels it, I know pretty much every CEO or leader I’ve worked with at least feels the temptation. They get different levels of skill holding themselves back from that. Any advice? You stick with the rocks, you run them for a couple months, but is it that you need to run these for 90 days?

Jeff Schafer:

In the first go, you shoot for 90. In our process, it can be between 60 and 90, typically 60 or 75 in the actual proven process of EOS. In the first round you realize, hey, maybe I should have built goals that were a 90-day objective that was a little more concise or SMART. You learn things every cycle, but you don’t change or edit the rock in the period you work on it. You can work on large objectives, you can get ready for the next quarter, but you really wanna force the ability to predict what those objectives are and get that practice of, every 90 days, predicting the next 90 days. It takes a few cycles to get it right.

Scott Levy:

100%. We see that with any framework, it's just that frequently, the frameworks and operating systems don't always build that learning curve in. I really like that idea of, let's be intentional about this. Let's get the first ones under our belt. The second of the things that came up is the issue-solving track. That's another area where I see people – I won't say stumble, but I feel like frequently, it takes time to develop a crisp practice there. What are the things people need to know about that issue-solving track and how to use it effectively in a Level 10™?

Jeff Schafer:

I want to give you some tips on the issue-solving track, but I want to go back, if I can, to answer your question about rocks. I want to tell you about getting that list down, and prioritizing. One of the things that we learn with the leadership team is that there are folks on the team who have different ways of solving problems. There are the integrators, who are really good at having tough conversations. They orchestrate the major functions of the organization. There are the visionaries who drive culture and are really good with the big relationships. What I challenge the self-implementer with is asking: which one are you? Which way does the rest of your team go? When you know, you can get in to people’s problems and their instinctual solving strengths. I’ve got my Colby score behind me which tells me a little bit about that.

But even if you were just looking at visionary and integrator - the visionary, when they’re looking at that list of 30 things that we have to get down to three to seven, the question they need to keep asking is, what’s great for the better, bigger picture? What’s for the greater food of the organization? What must we do in the next 90 days? When you ask a visionary that question, the list will get smaller, because visionaries are really good at answering that question when they’re asked to focus. They’re good at that bigger picture. The integrator, however, you have to ask them the question: if we don’t get this down in size, are we ever going to get off this topic? The integrator wants the ships to arrive and things to be done on time. You have to ask them that question. They’re often just as guilty of adding all those things. You’ve got to say to them, hey, we need to simplify and decide. If we don’t decide, this whole thing won’t move ahead. Can you please prioritize in order for us to decide on the highest priorities? When you frame the language like that, for the visionary and integrator respectively as I mentioned, it helps them get that list down.

There are other things you can do. I’m just putting that out there because I really think the way you described a self-implementing company, maybe they have the funds, but I don’t want them to get stuck there and say, let’s do nine goals. If I was coaching them, I wouldn't die on that hill. If you say nine, I’ll be like, let’s watch and see what happens. If they got 80% of them done or better, if they got all of them done, those are pretty weak.

Visionaries vs. Integrators

Scott Levy:

That call to action to the visionary and integrator to decide immediately gives the team a way to push back constructively. They aren’t calling them out, they’re just saying this is what we need from you, which is what great teams do. If you’re on the basketball court or anywhere else, the level of communication is high, crisp, and concise. I really like that call to action because it’s a way for the teams to lift their leaders up. We need this from you, and we need it now. Being able to say that can be very difficult for a lot of people, since that’s such a simple thing to say.

Jeff Schafer:

That’s why it’s good to know who’s who. If you know who the visionaries and integrators are, you can ask that question of them. You can say, hey, look, let’s simplify. You can say, hey, look, let's simplify. To simplify can sometimes be difficult for an integrator, but if you say, hey, can we please prioritize these tasks, that would simplify things. Can we decide?

An integrator can drive for a decision, they drive discipline and accountability, they naturally do it, but you can't ask the visionary to do that. Typically, that's harder for them to get into the conflict. It's not their natural state to get in the weeds even. They're looking at this list and they’re just like, what a mess. But if you say to them, what are we doing for the greater good of the organization? They’ll say, oh, well, it’s obvious! It’s those four things. Everybody’s like, thank you, all we saw was a list of 20 things!

Scott Levy:

It's great to hear that insight, because I can think of so many situations I've been in, even when I was coming up, where these would have been great tools to have.

Jeff Schafer:

If everybody's an integrator, you should talk to somebody. If your whole team is neither visionary nor integrator, you should talk to someone.

