Why you should implement a business management system (and how to do it)
One of the most popular questions we ask both advisors and small businesses on the Malartu platform is, “what is your single biggest business challenge?”
This question is intentionally open-ended. It’s intended to spark meaningful conversation around what keeps a business owner up at night. But with all that good-intention, often the answer is something like, “I’m not sure, we’re just stuck.”
Often your biggest challenge isn’t easily articulated. Often business is facing a handful of small challenges, one of them being a team’s ability to identify issues before they become major problems.
Many business owners and managers are beating their heads against the wall and can’t quite put their finger on why. In fact, we find that around 10% of businesses answer this question concisely, while 90% are in the “stuck” crowd.
The solution to this is a simple operational ethos: implementing a business management framework.
According to Black's Law Dictionary, 2nd Ed,
"A Business Management System is a set of tools for planning and implementing policies, practices, guidelines, processes and procedures that are used in the development, deployment and execution of business plans and strategies and all associated management activities."
Which management system is best?
These frameworks come in many shapes and sizes, but at the end of the day they’re all designed to do the same thing: unite a team around a singular goal, assign ownership of objectives to each team member, and sound the alarm when objectives and goals are slipping away.
You may have heard of management systems like “Balanced Scorecard (BSC)” “Hoshin Kanri” and “OKRs” but at Malartu our favorite, and one we often implement for advisors, is EOS - The Entrepreneurs Operating System.
As president of Malartu, and operations obsessor, I like EOS because it’s dead simple. There’s a strict agenda to each meeting, obvious goals, and by design it gives each team member a voice and influence on company direction.
What is EOS?
EOS is derived from the best-selling book, Traction, by Gino Wickman. I recommend this book to anyone in a leadership position.
You can download a handful of materials at eosworldwide.com that walk you through implementation but I'll give my perspective here since there's a lot to comprehend. After all, we're talking about an operating system for your entire company, and a system that requires buy-in from every team member.
Let’s talk about the key attributes that have built our commitment culture at Malartu.
A framework to clearly articulate the company vision and focus on your long-term goal
Every manager’s goal is to build a team that pushes forward with a unified purpose and passion to achieve their mission. This starts with establishing a clear vision.
According to the EOS framework, a company’s vision is a combination of core values and the company’s core focus. These core values and focus should be understood by every person in the organization. If they aren’t, the team won’t share that unity in purpose and passion.
Plain and simple (that’s the theme here).
The 10 year plan
Once you have clearly articulated your vision, create a ten-year plan that outlines the lofty, pie-in-the-sky goal you're trying to reach. This is an illustration of your vision. You’re literally going to describe what this *looks* like:
How many employees? How much is the company making? What does your benefits package look like? How many ping pong tables do you have in the office?
The 3 year plan
From the 10-year vision, you set your three-year plan, which describes the strategies you’ll need to put in place to accomplish that lofty ten-year goal. This is where your thinking might get a little less abstract, where you start working off real financial forecasts and well-formed hypothesese.
The 1 year plan
Continuing the pattern, we narrow the three year plan down to a one year plan, and from there quarterly goals, or Rocks, as Wickman calls them. All along the way keeping in mind how different divisions contribute to those goals.
We typically set aside an entire day each quarter to set these goals, review our mission, and make sure the whole leadership team is on the same page. It sounds like a lot of time dedicated to something so hypothetical, but I promise it’s worth the investment.
What is unique about your strategy?
Finally, to round out the vision, you need to establish your unique marketing strategy. What is something that is unique to your business that wins over a specific market segment?
This is a niche that everyone in your company understands and is proud to drive toward. This may evolve over time, but it must always be specific and unique.
Quick tip: One person needs to be the final word in these meetings. This is often the CEO or founder of the business. Agreeing on your unique strategy can be difficult because it’s not going to please everyone, and often times existing businesses have to cut customers who may no longer fit that strategy in order to truly stay on the path to achieving their 10 year target.
You’re implementing this framework to drive forward progress, so remember:
Agreeing on your unique strategy can be difficult because it’s not going to please everyone, and oftentimes existing businesses have to cut customers who may no longer fit that strategy in order to truly stay on the path to achieving their 10 year target. To that point, one of the best lines by Wickman is, “If you try to please everyone, you’re going to lose your ass.”
And to that point:
Be Deliberate About Cultural Fit
Whether you’re hiring new members to grow your team or turning an existing business around, it starts by analyzing people.
If you couldn’t tell by the name, EOS isn’t the most creatively named system. With that in mind, the team analysis part of the EOS model brings us to a chart called “The People Analyzer.”
To create the People Analyzer, list all your core values in one column, list your employees in one row, and mark if they exhibit this quality all of the time, some of the time, or none of the time.
This exercise will paint a clear picture for who fits the culture you’re building and who doesn’t.
Once you’ve identified that the team fits your overall vision, it’s important to understand how they fit into their specific roles. For this we use the Get, Want, Capacity chart. Simply answer these three questions:
Does the employee understand their role? (Get it)
Do they like the job? (Want it)
Do they have the intelligence, experience, or any other quality necessary to perform this job effectively? (Capacity)
If the answer is "no" to any of these, they aren’t right for the job. Plain and simple.
