Community, Coaches, and Implementers: Why I’m so excited about the Entrepreneurial Operating System (EOS)

I have made an extraordinary discovery and I am making a full pivot based on what I’ve learned.

I have been an entrepreneur since college when my friend Steve Rowe and I started writing code together with thoughts of being the next Jobs & Wozniak or Gates & Allen. Since then I have owned or led over a dozen entrepreneurial companies. Some have been unqualified successes, many have done well, and a few have been just great (sometimes expensive) learning experiences.

Everyone Hits the Ceiling

Between serving on entrepreneurial leadership teams, I have always ended up consulting for entrepreneurs – often starting new businesses from those efforts. I believe in entrepreneurship as a positive element of our society. I’ve seen how it can have a positive transformative impact on individuals and communities. But too often I see great ideas and great efforts hit the ceiling, damage the health of the company’s leaders, and take a toll on their families and relationships.

As a consultant, I felt helpless to make a sufficient difference. I have read maybe 100 books on entrepreneurship, management, and business strategy and have taught all these topics to clients, peer groups and my MBA students. The problem with consulting is that you dig for answers and insights and then serve them back to the client, but then they just have another thing to read and try to contextualize. The problem most entrepreneurs have isn’t a lack of ideas or insights – it’s poor visibility, uneven execution, and fractured team dynamics.

I have been passionately (perhaps obsessively) searching for a better way for a long time. The search is over.

A Simple and Complete Answer: EOS

My clients will recognize that I often say that when you really understand something, you can write the Haiku on it.

As much as I love complex puzzles to solve, I have learned that the best answer most often proves to be the simplest, most direct answer because it is the one that is most likely to be understood, supported, and get done. Over the past two years, I have had the privilege to be able to talk to dozens of leaders who have embraced and benefited from the Entrepreneurial Operating System (EOS). Originally developed (though he says cobbled together) by Gino Wickman and popularized in his book Traction: Get A Grip On Your Business, EOS has now been implemented professionally in over 6,000 companies by the 255 Professional EOS Implementers. This is a process and a set of tools and disciplines that have been tested and refined to the point of being a diamond, the ultimate business Haiku.

No alt text provided for this image — The Traction Library

EOS-implemented companies tell us that they experience what we call Vision, Traction, Healthy.

Vision meaning that everyone is on the same page with where your company is going and how you are going to get there
Traction refers to instilling discipline and accountability throughout the organization so that no matter where you go, you see people executing on that vision
Healthy meaning that you have a functional and cohesive leadership team and company that enjoy working together.

What entrepreneur doesn’t want that?

EOS Goes with Everything

I admit, I was originally skeptical. How could something so simple be so effective? Now, as a true believer, I can now give you 100 reasons why EOS, as a set of tools, as a system, and as a process of implementation, works with any organization, in any vertical, and at almost any stage of life. I offer you these eureka moments that converted me:

EOS focuses on the all the parts of the business that are not your special sauce, giving you more time and energy to focus on the thing that makes your company unique and valuable.
The EOS tools and disciplines are simple enough that even your least sophisticated colleagues can participate, contribute and find their sweet spot through it.
All the pieces of EOS are offered for free as part of the “give first” mentality of the EOS community meaning that everyone can start learning it and implementing it without financial obligation
EOS is implemented through a process of spaced, contextualized learning that gives everyone in the organization the opportunity to mature and learn new skills they need them.
There is an extensive community of implementers and implemented companies that work together towards mastery and share best practice.

So, in some ways, I‘m up to my old tricks. My good friend Kris Snyder and I have started a firm and I’m working with entrepreneurs, but no more consulting and no more fractional executive gigs. As a Professional EOS Implementer, I have found my sweet spot using all my natural skills and things I love to do.

I urge you to consider informing yourself about EOS. The best and fastest way to do that is to schedule an informative meeting with one of those 255 professional implementers around the world. I’m happy to make an introduction. If you need a copy of Traction: Get A Grip On Your Business (eosworldwide.com/traction), let me know.

For actual client testimonials – (http://www.eosworldwide.com/testimonials) or (http://www.eosworldwide.com/eosstory) to watch a short 4 minute video.

Ask questions. I would love to share my excitement with you!

This post is also available on LinkedIn and Impact Architects

AMPT Radio Episode 8 – The Other Music Industry

The music industry has been run by the same forces since long before anyone uttered the words “Rock & Roll.” This issue looks at some people who are attempting to rebuild the business from within and without. They ask the question, “Do you have to sell 5 million copies to be successful?”
Articles Include:

Mark Arm of Mudhoney lets loose on publishing matters and trends
Seattle’s Sound Man spins some yarns
Hamish Todd spends some quality time with a little label called “Bands We Like”
Ani Difranco sings I Am Not A Pretty Girl
Have a Cigar by Pink Floyd with intro by Eben Eldridge

Episode 13 – AMPT Live at Bumbershoot 1997

AMPT put on a show on the Main Stage during the annual Seattle arts festival known as Bumbershoot. The show was an adaptation of the Politics: You’re Soaking In Itshow.

