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Feb 29, 2024

Mark Abbott Discusses Why EOS Works

On this episode, we discuss the fundamentals of a BOS and what makes EOS work.

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Cole Abbott (00:00:00 -> 00:00:01)

Just gotta get into it, I guess. Right?

Mark Abbott (00:00:02 -> 00:00:03)

Let's just do it. Yeah. Yep.

Cole Abbott (00:00:04 -> 00:00:11)

All right. So do you wanna sort of give a opening about what, what we're doing with this fireside chat, kind of the concept?

Mark Abbott (00:00:11 -> 00:00:12)


Cole Abbott (00:00:12 -> 00:00:12)

In general? Yeah.

Mark Abbott (00:00:13 -> 00:01:06)

Yeah. I think the concept in general is that, uh, there's lots, lots of stuff we want to talk about. And, um, and we think that, uh, you know, this, this format for just sitting here and, um, ultimately answering a lot of questions or digging into a lot of different topics, uh, whether it's with you or whether it's with, you know, members of our team or ultimately, uh, clients and other people who we find fascinating or we think could provide useful information for, uh, for, um, you know, founders and, and other folks associated with building, you know, hopefully great companies. Um, I think, you know, this, this format hopefully will resonate with a lot of people and, uh, you know, we're just gonna see how it evolves, just like everything else. So I'm excited about it.

Cole Abbott (00:01:07 -> 00:01:24)

So, yeah, today we're talking about EOS. Yep. And, uh, we're just doing an overview. This will be the first episode in a, a series about EOS. Yeah. So, yeah, so I guess starting at the, the bottom, at the base of everything, I guess, what is a BOS?

Mark Abbott (00:01:24 -> 00:06:43)

Yeah, so A BOS, the acronym is Business Operating System. And, you know, it's a, um, it's an interesting, you know, there's so many different ways you could describe an operating system. You could describe, you know, a company operating system or an entrepreneurial operating system, or a business operating system, or, um, you know, lots of different ways of describing it. But the basic concept is that every single company, really, all of us, we run on an operating system. And the question is, is it intentional? Is it accidental? How sophisticated is it? Um, and it's particularly important when you have a bunch of people working together because we gotta sort of figure out how to work really, really well together, uh, enjoy what we're doing, uh, not step on each other's toes, be on the same page. And, um, what's happened is, you know, we've been building companies, you know, God, I don't know, hundreds on hundreds of years, but we've really been focusing on the art and science probably for the last a hundred plus years. And, uh, and the, the art and science has evolved to the point where we have these things called business operating systems. And a business operating system is a collection of concepts and tools and disciplines that helps us all work really, really well together, right? Take an idea, um, test it. If it's a good idea, maybe we start to produce it, whether it's a product or a service. And all of a sudden you bring other people into help you turn this idea into something that can scale and something that lots of people will, uh, benefit from. And so, you know, what we've discovered is, or you know, what we think is, there's actually actually five levels of operating systems or business operating systems. There's the accidental one when everybody just gets together and like, let, let's, let's, we got this idea for building a company. Let's, let's go get to work on it. And the first thing you do is you try to prove product market fit. Maybe you get your arms around some strategy or some vis a vision or a position, or all these different things. And then everybody sort of runs around, tries to figure out if it's gonna work or not. While you're running around, you're thinking about things, you're documenting things, you're getting agreements. And in the beginning, a lot of times it's just haphazard and people are using, like, maybe you're using Google Docs and I'm using Word Docs, and maybe someone's using, uh, a, you know, Excel for CRM and someone else has actually said, Hey, you know, I'm going to use, you know, some form of a, of a, of a cloud-based CRM, but everybody's kind of just running around doing their own thing that's accidental. And then all of a sudden, like, Hey, let's all get on the same page. Let's use maybe Google Drive to store all of our folders. Let's use these particular types of tools, an Excel file or a Google, um, sheets, or whatever it is. And you go from accidental to intentional. And that's sort of the second level of an operating system. Uh, the third level is you're like, Hey, you know, we're not the first ones to ever build a company. Um, and so this is, feels like it could be easier, you know, our, what we're all about is creating value for customers and prospective customers, and we shouldn't be wasting a lot of our time building the operating system. So there's gotta be a better way of doing this. And so that next level is called a designed operating system. And there are a lot of designed operating systems out there. Um, you know, probably one of the first of them was E-Myth, Michael Gerber's, um, E-Myth. And then over time, a number of them have, have, have, have come to being, uh, we're obviously talking about EOS today. And I think EOSI think, if I remember this correctly, Gino wrote Traction the book in, in 1998, or is it 2008? 2008. And, um, and so, you know, that's a famous operating system, which we're gonna talk about today. But there are other operating systems like scaling up and, um, and there's other systems like Pinnacle and Empire, and, um, so there's a number of 'em out there, but, uh, we're gonna talk about ES today. So that's the designed operating system. The interesting thing about the designed operating systems is some of 'em have like, uh, almost all the core concepts and tools and disciplines that you need to, in my opinion, build a, a company, something that you can accompany versus a business. A business is something that, you know, if you founder, uh, dies or just stops running it, it goes away. Whereas a company is something you can actually pass on either to a new leader or you can sell it. So, um, so if you want to build a company, right? You focus on, on a certain number of different things. And most of the designed operating systems, in my opinion, um, there's just a couple things that they don't have in there that I think are core to building a great company. Um, when they have all the core concept tools and disciplines, I call that a holistic operating system. And then the penultimate is, you know, what we're doing, right? Which is, it's all the best practices associated with these, uh, bos, right? All the concepts, tools, and disciplines. And we're putting it into the cloud and so that everybody can work on the same things regardless of where they are, what time of day it is, where they are across the, across across the world. And so, you know, so that's the penultimate version. We called it an integrated cloud-based, um, platform or operating system. And, uh, that's what, five minutes on an operating system.