Combining your learnings from these two exercises with an accountability chart (chart that maps out different departments of the business and where each person currently stands), will allow you to empower employees to take on leadership responsibilities and eventually entire leadership roles.
This empowerment is a huge factor in building an environment for commitment culture to thrive. If employees know they have the opportunity to grow within your company, they are far more committed to seeing the company succeed.
Setting quarterly goals from your 1 year plan
As I mentioned earlier, quarterly goals in EOS are referred to as ‘Rocks.’ The beauty of quarterly goals is that 90 days is the longest most humans can focus on specific issues without losing interest. It’s science, check it out here.
In the quarterly meeting everyone on the team lists their respective things to accomplish next quarter that will contribute and move the needle toward the one year, three year, and ten-year vision.
Take this list and whittle it down to seven (or less) top priority goals. These will be your Rocks.
EOS Rocks are different from other objective frameworks in that they’re specific, attainable that quarter, and measurable. For example, a Rock for your CTO might be to release V2 of your mobile app this quarter. This Rock is obviously made up of many smaller tasks but it has a binary outcome and clear deliverable before next quarter's meeting.
A good rule in identifying Rocks is to ask, “Will this take longer than a week to complete?” If the answer is yes, that’s a candidate for a rock.
Assign each Rock to a person on your leadership team who will be in charge of seeing it through. Only one person can own each Rock, since splitting the responsibility inevitably leaves no one accountable.
Each member of the leadership team should share these Rocks with their department and direct reports along with reporting on last quarter’s Rocks.
From here, those departments can set their own underlying Rocks that lead to accomplishing the company-wide ones.
By now I hope you see how this process builds from itself while also maintaining the company vision and culture of fulfilling work.
In the EOS system, the majority of data resides in scorecards. Scorecards consist of 5 to 15 performance factors that, if met, will lead to accomplishing quarterly rocks. Scorecards are reviewed each week in what EOS calls an “L10 Meeting.”
Generally, these scorecards hold people accountable, identify issues before they become huge problems, and create healthy competition among your leadership as well as their underlying departments.
This weekly meeting will be the cornerstone of your commitment culture. It certainly is for Malartu. The meeting promotes accountability within your team and transparency in how you go about solving issues. As a helpful addition to this post we've included our Malartu L10 template for you to download and use how you wish.
Using data to identify and solve issues
The process for solving issues within the weekly meeting is called IDS, which stands for Identify, Discuss, Solve. The general idea is that each member of your leadership teams lists all of the things that aren’t working the way they should since the last time you met.
With all issues listed out, the team votes to choose three to discuss and solve that week. First, you identify what’s actually going on, since issues are often symptoms of something deeper. In our L10 template you will see that we get to the core of an issue by asking “Why?” five times. This helps us to truly uncover all the factors leading to an issue.
Now that you've identified, discuss. Give everyone on your leadership team the chance to voice opinions about key issues and suggest ways to handle them. Finally, solve by assigning a solution, typically a concrete task that one person owns. When they complete this task, the issue should ideally disappear.
This process is so important because it creates a safe atmosphere for everyone involved. The idea of a “safe atmosphere” is a bit more nuanced than you might think.
You must maintain a safe atmosphere for identifying issues
In a study called "Project Aristotle," Google’s people analytics team set out to find what mattered most in building successful teams. At first guess, most people would assume that successful teams are made up of superstars with a strong consensus and just the right amount of work to pose a challenge. Project Aristotle, of course, found otherwise.
Project Artistotle found that any team, including those made up of relatively average performers, can achieve great things by achieving a “safe” dynamic.
So what does safe mean?
Team members won’t be ridiculed for making mistakes or suggesting new ideas.
They are allowed to admit mistakes and address issues quickly
They are all encouraged to contribute equally
It might be obvious, but safe teams consist of empathetic people - people who really care about the other people on the team.
It’s important for the leader of every meeting to make sure each person’s voice is heard.
Use your learnings to streamline your company’s processes
From a more strategic perspective, one of the worst things you can have are redundancies within your operation. An easy way to identify these is to have your leadership team list all the processes that are core to your business. Have everyone agree with the list and make sure they all use the same names to refer to the different processes.
From here, each person in charge of each process documents important steps they take in completing the process. For example, the head of HR documents steps she takes when recruiting, orienting, or terminating employees.
Review these sub-processes and you’ll find that some are redundant between team members. You might discover that there are areas that can be simplified with technology. After you clarify these redundancies and opportunities you can eliminate unnecessary tasks and simplify everything.
From there, make sure the remaining processes align with your core values, to maintain that consistency needed for a strong commitment culture.
Get started with EOS today
The EOS process is simple on purpose, its a distilled version of stuffy, complex corporate strategy that would put your employees to sleep if you tried to implement it. From accountability charts to rocks, to scorecards, we attribute everything about our culture at Malartu to this system.
Download our internal Google Sheet guide to the L10 weekly meeting here: