EOS (The Entrepreneurial Operating System) is a hot topic for small business that want to grow or sell. If you’ve looked at implementing EOS, and you've wanted some extra help with the goal setting practice of defining "rocks" , this video is for you. In part 2 of our Deep Dive into EOS, I talk to EOS Implementer and SAAS entrepreneur Jeff Schafer. By the end of this video, you’ll know the story on rocks, how they get set, and how they work across the team.

Full transcript below

Understanding Company, Departmental, and Individual Rocks

Scott Levy:

Talking about rocks is the first thing on my mind today. I have been getting a lot of questions about the differences and the relationships between company rocks, departmental rocks. I've heard the word personal rocks. I'd love any light you can shed on the different flavors of rocks. 

Jeff Schafer:

Sure. Yeah. Thanks for having me back. I appreciate it, Scott. It's always fun talking to you. You ask the right questions. 

Scott Levy:

I appreciate it. We have great customers helping give us all those questions.

Jeff Schafer:

Sometimes they're called personal rocks, but they're really individual rocks is what we call them. Individual rocks are a lower priority rock. You decide upon your company first. 

Building and Prioritizing Rocks

Jeff Schafer:

So before we solve issues, we list all the issues, we stare at them, we look at our VTO and we decide, what are the three to seven most important things we need to solve?

So when you have three or four leaders or more sitting around, they all think different things are going to be the hero move for the quarter. Everybody thinks differently. And some of them just think it's just their department that's going to save the company, Oh, it's all sales or Oh, it's all finance or whatever it is.

Whether they agree or disagree, the whole point is getting it all out there, getting it all written on a board so that everybody sees where everybody else's priorities are, and then discussing and debating what the actual three to seven most important are. It's a really important step to put all those together so that folks can feel like they're on the same page and they can leave with the united front to the company and say, “Hey this is what we're doing this quarter.” So those three to seven rocks, once you've got them, you just have to make sure they're written as SMART goals. 

Make sure they're written SMART and then you commit to them. After that, then you build individual rocks. The ones that didn't make the cut, maybe some of the issues that are still left, maybe some of the things that now we look at the department level, and we say, as individuals, what are the three to seven that each person can take?

These are things that are best. When you've got a room full of equals, your leaders are equals, you let them suggest it to you. The thing that the other leaders do in the room is they all vote on it to say it's a good use of their time, and it's written SMART.

Because nobody wants to hear about your individual rock in every Level10 meeting, if it wasn't written SMART and you don't trust that it matters, or if it wasn't a good use of somebody's time. You read out your individual rocks and that's how you go from building company to individual rocks.

Now, when you go back to your team and you've got, let’s say, I run the digital operations department and I'm the leader and I've got one or two company rocks assigned to me and I've got a bunch of individual rocks. I go back to my team and say, look, here's what the company is doing.

You saw the company's state in the company address. And now as an individual, I've got my team of 12 people here. And we’ve got to figure out, how are we going to make this department get this department's rocks done and my stuff done and what else do we need to do?

Departmental Meetings and Rock Assignments

Jeff Schafer:

So departments end up having their own quarterly meeting where they build their own department level rocks. Department level rocks are what the folks in that department will have. They're similar and synonymous to the company rock, but in the department. Each individual, after deciding what the three to seven most important things for the department are, get those done then, or you write those down, then each individual in the department depending on the size and who's in the meeting, they'll have three to seven, sometimes it's a smaller number for Sometimes just one or two rocks, depending on the level and the company. But the idea is that eventually everyone has a rock. Everybody has a scorecard number, everybody has a rock. 

Scott Levy:

So the leadership team comes out and they've got some individual rocks. They then turn those into their departmental rocks? Or is it different? 

Jeff Schafer:

The department should meet and decide what the department rocks are. Let's say I run the digital department and I've got a head programmer, a UX person and a DevOps head and they've got three people under them each. So I'm meeting with my three leaders. They've got 1099s under them, you got W2s, you name it, they've got it.

And some departments are smaller than others. I meet with my three leaders and I say, Hey, so here's which way the company's going the next 90 days. What does this department need to do? How can we make this the best for our department now? There's things that the department will say that the company doesn't want to hear about, like we're moving over to JIRA from whatever. There's a discussion and debate and they decide on the most important thing this department must do in the next. And everybody else in the company may or may not care about that, but the department does, and everybody in that department does.