Cole Abbott (00:06:43 -> 00:07:00)

The big thing is with all these things is they're, they're pulling from elements that are sort of like proven methodologies and, and, and time tested, um, theories and practices. Yeah. Um, and, and so, right, that all gets back to making sure that the goal of everything being explicit, coherent, and resonant.

Mark Abbott (00:07:00 -> 00:09:00)

Yeah. Yeah. So if, if building a company is, is very similar to building a house, right? And so there's just certain concepts, tools and disciplines that you need. Like you need to have meetings to make sure everybody's on the same page. You need to have a sense for where you're going, all that a vision, right? You need to have goals. How are we gonna evolve the company so that we can continue to be competitive and, and, um, and or even better ahead of the marketplace, right? Um, and, uh, you need to figure out how you're gonna deal with data. So there's all these, you know, sort of concepts, tools and disciplines that are associated with an operating system. And ultimately what you want to do is, like you just said, uh, you know, what we talk a lot about is when you get the concepts put together, like an ideal client as an example, is a concept. Uh, your core values is a concept. Your value proposition, or what we call your unique value proposition, or what a US calls like your three uniques, that's a concept. And ultimately, what you want to do is, is have these things that are really important. Like a hammer is really important. If you're building a house, like a, like a level is really important. If you're building a house, all these things that are really important, whether it's a concept tool or discipline, you wanna make sure that it's explicit. Like everybody in the company's on the same page. Then what you wanna make sure is that, um, collectively it's all coherent. So what I mean by that, so, you know, if you're one of your core values is team, but you're paying everybody to run and, and just, just like be exceptional at getting new business. And it doesn't matter whether or not you step on one of your colleagues toes to go get a customer. Like let's just say there's no structure whatsoever and everybody's running around calling on the same people, that's kind of uncool. It's a waste of time, right? Um, but that's what you've incentivized. So coherent means don't have core values that say team and have incentives that say warrior as an example. Does that make sense? Yeah.

