Ultimate Guide to Business Operating Systems
If you’re struggling to get your business under control, it’s probably time to implement a business operating system.
A solid business operating system takes your company from chaos to clarity. Everyone works toward the same goals, so your business runs more smoothly and profitably, setting you up to achieve growth.
Where do you begin?
Start by getting a clear picture of what a business operating system is and what it can do for your business. Is your business an ideal candidate? Learn how to spot the signs, and understand what it takes to build and manage a successful business operating system.
Keep reading to find out more.
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TABLE OF CONTENTS
Chapter 1
How do you know if you need a business operating system?
Does your business feel like it’s in constant chaos? Do you feel bogged down by details and issues that never go away? If you’re dealing with one or more of the following frustrations, it’s time to implement a business operating system in your organization:
LACK OF CONTROL – You don’t feel you have enough control over your time, the market, or your company. Instead of controlling the business, the business is controlling you.
PEOPLE – You’re frustrated with your employees, customers, vendors or partners. They don’t seem to listen, understand you or follow through with their commitments. You can’t seem to get everyone on the same page.
PROFIT AND CASH FLOW – Simply put, there’s not enough of it. You work hard on your business, but the profits never match your efforts.
YOU’VE HIT THE CEILING – Growth has stopped. No matter what you do, you can’t seem to break through and get to the next level. You feel stuck, overwhelmed, and unsure of your next move. You used to be able to add customers and revenue at will, but now you feel tapped out.
QUICK-FIX REMEDIES WON’T WORK – You’ve tried various strategies and watched countless YouTube videos on how to run a better business, but nothing has worked for long. As a result, your people have become numb to new initiatives. You’re spinning your wheels, and you need traction to move again.
YOUR VISION IS NOT SHARED BY THE TEAM – Everyone is doing their own thing and going in different directions. You wish everyone “got it” and could execute a plan for success.
Chapter 2
What is a business operating system?
A business operating system (BOS) is a complete set of processes and tools that allow you to build a solid, well-run organization. It helps your business develop a standard way to operate – from how it develops, produces, and delivers products, to the way it interacts with customers.
As you develop a BOS, you examine key aspects of your workflow – how your business sets priorities, carries out its vision, conducts meetings, and communicates with employees. You define your business processes and systems and establish clear roles, skill requirements, and an organizational structure.
Ultimately, an effective BOS gets everyone in your company on the same page, sharing the same vision and working toward the same goals. Expectations, processes, and accountability are all clearly defined, so everyone is in sync and operating together like a well-oiled machine.
It also transcends the founders, owners, and leadership team. A BOS allows you to build a well-run business that can operate successfully without you. It gives you the freedom to scale your business to the next level and ensure long-term success for your company.
What are business operating system examples?
There are a variety of approaches to developing a business operating system, and many offer guidance through education, coaching, and software.
Here are a few examples, including published books that explain the methodologies:
The Entrepreneurial Operating System® (EOS) – explained in Gino Wickman’s Traction: Get a Grip on Your Business
- E-Myth – Michael Gerber’s E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It provides an overview of this operating system.
- Scaling Up – detailed in Verne Harnish’s Scaling Up: How a Few Companies Make It… and Why the Rest Don’t.
- The Great Game – outlined in The Great Game of Business: The Only Sensible Way to Run a Company by Jack Stack with Bo Burlingham.
- 4DX – explained in The 4 Disciples of Execution: Achieving Your Wildly Important Goals by Sean Covey and Chris McChesney.
Chapter 3
What is the purpose of a business operating system?
A business operating system provides a solid foundation, especially for organizations where it’s needed the most, such as privately held entrepreneurial businesses, growth-minded organizations, and small- to medium-sized companies with 10 to 250 employees
It captures all your business procedures in one place and lays the groundwork for ongoing success by:
- aligning your leadership team to a shared vision and goals
- helping your leadership team understand and define employee roles
- improving business processes by streamlining workflows, removing roadblocks, and creating consistency
- creating a system that clearly defines accountability and measures success
- encouraging open dialogue among employees and key stakeholders
When your people align with a shared vision and goals, and a clear roadmap to get there, everyone has a stake in the game. Success no longer depends solely on the business owner, which gives you the freedom to focus on scaling your business for future growth.
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Chapter 4
What should you look for in a business operating system?
You have several options to implement a business operating system. You can research and create your own system. You can implement an established system on your own. Or, you can hire a certified business consultant to guide you through the implementation process.
Whatever you decide, your BOS should effectively address six key areas:
- Vision – mapping out a clear vision for your organization and getting all your people to share that vision.