So the department has their own meeting to decide as a department, what do we need? And they list that. And then, for instance, the DevOps guys will say, ‘I have an individual rock to update environments and we need to build a policy manual around usage. And I need to write a document for project managers.’ So they understand what they're supposed to do and not supposed to do. Things like that. 

Scott Levy:

Okay. So they, what I'm hearing is, there are the rocks that individuals are going to get done to contribute. To those departmental rocks, it's hard to speculate what those rocks will be

Jeff Schafer:

What's important is the order that you ask the question of what the rocks are. What are the company rocks? What are the leadership team’s individual rocks? What are the department rocks? What are the individual rocks in the department? And if you have to go down another layer and you have different layers of management, you do the same thing. Do the same thing. 

The Role of the Integrator

Jeff Schafer:

This could mean there's a trickle down of lots of rocks, but there's always an integrator in the meeting, or a department lead, or an integrator at the leadership team, and they are the ones who are always asked for each individual - do they have too many rocks? Do they not have enough? What else, what other rock could they have? And the integrator really has the right sizes, the rocks for each individual, if you're doing it right. So you give them permission to do that. 

Scott Levy:

And so are you thinking in terms of an integrator per department, if it's a larger company? I mean like a de facto integrator. I know they're not the integrator, but they serve that role for their team.

Jeff Schafer:

From my perspective, I make sure that at the leadership level, that person exists. And then I let them figure out - based on the size and form and shape of their department - who's going to be the integrator of that department. You don't have to have a visionary/integrator for each department. But you do need ownership. So when they see how their visionary/integrator works together, they will figure it out from there. It doesn't have to be perfect. You just need to make sure that there is a leader who will make the call on things and there is somebody who runs the meeting. You have to make sure that somebody's recording to-do’s, so the person running the meeting doesn't have to write the to-do’s down. All these little things make it work better.

The Importance of Context and Experience

Jeff Schafer:

I wanted to tell you after I listened back to our last podcast I realized something. There's a lot about EOS that is not about just knowing all these tools. It's contextual to experience. So you can learn how to use these tools, but knowing how to use the tool is not going to matter as much as knowing when to use the tool and when not to, how deep to go and how deep not to go. And that takes practice. 

Scott Levy:

I like that. 

Jeff Schafer:

It's about practice and discipline. You have to stick with it. Now, when you have a coach, they'll help. They'll just make you go further, faster, because they see all these people and they know, Oh, you're this size. Oh, you have one of these types of dilemmas. Oh, it's a family business. Oh, I see. We need to talk about that. There's all these things that help when you have a coach. 

Scott Levy:

Yeah, it makes sense. 

Jeff Schafer:

You don't need a coach. You can do this all, but I'm just saying that I was somebody who had a coach and then I did it on my own and I was like, I know how to use these tools. I'll figure it out. You might spend eight hours, five, four hours doing a quarterly meeting, however long you spend, but it's the five or 10 minutes when people decide to change or decide that they want to be better leaders when you're looking at your leaders, those moments are the ones that you are worth the whole day.

So you just gotta ask yourself, how many of those moments are you going to be able to procure or lead and with or without a coach? So that's essentially what keeps me employed is that I produce those moments, But it means that it's contextual. I have to study and understand my client, understand what experiences to bring them.

So anybody without a coach, I'd say, hey, as long as you have a system, that's great, but don't get too caught up on the do's and don'ts of the system. First, practice the system. And then, to be a great leader, you have to want to be a great leader and manager, and you got to love your people. If you truly love your people, if you really want the best for them, it'll work.

Scott Levy:

I think that's great advice in all domains, we can get so hung up on the tool and the process for getting something done imperfectly is better than not doing it. Going to the gym and not having a perfect workout. Every rep isn't perfect, but you got in and you went, you're going to get the health benefits of it. And I think, you're describing a similar thing and a coach can absolutely help you identify things that maybe you're not able to see because you're in it, right? 

Jeff Schafer:

Yeah. I hope that clarifies some of the rock confusion, but again, rocks are contextual, so one group's journey with rocks and another's are going to be different. So the boundaries of what you do and what you don't do with certain situations with rocks are better understood with practice. 

Scott Levy:

I'm hearing people throw around the different names, how many different types of rocks are there? Is it just company, departmental and individual? 