What to Know about Issue-Solving with EOS

Scott Levy:

What’s interesting is that, a team of all visionaries, the only way that works is if it’s almost purely sales. A team of all integrators I have seen, because I come from a technical and management consulting background. Those are armies of integrators. I would like to make sure we get this IDS and issue-solving track in the Level 10™. In the L10, you’re going to look at your scorecard, your Traction component, and then you’re going to drop down to the issues list, any things that aren’t on track. You’re going to look at any customer/people headlines, what got done since last week. Then, the bulk of the meeting is really solving issues together, which I love because a business that can solve issues and challenges is a healthy business indeed. Can you talk to us a little bit about what goes into that? What should folks self-implementing EOS know about that critical portion of the Level 10™.

Jeff Schafer:

Just like setting the setting rocks, this is something that takes practice. The issue-solving track and IDS is really about strengthening a muscle with your leadership team and then eventually the entire company. Getting everybody capable, knocking out their issues as quickly as they arise. But for you to do that, you have to get past the habits we learn out in the wild, like in how we all solve problems and create what I call a reactive atmosphere. The issues list is a very deliberate way to predict that we've actually solved an issue and that we're gonna solve it for good so we don't see it again.

When Geno Wickman built EOS, he pulled all the levers, he tried everything, he noticed that 5% of companies are not frustrated and the other 95% are. He just was obsessed with why these guys are frustrated. So I bring this up because solving issues is why they're frustrated. When the typical company solves issues, the issue comes back later. The same issue comes back and it just bothers them. It just gets them frustrated. They're like, you know, we can talk about this, but if we don't get past it, we're always going to be hitting the ceiling. So that's why they're frustrated. A lot of frustrations are solved by using this issue-solving track. Problem, and here's what you do to solve the issue and find new issues to solve.

We did a little study and we found that when you put leaders in a room, rarely do they identify the root cause of an issue. They discuss, discuss, discuss, discuss, discuss. They beat each other up. They tire each other out. And then rarely do they solve it. So they create this little negative feedback loop that says, "I'm not going to solve this and we can't solve this." They get all negative about solving a problem, they get into silos, they do all sorts of things. We don't need to list the behaviors that happen when people sort of resent talking about tough topics, right? It’s a human thing.

So that's why we built the issue solving track that starts with identifying what the root cause of that issue is. So what this means, and this is the part to answer your question, because it really built the idea and IDS is really where this all happens. Whatever you see on that issues list, you have to frame your mind, reframe your mind that that is not an issue. That is just a symptom. And that's the beginning of realizing that you need to get to the root of something in order to knock it out for good.

That's why a lot of issue discussions in a non-EOS company are circular and you end up seeing the same issue come up over and over again. You're not practiced and focused at getting to the root. So you're looking at that issue or that issue list item and you know that it's a symptom. So what you do is you dig dig dig to get to the root cause, meaning the group is challenging each other to describe the root of that issue. The first person says, “Hey, it's my issue. Here's what it looks like when it's solved." And the next person says, "Well, it could be because of this that we have this issue." Somebody else challenges it, takes it a little level deeper, says, "No, I think that's because of this. Well, maybe that's because of this.”

Once you get to that root, then discussion is brief. You just easily get to a solve, which is a to-do or a change in what you're doing, or maybe a message that needs to go out to everybody. That's IDS, identify, discuss, and solve. It really starts with a strong commitment by the team to get to the root. And that means that if you're not getting to the root, you're talking in circles. Somebody needs to say, we're not going deep enough. I've even heard of companies with Nerf guns. It's like, if you're tangenting and we're just talking about the surface or it's another perspective of the same problem, the Nerf gun goes off and somebody gets, somebody's gonna get shot. So you can do all sorts of things to train the team to get to the group. But that's doing the idea as well.

When Has an Issue Been Discussed Fully?

Scott Levy:

I like the Nerf gun. The other one I've seen used with great efficacy is squirt guns. Is it just up to the integrator to decide: have we discussed this fully?

Jeff Schafer:

It's totally up to the integrator. I would never put a clock in there. You could have a list of issues, and on any given day you decided to talk about the biggest, hardest issue, and you didn't even solve it, but you know you got to 80%. That was a great meeting. Everybody would say we went further on that than we ever have, and we're almost there. So it's not about the number of issues you solve or the time it takes to solve an issue. It's really about the quality and making sure that everybody's seeing that we're getting deeper to the solve.

That said, we have two types of issues - long term and short term. The short term issues are the ones we're going to talk about weekly. You have a fighting chance to solve those on any given week, or at least move the ball forward. Long term issues are ones that need to be solved over the course of a year or maybe a future year, but we're going to discuss those in a quarterly meeting. So if you've got an issue that you feel may never get resolved in the weekly meetings, put it on your long-term list and tackle it aggressively when you do your quarterly planning meetings.

Measurables Guidelines from an EOS Perspective

Scott Levy:

The other question I get a lot is about KPIs for our scorecard. What are the things we need to add to the scorecard? I know on the Vision Traction Organizer, we typically see revenue and profit metrics. Are there some standard KPIs from an EOS perspective that you should always have at the top of that list, or is it really dependent on the type of company and industry?