- People – getting the right people with the right skills in the right jobs in your organization.
- Data – using consistent, accurate data to manage your business, and measuring your business regularly against key metrics to keep it on track.
- Issues – developing a process to identify, prioritize and solve issues for good.
- Processes – identifying the core processes for your business model, documenting them, and training everyone to follow these procedures.
- Execution – establishing a systematic way to make sure your plan is on track through effective meetings and quarterly goals.
What are the types of business operating systems?
Business operating systems range from specialized to comprehensive business management solutions. Specialized systems target either one aspect of a company or a specific type of organization, such as a start-up. Broader systems typically apply to any business, from small ventures to larger companies. With some systems, you can learn and apply the principles on your own. But others benefit from the use of a dedicated coach or certified consultant.
How do you know what solution is right for your business? Start with some research to find a methodology that meets your needs.
As you narrow down your choices, keep the following tips in mind:
DON'T MIX AND MATCH COMPONENTS from different operating systems. Apply one solution consistently and comprehensively so you realize the full benefits for your business.
DON'T IMPLEMENT A SYSTEM HALF WAY. Most business operating systems feature interrelated components, so picking a few pieces to implement in isolation won’t achieve the desired results.
DO PICK A PROGRAM THAT ALIGNS with your business philosophy and your company's stage of growth.
DO CHOOSE A SYSTEM WITH A PROVEN TRACK RECORD of success, one that can provide references meaningful to your business.
Chapter 5
What are the methods to manage a business operating system?
A good business operating system focuses on people, but also incorporates a software platform and digital tools to help you manage the entire process – from implementation to ongoing operation. Compared with a pen and paper system, business operating system software not only speeds up implementation, it helps you track ongoing metrics and achieve your goals more efficiently.
EOS One™ , developed by EOS Worldwide, for example, digitizes your EOS Foundational Tools and the EOS meeting experience to make running your business on the Entrepreneurial Operating System® simpler and more efficient.
Overall, effective business operating system software integrates all the functions that help you run your business successfully, giving you insightful data to inform your business decisions. The best systems:
Improve efficiency across the board
Provide your leadership team with more clarity and control
Allow you to allocate resources more efficiently
Automate your administrative functions
Offer robust reporting functions
Grow with your business
Give you the system integration you need to keep your customers happy
Chapter 6
How do you build a business operating system?
Overall, a solid business operating system manages issues proactively, sets clear expectations for everyone in your organization, and measures performance against those expectations.
As you build your BOS, you’ll examine five interrelated components: processes, systems, roles, skills, and organizational structure. Throughout the process, keep flexibility in mind so your business can adapt quickly to changing conditions.
Processes
How does your business complete tasks – responding to a customer complaint, maintaining supplier relationships, resolving internal conflicts? It’s important not only to map out these and other processes but to design ways to track them. This helps to pinpoint inefficiencies and adjust processes to improve productivity.
Well-designed processes, supported by tools, make it easy for stakeholders to:
- Understand – written in simple, straightforward language
- Access – stored in a shared location
- Perform – steps are followed consistently each time
- Track – measure for continuous process improvement
Systems
Business systems encompass groups of interrelated processes. They include areas such as employee management, financial management, supplier development, product development, and customer development. In a customer development system, for example, related processes drive the entire customer experience, from first contact with a new prospect to the customer’s first product or service order to ongoing account management and maintenance.
Successful systems connect with your company’s overall growth targets. They’re easy for employees to perform consistently and easy to measure against company goals. Effective systems create consistent, positive experiences for customers, employees, suppliers, and other key stakeholders. When your employees know what to expect, they can confidently make smart decisions that ultimately benefit your business.
Roles
When you define clear roles, it’s important to focus on how they support your company’s processes and overall mission rather than getting stuck on employees’ current responsibilities. If you determine how these various roles relate to one another, you’ll do a better job of identifying gaps and aligning responsibilities across positions. By aligning roles with your company culture and goals, you’ll also make connections with employees who share your company’s core values.
Role development should also account for future growth. You may develop a role that your company doesn’t need today but will need in the future. You may end up with one employee who takes on multiple roles at first. Either way, you should be prepared for growth, so you can easily adjust for larger staff requirements as you scale your business.
Skills
Once you define the roles your business requires, it’s time to match them up with the skills necessary to fulfill each role. By assessing your current employees, you can evaluate existing skill sets and determine if new or different skills are required.