Articles Include:

Instigator & Eben Eldridge perform the AMPT Preface and The Power of One
Dave Dederer talks about changing the world through small acts.
Krist Novoselic interviews State Rep Dow Constantine about legislation and involvement.
Roderick Romero copes with paranoia through poetry.

Some Free Resources for SaaS Valuation Algebra

TechCrunch: Determining the worth of your SaaS company

First, a warning. Valuation is in the eyes of the payer.

But at some point, all entrepreneurs need to tell investors, their board, or maybe their recruits that will be getting equity what the valuation of the company is going to be. The correct answer is, “I have no idea” but you will need to put something on your pitch deck, your prospectus, and your financials (don’t forget to do a Reverse Income Statement).

A few resources that I have found valuable:

The BVP Cloud Computing Index [ https://www.bvp.com/strategy/cloud-computing/index ] This is the prospectus page for an index fund that is a great collection of SaaS company stocks and their basic financials – great data for your business plan. The listing is also sortable (though is handles the text fields incorrectly – poor form, my friends – but you can also download the XLS. The range in multiples should give you both pause and hope.
Determining the worth of your SaaS company by Todd Gardner for TechCrunch [ https://techcrunch.com/2016/10/07/determining-the-worth-of-your-saas-company/ ] This includes the great visual below to help all your stakeholders understand the factors that contribute to valuation.

3 Reasons You Should Love the Reverse Income Statement (RIS)

Even if you get vision, culture, and brand right, success is still measured by the things you can capture in a spreadsheet. My favorite spreadsheet, though, are the ones that tie all those things together.

This past summer, the students in my MBA class took special note of my, perhaps, overwrought appreciation of the Reverse Income Statement (RIS) as a tool for developing strategy. Admittedly, it is not sexy or flashy and will not offer any sort of output you can use in a Powerpoint. It is a solid tool for rationalizing your assumptions and keeping track of all those “testable theories” that accumulate when you are business planning.

First, let’s accept that the RIS is like Pad Thai – there are endless variations on the basic premise. I have a version that I rely on often enough that I have it as a template in 4 different apps: Excel, G-suite, Numbers and Calc. I offer the Microsoft Excel version here:

BDG_RIS_Template_v0.9

The Official BizDevGuy Reverse Income Statement Template by Jim Haviland aka BizDevGuy is licensed under a Creative Commons Attribution 4.0 International License

My advocacy for this particular instrument is less important than reasons why I think it is so valuable for strategy development and business planning. I will offer details on using it below but first, the reasons I think business planners and strategists should love it as much as I do.

Focus on the outcome: The very top of your RIS is your business goal and it is a number. Yes, you need to know your WHY and have a mission and other organizing thoughts but you also have to be able to communicate to yourself and your stakeholders what success looks like in concrete, measurable ways that convey value. It doesn’t have to be a currency figure but it has to be a number that you can use as the basis for the rest of your calculations. Even if you are guessing, you start with an outcome.
Catalog your “testable theories”: The best and worst part of Entrepreneurs is their optimism. Over time, optimism can turn reasonable assumptions into unimpeachable myths and false hopes unless they are informed by new insights or challenged by data. I have noticed that business plan assumptions and press release logic can quickly become common knowledge unless you have tactics and disciplines in place to check them and keep exuberance in check. In the RIS, everything you input to the calculations are listed as assumptions. On my version you also include sources and how frequently you should recalibrate.
Know your numbers: One of my favorite modern fictional characters is fake President Josiah Bartlett. He had Mrs Linninham to ask “what’s Next?” but the rest of us need guidance, day by day, hour by hour, to determine what’s the next best thing for us to work on. Business strategy can become complex math pretty quickly but we shouldn’t use that as an excuse not to know the numbers that best align with our predictions and the intended future. In my version of the RIS, you are asked to capture when and how you validate your assumptions and assign a member of the team to do the validating. The more you share ownership of your numbers, the more everyone on the team can see, in very real terms, how their contribution in action or measurement impacts the overall outcome. The RIS wont relieve you of having the usual financial statements, but it is easier for everyone to look at a determine whether the effort is headed in the right direction.

The hardest part of working from a template like this is getting started.

In my template, I offer a sample of a RIS for a pizza restaurant. It includes financial calculations as well as operational considerations. For me, the operational metrics are the most important part of the power of this tool as it allows clear linkage between operations and the front office. Many parts of an organization of any size can struggle to feel their connectivity to the financial performance of the organization.