Cole Abbott (00:09:00 -> 00:09:03)

I guess it comes back to accountability, right? Yeah. And focus on that

Mark Abbott (00:09:03 -> 00:11:04)

And, and alignment and, and, and things like that. And so, and then ultimately, if you really want to do this, well, you want all those concepts, tools, and disciplines to resonate, and you want 'em to resonate not just with your own people, but you want 'em to resonate with your ideal stakeholders. And that's a big idea actually. So, ideal stakeholders, you know, every company has stakeholders, obviously employees are stakeholders, and, um, their customers are stakeholders. Uh, there's always money invested. And so those investors are stakeholders. You almost every company has vendors, and those are stakeholders. And then, and then ultimately you may have strategic partners, and those are stakeholders. And then you, you exist within a community. Some, some companies exist within just a local community. Some companies, maybe it's in regional, some companies it's national. We're obviously international, right? We're in 40 different countries. So, you know, our community is the world, um, particularly the, the, the free world. And so ultimately what you want to do is you want to have high trust relationships with all of those ideal stakeholders. And you want to be clear on who your ideal stakeholders are. Because if you're just like anybody, you may sit here and, and your employees as an example, if you're not clear on ideal stakeholders, they may feel like, well, you know, every single customer, we gotta, you know, we got to, you know, really try hard to make them happy. But some customers you can't make happy. And so don't waste your energy on those customers. That's why it's important to really be clear about who your ideal customer is, and then lean into having a high trust relationship with them. But don't waste your energy on someone who's not buying what you're selling, or who, frankly you just think is not a good, you know, good customer to have a relationship with. 'cause they treat your people poorly. So, um, yeah. Uh, back to, you know, there are certain concepts, tools, and disciplines. We want this as explicit as possible, coherent and resonant. And then ultimately this helps us build really, like I say, high trust relationships, all of the people that really matter to us. Yeah.

Cole Abbott (00:11:04 -> 00:11:14)

And I guess going off of people, right? One of the things that's sort of an impor an important component in all this is like the power of coaches Yeah. And, and leveraging that community and sort of building from there. Yeah.

Mark Abbott (00:11:14 -> 00:12:54)

Because the, you know, there's an old expression, you can't read the label from inside a jar, right? And so, um, the, what that means is that, um, it's hard to be, you know, objective about yourself. And so, you know, I encourage everyone who's, you know, who can afford it, and in particular founders and even senior leaders in companies that can afford it, right? Um, there's something, there's very, something very powerful about having a third party help you see yourself and help you see how you are working as a team, as an example. And those are coaches, right? And so we deeply believe, um, if you really want to build a great company, you know, having a third party who's really objective helps you think about not just, you know, how you guys are working, but walk you through the journey, um, associated with building a great company. Because one of the things we teach is teach is that there are five stages of development to go from a business, right? Something where, you know, if you, if you die or you, you, you stop wanting to run it, it goes away to a true company that's, that you can hand off to someone, as I said earlier, to either run it or you can, you can sell it to someone. So there's those five stages, and as you're going through those stages, it's a lot of work. And, um, you know, all the tools are relatively simply, but that journey is not so simple. And so having a coach help you navigate that journey is something we deeply believe is a, if a very smart thing to do, if you can afford it, and we think it's worth, you know, um, investing in. So we encourage everybody to coach

Cole Abbott (00:12:55 -> 00:13:07)

Building off and off that entrepreneurial community, right? Um, right. E ossis as coaches. How does that sort of kick off, I guess, our, our discussion more specifically on about E-S-E-O-S? Yeah,

Mark Abbott (00:13:08 -> 00:16:09)