Jeff Schafer:

Yes. 

Scott Levy:

The other question that we were talking about is, using this information now, everybody's got a number, everybody's got rocks. How do we then have that conversation on our quarterly cadence and how do those things all fit together to enable that conversation?

Jeff Schafer:

So, after the VTO has been reviewed, the new rocks are built, and the major issues—the key issues—have been resolved in a quarterly meeting. That's having a clear vision and getting on the same page as leaders, having a clear plan, and resolving key issues. Those are the objectives of a quarterly meeting.

When you've done those three things, within a week or two, you have a state of the company address. You let them know where you've been, where you are, and where you're going. Ideally, you share the VTO with them, or parts of it at least. Minimally, you find a new and creative way to describe your core values.

You have to show and give them the answers to all eight questions answered in the VTO. Show them all the things that you've seen, even your issues list and long-term issues. Let them know the things you're still working on solving by showing a little vulnerability. By showing them things you didn't get done and things you're still working on, along with what you've accomplished, they realize you're working for them and that we're all working hard. It encourages trust. So yeah, the state of the company address is done a week or two after, and it's best done after the leaders get on the same page with those three things.

Quarterly Conversations and the 5-5-5 Framework

Scott Levy:

And then what about for individuals and in a one-on-one environment?

Jeff Schafer:

Like quarterly conversations?

Scott Levy:

Yes.

Jeff Schafer:

The idea there with the five, five, five, which I think we're going to rename it to just quarterly conversations soon. And the idea with the quarterly conversation is really simple. You just want to get offsite with each of your direct reports for maybe 20 minutes, maybe 40 at the most.

And I did this the wrong way, by the way. I learned, I did everything wrong before I learned how to do it right. Before I was an implementer, I was self-implementing, and even when I had an implementer, I still was like, I'm going to try this instead. I hear what you're saying; I'm going to try that. I tried everything.

So, you want to be offsite with the quarterly conversation. And you want to make it all about them. Shut your phone down. You're basically focused on them, and you're there to just talk about what's working and not working for them in their role. Every once in a while, you want to ask the question, and you really want an answer one way or another: Would you do it again? Would you take this job? If you had to start it again, would you do it? Because when they say yes or no to that, you really are at a great reset point for moving forward. When they say yes, it's... when they say yes to that, they've committed, right? They've recommitted.

So, you're there to listen in a quarterly conversation. You're not there to write stuff down. You shouldn't be writing things down. It makes them feel insecure, like, "Oh, what are you doing?" So, you're there to listen. Now, the whole five, five, five, what that is, there's roughly five core values. There's usually roughly five roles and responsibilities. And there's roughly five rocks, like including company and individual—sorry, don't call them personal, call them individual rocks. So, those are fodder for the discussion. You could talk about those things. You don't have to. They're just things that you could talk about.

If you feel that they're not enjoying their role, you could talk about the five or six roles in their function on the accountability chart. Or if they're in multiple seats, talk about the ten to twelve. So, if you talk about that, say, "How's that going? Let's read it out loud. Let's look at the accountability chart." You could talk about the core values: Do you feel you show this most of the time, some of the time, or never? And then their rocks—you just check in on their rocks. If they, if the... you can, these are things like, if you're not sure, "What should I talk about with this person?" five, five, five gives you a little bit of structure, but that's there if you need it.

What you really need is to talk about what's working and not working from their perspective and listen. And if you get a chance, tell them, echo that and say, "Here's what I hear you saying, and here's what I see. Here's what I see that's working and not working." Sometimes you got to give them a shot in the arm, let them know, "Hey, you're doing great work. Here's what I see that's working." So, it does great things for them to have that quarterly conversation, and it's offsite and informal. That's the quarterly conversation.

Scott Levy:

I'm hearing again, the context plays a big role. You're given a structure that you can use to set up that context, and then you're able to focus based on the situation and what's required to make sure that you're getting the result you want out of the conversation. 

Jeff Schafer:

So, when I did this, when I learned to do this, I took it further because I thought more data, more information would be better. And I really thought I was serving my direct reports better by having a longer meeting, writing stuff down, and really looking through every one of the five, five, and five, basically doing a people analyzer, doing a GWC fit on them. I did everything with my direct reports, and I found that some of my meetings would even go over an hour.