Jeff Schafer:

We live in an age of data, and there are many approaches to this. So you have to consider that if you're using these metrics to help you get results, you want to know what works right with EOS before you dismiss it or modify it. Because if you're not really doing EOS as intended, you won't get the same results that a properly run EOS company gets. And this is a common pitfall for folks - to invent their own thing, not get the results, and then say "I'm not getting results from EOS." But you really have to follow the system for a while to evaluate it fairly.

So I'll give you one key guideline - you really want your weekly measurables, we call them measurables and not KPIs. We want your weekly measurable to be an activity-based or a leading indicator type of measurement, not a lagging indicator. Those lagging metrics that take a lot of calculation or pre-work, those things are useful, but they are way more useful in a monthly or quarterly report. So when you look at and consider things, if the result could wait a few weeks or even a couple months to be seen, put that in your monthly/quarterly report. That's not necessarily meant for the EOS weekly scorecard.

What you want your weekly scorecard to be is five to fifteen numbers that give you a true pulse on the business. Tell you when things are off track, and when things are on track and working well. But these need to be the activities that you know, if done consistently, will lead to great monthly KPIs and quarterly results.

So if it's a sales number for example, if you're tracking revenue for the quarter and need $3 million, well what are the biggest leading activities that you know you must do every week to hit that revenue number? For some companies it might be follow-up emails sent, or calls made. I'm just using that as an example. If your quarterly revenue was off, and you looked back and realized "Well, we weren't making the calls. We didn't do the follow-ups" - then those should be the type of activites you track weekly, because those are leading indicators that predict your lagging revenue metric.

So in summary, you want 5-15 activity-based measurables, five to fifteen of them, as far as what exactly they should be? That's contextual to the organization. Different industries need different measurables. For some industries, what looks like a lagging indicator for one company is actually a leading indicator for another. There's no black and white rule on this. It depends. And this is why it can be helpful to have an experienced EOS coach to guide you initially.

But I will tell you one piece of advice from my experience - look at the three major functions of any healthy entrepreneurial organization: the sales and marketing function, the operations function, and the finance function. All three of those need to be strong. If one is weak, then issues will start cropping up in the business. What one company calls "operations" might be different from another company's definition. Sales and marketing roles can be structured differently. Finance could be completely different. But it doesn't matter what you call those three core disciplines - all thriving entrepreneurial companies have robust operations covering those three areas.

With that in mind, you know that you need measurables representing all three of those functions. If all your measurables are leaning heavily towards just one of those three areas, well then I'd ask - why are you allowing the other two areas to be weak or neglected? Your accountability chart, if built out properly, will highlight those three major functions. And if you have equal strength in those three functions, then you'll have the right balance on your scorecard, which translates to strength in your overall business.

Core Values from an EOS Perspective

Scott Levy:

I like that. Is there anything top of mind for you you wanna add?

Jeff Schafer:

We talked a little bit about core values, didn't we?

Scott Levy:

We said, you're not going to go hire and fire tomorrow based on core values written today. It's better to get in there, get your rocks set, get your weekly cadence moving with the Level 10s™, and then come back and think about core values.

Jeff Schafer:

Then build the ax, right? Don’t build the ax on the first day. The ax is a good thing. It cuts down trees to feed the stove. I wouldn’t look at core values as the ax. That’s a bad thing. I would use core values to, with calmness, hire and fire, and make sure that everything on that accountability chart and all those numbers coming in from the scorecard are accurate.

Those discussions you’re having in your IDS are valuable, so that people in the meeting are actually challenging each other to get to the root. You have to make sure you have people who match your values. If they don’t feel safe that they can do that because the core values aren’t aligned, you’re never gonna get anywhere. There

Scott Levy

Yeah, the thing I love about great actionable core values is you get that healthy tension.

People will push back on you and gain the courage to push back on their leader, their boss, and whomever, because they say, "Listen, if this is important to you, Then we need to do x.” I feel like that's almost the sign of a healthy team. If you're not getting that, it may be that everybody's not comfortable.

Jeff Schafer:

It's true. I used to have a core value of being a past athlete. If you've been an athlete, then you understand growth and you understand improvement and you know good pain and bad pain and you understand. It was just me trying to use what tools I had and what my background was. Then I realized it's deeper than that because I've got some people who are clearly non-athletes, but they're great. They belong here and they're great performers. So that exploration of why you would hire or fire and getting those core values, it's taken me decades to understand why it works or how it works.

But I will say when you figure that part out, all of this is so much more fun. So it's worth the work of doing your rocks and taking a couple hits, running those Level 10™ meetings, making sure they start on time, end on time, and they're at the same time of the week, every week, and that you run that agenda. Doing all that work really does pay off when you start asking those questions and executing. And that's what EOS is all about.