So, you know, I think one of the, there's a lot of things I'm hugely, uh, uh, you know, have huge amount of respect for what Gino did, right? I mean, one of the things he did was, uh, that was brilliant, was he took all these concepts and tools and disciplines, put it into a book that was really, really well written from the perspective of a couple different things. Number one, um, you know, the flow is really good. Uh, it sort of has a nice stacking of bringing you into the big ideas. Number two, he really simplified it as much as you could simplify it. Um, there's an old expression I love, which is less is more until it's not. So you make things as simple as you possibly can, and right, there's a number of people who are great quotes around, great quotes around this, but he did an amazing job of making it as simple as you possibly can without making it so simple it doesn't work anymore. Right? And so that's one of the beauties of traction. The next thing he did that was, that was really, really good was he just didn't write the book. He went out and built a coaching community, because as I said earlier, it's hard, right? The journey from stage one to stage five, um, is just takes time. It's people were messy, we're complex. Um, and the challenges that we encounter along that journey, um, they're not predictable. You can't predict what challenges, you know, you'll have building a company. Um, we know that obviously really, really well. Um, and, uh, and so yeah, so the coaches are really good. Um, that was one of the things he did that I think is, you know, amazing, is he not only, uh, wrote a great book, but he built a community. And when he leaned into building the community, one of the things he really leaned into was, um, this concept of purity. Uh, and, and I don't love the word, but I love the intent, right? And the, the intent was, let's really get good as a community at teaching the same thing. So that, um, so that, you know, there's, there's power into all of the, um, the, the community that you're creating, not not just the coaching community, but the community of companies that are running on EOS. There's shared language. Uh, they're, they're all talking the same things. They're experiencing a lot of the same things because of the journey they take, the way they take the journey, the way you sort of stage the journey. And, um, and so that those, those shared frameworks provide a, in essence, you know, a compounding effect, right? So, uh, Einstein said the eighth wonder, the world is compounding. And so what that basically means is, you know, is you, is if, if you, if you do the same thing over and over and over, the amount of of of benefit you get compounds, whether you're, you're talking about compounding money and interest rates, you're compounding knowledge, you're compounding experience. And so the community is, is one of the things that, um, is super powerful about E os.

Cole Abbott (00:16:09 -> 00:16:29)

Yeah. Same thing to be said about relationships, right? Compounding the network effect, basically. Yeah. It's in our way of looking at that. Yeah. Um, yeah. So I, on e os, what do you believe is like the core pain point behind why somebody would, um, you know, adopt EOS as a, as a process? As a system? Yeah.

Mark Abbott (00:16:29 -> 00:18:17)

Yeah. I think, um, like I said earlier, the, the journey is complex. Um, and, uh, you know, even though there's only like, you know, 20 concepts, tools and disciplines that are really super core, um, to, for mastery in terms of, you know, being really good at the art and science of company building, uh, the whole thing involves people, right? And we're complex and, um, you know, we're, uh, every single human is extraordinarily unique. I could spend a lot of time talking about this as you well know. Um, but we've got, you know, aptitudes and we've got experiences, and we have personalities, and we have skills, and we have interests, and we have, you know, garbage that somehow or another, you know, starts to accumulate as we develop as human beings, we have biases. I mean, I can go on and on, right? And when you look at, um, every single human, we're extraordinarily unique as I, as I, as I shared. And so, you know, figuring out how to create an organization where, you know, we get everybody to be pretty focused, this is what I'm doing, and this is how I help. And then we align around things like, you know, our goals and our vision, our core values, and our ideal customers, um, right? That, that that's not easy. And, um, and so ultimately what, you know, what we want people to do is we want them to thrive, and we want their companies to thrive. And so, um, that journey, you know, is all about the coaches really help you sort of navigate the complexity associated with the journey to mastery. That make sense? Yeah, yeah,

Cole Abbott (00:18:17 -> 00:18:36)

Yeah. And on, on that journey, uh, right? 'cause you have a lot of companies, you know, starting off small and then mm-hmm, <affirmative> growing with EOS, right? And, uh, so like I, big part of it is the scalability. And so, um, you know, on the philosophical side, what makes EOS scalable,

