Traction Inc.

WHAT is EOS?

Simply put, the Entrepreneurial Operating System is an integrated set of concepts and tools that help entrepreneurs to get the most out of their companies. Supported by an easy-to-understand framework powerfully depicted in founder Gino Wickman’s bestselling book, Traction, EOS optimizes human energy within an organization so that everyone – from owners to employees – is working productively on the most important priorities. The system consists of Six Key ComponentsTM – People, Vision, Data, Issues, Process and Traction®– each of which includes a handful of straightforward tools to promote mastery. Full implementation within an organization typically takes two years following a rigorous and proven process that can be self-directed or facilitated by a Professional or Certified EOS Implementer®.

While thousands of entrepreneurial companies have adopted parts or all of the Entrepreneurial Operating System by implementing it themselves, we believe the real magic happens when companies tap into the expertise of a Certified or Professional EOS Implementer to facilitate the process. As of early 2020, there were over 350 such implementers worldwide. From our experience, just as a coach or trainer helps us stick to a workout schedule and push the boundaries of our comfort zone, so too an EOS Implementer helps keep leadership teams on track during implementation, ensuring they tackle head on the most difficult problems that impede organizational health and performance.

WHY is EOS relevant to investors and boards?

EOS was specifically designed for entrepreneur-owned companies with 10 to 250 employees. Indeed, outside investors and active boards of directors do not figure prominently in the framework. That being said, we believe EOS provides a powerful tool for investors and boards to spur value creation in similarly sized companies provided they approach it the right way. Most outside or professional investors expect alignment with and accountability from their leadership teams and will take steps to accomplish it one way or another. EOS provides a proven way to accomplish both.

Why has EOS become such a popular tool among investors? There are several reasons:

1. EOS Makes Sense. The plainspoken, intuitive logic of EOS resonates with everyone from hard- nosed, school-of-life entrepreneurs to MBA boardroom types to, most importantly, line managers and frontline staff who get the real work done. We have not found anything else with a comparably broad range of appeal up and down an organization. Put simply, EOS supplies everyone with a common conceptual framework, vocabulary, and tool set to drive performance.

2. EOS Demands Ruthless Prioritization. With so many ideas, so much to get done, and so many sources of information, modern leadership teams are at constant risk of distraction and fragmentation. As investors, we see this all the time, especially in companies that were for years dominated by a visionary founder. EOS is the perfect antidote to this tendency through such tools as the Vision/Traction OrganizerTM, quarterly Rocks, and disciplined problem solving via the Issues Solving Track (Identify, Discuss, and Solve).

3. EOS Instills Accountability. Investors and boards value this feature immensely because, without it, organizations rarely perform to their full potential. With roles defined, goals identified, and results measured, there is nowhere to hide in a company running on EOS. The components of EOS work together to create a self-reinforcing culture of measurable and durable performance improvement that results in growth, profitability, and team success.

4. EOS Runs on Data. Most professional investors and attentive boards demand accurate and timely data. The EOS weekly Scorecard provides it in an easily digestible format that highlights only the top 10-15 metrics that matter most to diagnosing company health. Furthermore, the emphasis is on not just lagging indicators like sales and profit but also leading ones, such as prospect generation, account wins, and order flow that predict future performance. Investors love predictability.

5. EOS is Proven. When investors and leadership teams begin their working relationship, it’s natural for skepticism to mount and tensions to rise early on. Company leadership might reflexively resist new ideas. We have found that the introduction of EOS – an independently validated and widely popular system designed for entrepreneurial companies – helps build trust and improve communication. As we often say to companies we have recently acquired, we recommend EOS not just because we like it but because thousands of other entrepreneurs and leadership teams like it too.

HOW should investors and boards deploy EOS?

Through repeated trial-and-error, we have learned over time to do the following things to maximize our impact and minimize disruption during the EOS implementation process:

1. Use a Certified or Professional EOS Implementer. As noted above, we strongly believe the investment in a competent, experienced facilitator who fits with the personality of the leadership team pays off in a swifter, more enduring implementation. Our experience with self- implementation is that it’s better than not doing EOS at all but won’t deliver the same impact. A lot rides on an EOS implementation – investing in an Implementer increases the odds of success.

2. Define the role of investors and the board. Since EOS was explicitly designed for entrepreneurial companies, there is no formal role for investors or board members in an EOS implementation, a reality we have learned to respect in most circumstances. However, we believe alignment between the board and a leadership team during and after implementation is critical. We have found that scheduling board meetings one or two weeks prior to annual or quarterly leadership team meetings helps senior leaders translate board priorities into specific and concrete objectives with the team. In addition, we value seeing the Scorecard each week and having regularly scheduled “same-page” meetings with key stakeholders.