For smaller organizations, marketing offers an even bigger problem than operations. Many of the business leaders I have worked with ask the age old “attribution” question: “How do I know my marketing dollars are growing the bottom line?” The RIS doesn’t make the absolute causality of sales or profitability any easier to track but it does offer a pretty easy way to look for correlation, which is almost as good and sometimes better.

When I start a new RIS, I like to start small, capturing a few dozen assumptions and then using them a number of ways to calculate some things that will be easy to track like daily activities or outcomes. In my example in the template, you should be able to get to the end of a day and, from the number of pizzas sold, decide on ordering for the next day and whether you are on track for the week or month. After a week, you could add a new marketing campaign to the mix. Your assumption would be number of emails sent or ads purchased. The impact on sales could be seen even though you wouldn’t want to pretend that you know it is causal because lots of factors that you haven’t captured yet could be at play. I like to keep adding Assumptions as time goes on and I realize what I am assuming and what can make a difference.

The really power of my version comes from using it to validate results and allow everyone to contribute to the numbers. Weekly or monthly sessions reviewing the document will expose differences in opinions that can be very meaningful to catching problems before they grow to tragedies.

Over time, some of your assumptions will “lock in” and become pretty reliable facts – understandings that all your team can own and use to make decisions everyday, fully bought-in on their meaning and impact.

That level of alignment is something, I think, everyone can love.

(Re)Align to Transform: 5 Misalignments to Address in 2018

Most projects that fall into the realm of Digital Transformation (DX or DT, depending on your analysts of choice) will fall short or outright fail.

We have cataloged these many mishaps from the stories we gather from Mobile Thought Leaders (MTL) and the Digital Transformation Thought Leaders (DXTL). We collectively refer to their root cause as The M-Gap. The projects we include in this consideration typically involve mobile technology, but it isn’t a technology problem. Its a Management problem. The structure of the organization, the governance models, the budget practices, pretty much everything aside from the technology will actually be what gets in the way and dooms these otherwise strategic initiatives. If you feel like your organization is just getting started in DX, then you ARE behind – and the reasons that you have waited this long are the problem – you have an M-Gap – and you know it.

But knowing you have a problem isn’t getting you much closer to the solution.

It is well beyond the possible scope of a document this length to give you everything you need to diagnose your M-Gap, but we have grouped our stories into some common themes that many members say resonate with their experiences.. In general, M-Gap problems are alignment problems. DX requires that disciplines and practices that might otherwise be lumped into “IT” be integrated deeply into the ways that problems and opportunities are addressed throughout the organization. Likewise, there are very few IT initiatives that should not be reconsidered in terms of their business value return. A balance must be struck between addressing the digitization of each part of the organization and in selecting or designing solutions that fit into a larger framework. Some efforts will be part of the overall strategy and have a multiplicative impact and others will need to be recognized as small tests that may challenge or support the larger strategic thinking.

In the end, the focus of planning efforts will look more like the weekly/monthly cadence of an agile development team than the common current focus on annual budgets. This is a major realignment that may take years, but every step can feed the flywheel of innovation in the organization

We find that identifying a gap in alignment along with a little communications sensitivity can go a long way to help all the stakeholders get a bit more comfortable with the changes that must be made to allow progress. I have ordered the five most common problems in order of commonality and impact. This list isn’t comprehensive but it does cover more than 80% of the problems we regularly encounter.

BUDGET: More than half of the DX initiatives that stalled or failed did so due to a misalignment between IT budgets and Line of Business budgets and a misappropriation of the costs and potential benefits. Aligning line of business budgets and IT budgets, as well as what returns are measured against them, stalls or kills more than half of the DX initiaitves. While there are some portions of the current IT budget that are predictable and purely a “Cost of doing business,” you will need to structure more of what has traditionally been considered part of the IT budget to be be seen as business investment toward business returns, what Deloitte refers to as Outcome-based budgeting. This means rethinking how investments are made, ROI is measured and how employees are compensated for success. If you are trying to cut budget out of the current IT budget to get started, you are barking up the wrong tree. Organizations have spent the last few decades squeezing IT budgets and leaving almost nothing for experimentation, let alone error. We often see managers with bonus or MBO structures that only recognize cost cutting, up-time, or other metrics that leave no room for experimentation or developing new expertise. This leaves the organization without resources to play with or the inclination to participate in impacting business outcomes, which leads to our next topic…
FOCUS: Every bone and muscle of the organization has likely been honed to deliver incremental improvement and cost reduction. If this is the case, you can be proud of having an efficient organization, but it wont work for transformation. Gartner analysts have written extensively about the need and the benefit of slicing organizational goals in two and leaving sufficient resources in place to maintain the “lights on” technologies (Mode 1) while creating new structures in the organization for innovation (Mode 2). From the front lines to the board, you need to have a plurality of stakeholders accepting that the past can not be the model for the future. Some sacred cows must die. If you are just now getting around to converting paper forms to apps, it is probably because you had the same people that deliver “lights-on” services trying to find some time to innovate. Converting paper forms isn’t really an innovation anymore. Its an incremental improvement. This approach is both inefficient and error-prone. You need people and budget focused on returning business value through digitization to get to anything that really looks like transformation.
OWNERSHIP: Should IT own digital transformation? Do you need a new DX Czar? Wrong questions. Digital Transformation is fueled by agile methods, cross-platform teams, and collaboration. The ideas and understanding needed for DX are scattered around the organization and the muscles to make DX effective are new. Many organizations have taken the well-documented route of forming a Mobility or Digital Center of Excellence (COE) or some other new body but this can be a trap. MTL Members tell us that sequestering DX to a separate group without also giving them budget and an executive mandate is a wasted effort. Unless you give this new org resources and authority (see #1 and #2), nothing will change. Lines of Business, IT, and leadership must align around the belief that integrating new applications of digital technology AND rethinking how business is approached can yield significantly better results and that the resulting organization will likely be organized differently – but we don’t know what that structure is yet.
VENDOR MANAGEMENT: You don’t know enough about what your organization needs to write an RFP. Just admit it now. Small experiments. Fail fast. Your path to Transformation will go a lot faster if you change the way you think about vendors and ROI from vendor relationships. You need to be willing and able to fail and not cut off any heads. You need to trust in positive intent. You are going to have to find new wats of measuring vendor value. The companies that are ahead of you, lapping you in some instances, are the one’s that have gotten good at allowing small bets to fail and MTL members tell us this is hardest to do when it comes to vendors. If you had all the expertise you need you would have already been well on your way. We hear many stories of organizations asking a vendor to help with an initiative, give them lots of ink-conceived guidance, ignore their advice and then fire them for the outcome. Don’t do that.
LANGUAGE: As with so many aspects of life, alignment (and understanding) requires that we develop a common language to discuss both problems and solutions. Both IT and the business need to learn bit of each other’s terms and ways of recognizing value. For the business, we have seen the most powerful tool for this in the framing of requirements as User Stories. There are plenty of materials available about how to craft a good User Story – some of it written in language that everyone can understand – but the key here is that a User Story reframes a problem or issue as a functional outcome that ultimately is the test of completion and, over many iterations, teaches both the consumer and the producer of the solution to make fewer assumptions about what the other side is thinking. For IT, the big opportunity is forcing them to frame all their activities in terms of business outcomes. Everything has a value and a cost and both IT and the business should agree on both sides of the equation. My favorite tool for this is the Reverse Income Statement. I have posted elsewhere on this tool, but the magic here is that you have to list all your assumptions as numerical values. Even if you don’t know the value, you have to put something down as an assumption. This will be most painful for the security-oriented team members.

The good news about getting a later start is that there are many stories and experiences to draw from as you embark, but the time has come.

These topics will continue to be interwoven with topics of technologies and use cases during 2018. If these issues sounds familiar and you are either seeking insights or have insights to share, we would love to have you join Mobile Thought Leaders. Learn more at http://www.mobilethoughtsleaders.com or our LinkedIn Group https://www.linkedin.com/groups/4687169

AMPT Radio Episode 10 – TV Sucks

AMPT explores a few of the many ways that the greatest communications appliance falls short of living up to its potential.
Articles Include:

Interview: Musicians from Sarajevo discuss the use of TV to feed hatred
Cody Sontagg offers a few words from the Witness Campaign and Powerful Choices.
Listen Closely #1:The Disposable Heroes of Hiphopcrasy Television: Drug of the Nation
Listen Closely #2: Flipper Sacrifice (by Krist Novoselic)
Rant: Jerry Mander on killing TVs

Episode 14: Riot Grrrl Feminism

This episode first aired in 1998.
Social change takes many generations. We attempt to define feminism as it was in the 60’s and 70’s and what it is in the 90’s and into the new millennium, notably third-wave feminism and the Riot Grrl movement.
Articles Include:

Gloria Steinem gives her version of the story
Donita speaks of L7 with the instigator on-stage at Bumbershoot 1997
Music by the Geraldine Fibbers, and Lady of Rage
Feminist Herstory by Paula Friederich

The Music and Media List:

Episode 9: Who Owns Mexico?

Mexico and the U.S. are neighbors with very little in common culturally. Why does America reach over the border and cherry-pick what it wants to exploit. Why is the PRI so corrupt? Tell me about Zapatistas. What is different about racism towards Latinos?

Articles Include:

History of Mexico -Mayans, colonialism, Cinco de Mayo, NAFTA, PRI by Paula Friedrich
Interview: El Vez, the Mexican Elvis on the deconstruction of bias against Mexicans
Listen Closely #1: Reubén Blades Patrios
Listen Closely #2: Los Lobos Is This All There Is?
Rant: Coyote by Javier Cabasos