Mark Abbott (00:18:37 -> 00:21:32)

As I mentioned earlier, uh, it's a really simple, right? He made everything as simple as possible. And so the, if you think about scaling it is hard, it's complex. And so what you want to be able to do is make everything as simple as possible, number one. Number two, the, the journey that the coaches will take you through, or you can take on your own by reading the books. Um, you know, it's time tested. And so it, it helps you think about prioritizing the, um, the mastery of being a great company builder, right? You can't all of a sudden just, you know, um, uh, click your, your, your, you snap your fingers and you'll, you're grade at everything. So, you know, as an example, um, you know, one of the tools, uh, EOS talk has is ugly accountability chart, which, you know, most people think is an org chart. Theirs is focused on accountability, not on titles. And so they like to call it the accountability chart. And, and I like that aspect of, I like that, that term. Um, and so, you know, I like to say that all tools are equal to paraphrase, or well, right? All tools are equal, but some tools are more equal than others. I think you need to get that accountability chart, that org chart needs to be like, one of the first things you focus on, right? And, and you can't focus on everything. And so you just have to sort of what's first, what's second, what's third? And, you know, so first thing for me personally is I think you gotta be thinking about that, um, and, and working on that, because that involves all the people, you know, how are we gonna divide and conquer, right? What are the skills and experiences we need? Um, and so, you know, structure first, people second's, a famous line that we all use. So you got that part of the journey and mastery. And then my experience has been, and I've had, I don't know, 60, 70 clients and then obviously building 90 and, and I've built a couple other businesses too. Um, you know, my experience is, is that the last thing you really want to focus on mastering, and that's, let's just say that's a nine out of 10, that you collectively as a senior leadership team, score yourself. It's process, right? Because every part, department's at a different phase, they've got different things they gotta focus on, and, um, and you'd think you'd like to get process refined real early on, but it's just hard. So, you know, helping people think through how to prioritize getting strong across what USS calls the six key components, right? Um, and so there is a journey there, there is some time tested best practices in terms of, you know, uh, what's your first step, what's your second step? What's your third step, et cetera.

Cole Abbott (00:21:33 -> 00:21:36)

What are those six key components for those who don't know? Yeah.

Mark Abbott (00:21:37 -> 00:22:52)

So, uh, the first one's vision, um, uh, which, you know, is on the top, uh, even though I said, you know, accountability chart should be first, but, you know, vision's first, and then people as the second core, uh, core component, uh, key component. And then the third one is data. And then the fourth one it has is issues because it has a wheel. So that's how I always think about it, right? And the fifth one is process, and the sixth one is traction. And each of those core components has, uh, two concepts and or disciplines associated with it, right? And so, um, um, you know, the vision is has about eight things. You want to get everybody on the same page. People is right, people right. See data scorecards, and everyone ultimately has, uh, EOS teaches a number, but I deeply believe you need to have, you know, at least three, um, KPIs per every single individual or metrics or measurables as they say. Um, then it teaches you how to be really good at issue solving, because every company has issues. I mentioned process, and then that traction is right. What are the things you need to turn the vision into reality? Um, I forget who it is off the top of my head, but, you know, vision, um, uh, the whole expression about, um, uh, vision without traction, hallucination kind of a thing. Yeah.

Cole Abbott (00:22:52 -> 00:23:18)

Vision without execution, hallucination, yeah. At a center, something. Um, but yeah, I guess that's probably our last point, but we kind of touched on it, but didn't really go into depth sort of focusing on and appreciating, uh, people. Right? Right. And in a big part of, you know, it's a big part of EOS Yeah. And especially, you know, having your visionaries and your integrators and sort of the, the dynamic, the yin yang kind of dynamic that goes along with that. Yeah.