And I'd be right there, having it in my notebook, and I'd be saying, "Okay, what do you say?" What I didn't realize was I was making them very nervous. To me, it was enlightening, but I felt that by the end of the meeting, they didn't like that. And honestly, I didn't know what all this data was going to do for me.

SIt was years later that I really understood. You have to hear it seven times before you really get it. I learned later that a great structure doesn't need to go that deep; just find out what's working and not working. It's funny; I used to add a "working, not working" section at the end of my old format, and that would be the best part of the meeting.

Eventually, by the time I was with my last company, I threw away the five, five, five format. I'd use it when I needed to, and I would just focus on "working, not working." It would be 15 to 20 minutes, and they'd leave energized, and I'd leave knowing where we stand. I loved it. But I had to keep it simple. Yes, it is contextual, but it is fully focused on them.

If you pull anything out to write something down, it's just to say, "Hey, you told me you need something; I just need to write that down to make sure I get it right." Because as their servant leader, as their supervisor, you're saying to them, "I want to make sure I get that for you." They will respond well to that, so you should do that.

Effective Level 10 Meetings

Scott Levy:

That makes great sense. One thing I was going to ask about, and this perfectly ties in because we're talking about several other meetings and the importance of how you use the tools.

Do you have opinions on what goes into a good Level 10 meeting? 

Jeff Schafer:

I say stick to the agenda, but I'll tell you some extra tips because I think I did talk about that. I will say that, minimally, a meeting pulse should have a measurable element in it. So, yeah, always have something that they bring to the meeting so that you're not just talking. Half of your meeting should be issue-solving. If it's a level 10 meeting, even if it's a department meeting and it's a little shorter than the 90 minutes, it's okay if you've got a smaller team, but make sure half of it is issue-solving. Everybody understands that.

For me, I've always found it really helpful to have a strong segue and a strong conclusion. So they know at the beginning what's going to happen, and they know at the end that they're accountable for having an opinion on how that meeting went. They can't just ride; they have to come in with their personal best and their professional or business best, and they have to leave with an opinion on how it went.

It's like writing things down, like we were talking about before we started. You have to write stuff down. Something happens in your mind when you actually deliberate, be deliberate, and say, "I'm committed to this." It allows you to take further steps.

But if your mental attitude is, "I can just ride; I'll just react to them," then you leave and just wait for everybody to react, and you end up being exhausted if you have a reactive work life. It's about changing the mindset of the folks in the meeting to be proactive so that they realize their life can be better if they're just a little more proactive. It starts with the segue and ends with the conclusion.

Scott Levy:

I'm not sure I've heard it stated that way before. It's really about changing everyone's mindset to be proactive in the meeting, because I've seen people go into their first one a little guarded. Like, what's this new thing? And frequently by the end of the meeting, they get it and they're like, okay, this is going to be great, but I've also seen people be very guarded. Like, why are we here? It's another meeting and especially if it's virtual, you have to pull people's attention in, but I like that call to action.This is how we become proactive. 

Jeff Schafer:

With a leadership team, you get them to commit to EOS first. When they do, they realize there's a format that works. And when they agree, they often don't agree at the beginning. They're like, "Oh, I'm not sure. I have a lot of meetings. I don't want to throw this on there." But then, when you point out, "Hey, this meeting will replace those other meetings magically. You won't have to have them. There won't be as much that you need to exchange. People will figure stuff out instead of having to ask you about everything all the time," they don't believe you at first. But then, after a few weeks of doing it, they're like, "This is changing the game."

So, I'll give you one thing that happens way down the road, maybe a quarter, two quarters, or even three quarters down the road. Sometimes, I make a suggestion to clients that when they're in the headline section, use that to call out positive core values in direct reports they see. I want to do a positive core value callout: "I saw this guy do this, and that showed this core value." So, you document it in the headline. Everybody says, "Yay!" and then, everybody brings them up. Then, at the end of the quarter, when you're having that state of the company address we were talking about, you just tally all those up, and then you give the energy back to them.

"Hey, we want to do some core value callouts. For our core value of positivity, or whatever, we've got this person who did this, this person who did this, this person who did this." Now everybody's participating in the state of the company address because they know it's about them. If they didn't hear their name called, they're like, "Oh, I wonder if I'll get called out next time." So, it's a great way to get people to realize they belong there. But you have to do the work as leaders to bring those core value callouts into every meeting. That headline section creates a culture of accountability, but it takes time and consistency.