Be sure to consider hard skills, such as technical capabilities, as well as soft skills, such as personal traits. There are the obvious hard skills required to get a job done, but soft skills are just as critical. Personal traits, such as collaboration, sensitivity, and attention to detail, play an important part in placing the right person in the right role.
Ultimately, clearly defined skills requirements will simplify your hiring process both internally and externally.
Organizational Structure
Once you have your processes, systems, roles, and skills well defined, it’s time to develop an organizational structure that not only works for today, but that can quickly adapt as your business grows. Don’t be tempted to create your organizational structure first – the results can be constricting and may not reflect the needs of your business or your customers.
By saving this important step for last, you’ll create a culture of empowerment. A successful structure will support the way you do business. It will reflect your company values, support your business systems and processes, and give employees the framework they need to be successful.
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EOS Glossary
Terms to Help you Navigate EOS
EOS® is a language onto itself. Here are a few EOS terms from our glossary that will help you navigate the Entrepreneurial Operating System® for the first time – or at least help clarify a term that you’ve heard before but are unclear about:
Entrepreneurial Operating System® (EOS®): A proven set of simple, practical tools that improves how people in an organization meet, solve problems, plan, prioritize, follow processes, communicate, measure, structure, clarify roles, lead, and manage.
The EOS Model®: Every business is comprised of Six Key Components™ as depicted by the EOS Model. Those six components are: Vision, People, Data, Issues, Process, Traction®. These must be managed and strengthened to create a healthy, well-run business.
Vision Component™: Getting everyone in the organization 100% on the same page with where your company is going and how you’re going to get there.
People Component™: Getting the right people in the right seats.
Data Component™: Using a handful of numbers that give everyone an exact pulse on where things are and when they are off track.
Issues Component™: Strengthening your organization’s ability to identify issues, discuss them, solve them, and make them go away forever.
Process Component™: “Systemizing” your business by identifying and documenting the core processes that define the way to run your business.
Traction® Component: Bringing discipline and accountability into the organization.
Integrator: The leader of a company’s leadership team. Integrators beat the drum, break the ties, harmoniously integrate other major functions in the organization, and accept ultimate accountability for achieving results.
Scorecard: An EOS Tool used to track a handful of numbers that give you a pulse on your business.
Accountability Chart™: Different from an organizational chart, an Accountability Chart defines the right structure for your company and clearly identifies who is accountable for what.
Rocks: The three to seven most important things you must get done in the next 90 days. Employees will typically have one to three individual Rocks each quarter while leadership team members will typically have three to seven individual Rocks.
Measurables: When companies use EOS, everyone “has a number” that is considered their measurable – something they do to contribute value to the organization that is measured on a consistent basis.
V/TO™ (Vision/Traction Organizer™): A two-page document that helps your leadership team define, document, agree on, and share the company vision.
10-Year Target™: A long-range, energizing goal for the organization, ranging from five years to 20 years out.
Core Focus™: Your core focus defines what you are as a company to help you avoid “shiny stuff” and keep you focused on the areas where your business excels. It comes from the intersection of knowing “Why” your company exists and “What” you do in the world.
Core Values: A timeless set of guiding principles that define your culture and the behaviors you expect from each other. They help you determine who fits your culture and who doesn’t and they help you attract like-minded people to your team.
Marketing Strategy: The definition of your ideal customer and the most appealing message to attract them to your business. It should provide a laser-like focus for your sales and marketing efforts.
3-Year Picture™: A definition of what your company will look like, feel like, and be like in three years. The 3-Year Picture creates a powerful image of the future and helps everyone work towards the same vision.
1-Year Plan: Defines your objectives for the year by identifying and crystallizing your revenue target, profit target, and measurables, along with your top three to seven goals for the year.
SMART: Stands for Specific, Measurable, Attainable, Realistic, and Timely. Making goals and Rocks SMART is essential for creating crystal clear communication and for setting the right expectations between you and your team so everyone knows what “done” looks like.
IDS™: Also known as the Issues Solving Track™, IDS is the process your team uses to identify, discuss, and solve issues on an ongoing basis.
Level 10 Meetings®: A weekly meeting with a specific agenda designed to help you stay focused on what’s important, solve issues effectively, and keep your team connected.
People Analyzer™: A simple tool that pulls your core values and Accountability Chart together to help your organization identify if they have the right people in the right seats.
Visionary: Often the company founder, a visionary is a strategic thinker who always sees the big picture and is tuned into the future of your industry. Visionaries are usually great with big relationships and the culture of the organization.
Organizational Checkup®: A 20-question survey that helps measure a company’s strength in the Six Key Components.
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