Mark Abbott (00:23:18 -> 00:28:13)

So, as I said earlier, I mean, one of the reasons why building a great company is isn't easy, it's because people are complex, right? On the one hand, on the other hand, um, you know, it's just like, uh, archetypes right there. There's, they, they provide utility. Um, they help us generally understand people. And, um, you know, one of the things I deeply believe is that, you know, know part of the journey of life is to become better, better, and better, uh, itself and others awareness. And so you got this concept of self and others awareness, and then you got the concept of archetypes as an example. And so, you know, one of the things that, that you can see, uh, is that there are a lot of founders out there that are, um, you know, they're, they're sort of like your classic entrepreneur, right? Where they have tons of thoughts. They're, they're brilliant. Um, they're highly, uh, you know, uh, they're amazing storytellers. They can, you know, uh, uh, I used to say about one of my old bosses, he could sell waters to someone who's drowning, right? Um, and, uh, so they're just, they're amazingly compelling magnetic, um, beings. Um, a lot of those people, those visionaries who have these compelling ideas, we're gonna go from here to there. They're great leaders. People wanna follow them. Um, they're not as good at, um, sort of the day-to-day management. They're not as good at making sure the trains are running on time. They're not as good at, um, really seeing where someone is in a moment and helping them. Uh, they're not as good at, uh, at, at sort of focusing on developing people. Um, they're good, but they're not great, right? And so, half the time in small and mid-size businesses, what you find is, or what we've experienced is that you have these dynamic duos where you got the visionary who's like, this is where I we're gonna go. This is what's amazing about it. This is the dream. I'm great at selling this to all of our ideal stakeholders, right? I can, I can sell my customers, I can sell employees. Um, they're amazing at that stuff, but they're not amazing, as I said earlier at, at, at managing and coaching, and, uh, really making sure things are, things are, you know, running relatively smoothly. So when you have that type of entrepreneur, and most are right, um, it's powerful when you sort of help them find a yin to their yang, right? And, and those, those, I call those dynamic duos, because together, they're, they're, they're super powerful. Now, the reality is, it's, it's easier said than done because we're humans and, you know, and, and you need to develop trust. You need to feel like the puzzle piece that you are, and they are matches up well, and there's a lot into visionaries versus integrators. Um, and us has a whole thing on to support visionaries and another whole thing to support integrators. But, you know, that's just a, that's just a, like the beginning of the people stuff for EOS. So they focus on really helping visionaries figure out whether they need integrators. They help visionaries think about what a really good integrator would look like for me. But then what it also does though, is, is it cascades down the focus on people, right? One of the things that, um, you know, it's really good at doing is encouraging everybody to have quarterly conversations, um, as opposed to just annual reviews. As anybody who's hang hung with me for a while knows I, I really hate annual reviews. I think they're ridiculous. Um, and, uh, you know, you're gonna wait a year to tell someone how they're doing. If you do that, you're not gonna remember anything except for the last, like, 3, 4, 5 weeks. Um, so that's, that's uncool. Um, and so, you know, that's an example of EOS being really good at, um, at helping people sort of have good feed forward feedback systems, uh, good practices around, uh, helping people, um, uh, coaching and developing people. Uh, but there's a whole, you know, there's a whole host of things that EOS does well on the people front. Weekly meetings as an example, right? Making sure everybody's reasonably well connected. Um, and focusing on just staying in touch. Obviously helping teams come together and focus over 90 day periods is another thing that's really important. Uh, and obviously teams are nothing but a collection of people. So there's a bunch of things, and we could obviously go down a lot of rabbit holes on this one, but there's a bunch of things I think EOS does particularly well with regard to helping us, um, sort of master the people component. Yeah.

Cole Abbott (00:28:14 -> 00:28:19)

Well, that's all we have time for today. Uh, it's been fun. Cool. Yeah.

Mark Abbott (00:28:19 -> 00:28:24)

Yeah. Our number one, our first time. First one. All righty. All right, thanks. <silence>.