Evolving Accountability Charts

Scott Levy:

Speaking of a culture of accountability, we were talking a little bit before we started recording about accountability charts, and in particular, how they evolve and whether and what controls you need in place as they evolve. You said you've got some opinions to share there. 

Jeff Schafer:

Yeah. What I do is I ask them to come in every quarter and print out their accountability chart, print out all their foundational tools, and put them into a paper binder. The binder looks like this: in the back of the binder, there's this section where you can actually put those tools. There’s nothing in those back sections, and in the front, all the tools are in the toolbox—all the items that I take them through, walk them through each step and every piece of the process. But in the back, it's all blank, and it's blank for a reason.

You should actually print those copies, discuss them as leaders, mark them up with a pen, and put a date—what was the date that this thing was published? Put it in the binder, because over time, you'll be able to see how it evolved and changed. Now, some people are like, "I'm digital only; this is the way I do it." I'm like, "You're missing out." This is the one time paper really works because you want to be able to modify this in a way that shows it was your writing. You actually said, "I don't want that," crossed it out, and I'm Mr. Tablet. I like that too. And yeah, there's probably a way you can convert it over to some sort of OneNote or PDF Remarkable deal or something.

But if you actually put it on paper and everybody's got their papers and everybody's together and they've got the same stuff, there's something about that that allows everybody to accept the history of the work that they've created. Because they've all done it the same way, they've all been asked to make notes, and they've all got their notes quarter after quarter. When they all look back on it and see their own thoughts, it's a great archive for them to see. As their revenue and profit grow and as the company grows, they can see that accountability chart change as well.

Scott Levy:

I think we were talking about this a little and it comes up in my mind - there is actual research on the way even just doodling can help encode information in your brain. We have a digital platform printing things out and writing on them. I do that all the time. I fill notebooks with it. It's just an incredibly useful practice. And as you say, it's delightful to go back and look at how ideas have evolved, how our conception of the company has evolved. All those things I think are fantastic. 

Is there anything in particular at the top of your mind that you'd like to cover? 

Jeff Schafer:

Yeah, I want to mention something. There's some practices that you can take on with recording calls, recording your meetings or getting really strict on versioning your documents. There's things that you can do that will definitely create organization and structure. And folks, once they get that structure, they love to work in the structure.

Building Trust and Healthy Conflict

Jeff Schafer:

But I want to show the Lencioni Trust Pyramid. I don't know if you can see that or if it's reversed. This is in Five Dysfunctions of a Team, which, by the way, has a manga version, like a comic book version, which I think is nice. This thing is pretty fun to read, just a quick, easy read. At its core, it essentially says that you need to start with a foundation of trust. When you have that foundation of trust, you can have healthy conflict. From there, you can actually get true commitment. After healthy conflict, you'll actually get commitment.

If you have enough commitment, then you can have some accountability, and from accountability, you get results. Now, you can get results without all those steps, but it's really painful if you don't build a nice, broad foundation of trust. So, when you're recording meetings, is that adding trust or taking it away? You have to consider that. Yeah, we're not all researchers, and we don't all have time. Some of us weigh the pros versus the cons of having control, structure, and every word written down. It's not necessarily what's great for the visionary leader or the leader; it's about what's good for the group.

What does the group really want? What does the group really need? If they have strong trust, then they'll have healthy conflict. Healthy conflict looks like, "Hey, I'm going to say it even though I might be wrong," or "I'm going to say it even though I know it's not a popular opinion." When you use the brain trust of the entire room, that actually gets you further than people being guarded. So, what makes people more guarded than recording every word they say in a meeting? Do you know what I'm saying? What's going to make them even more guarded? Recording every word they say will make them guarded. So, you don't—it's a trust thing.

As for version control and versioning, if you're worried about people changing something willy-nilly, why not just print it and say, "That's the printed version." If we've made changes, that's fine, but the printed version is the one I have. We called it this version in a snapshot of time. We don't necessarily need to have control; you just say, "This is when we print it, and this is what we're going to work with for the next three months. If we're going to make any changes, great. Let's talk about it in three months. We'll make some edits and come together." If we know we're going to come together to make those changes, then we don't have to worry about somebody messing with our stuff. It's about trust. It's about creating trust.