Is EOS the Answer or the Leadership Flavor of the Month?

Is EOS the Answer or the Leadership Flavor of the Month?

by Richard Friedman, Friedman & Partners

The Entrepreneurial Operating System (EOS) is a hot topic in A/E/C leadership circles. Curiosity about the effectiveness of this 15-year-old management approach runs high at conferences, online discussion boards and other gatherings. In this article, we examine pros and cons of EOS with insight from two CEOs whose firms adopted it.

What is EOS?

As perfectly described by the website Ablison.com, “Entrepreneurial Operating System (EOS) is a framework designed to help companies achieve their goals by creating structure and discipline in their operations. It is a set of tools that encompasses various management concepts such as Six Sigma, lean manufacturing and total quality management.”

Founder and entrepreneur Gino Wickman hatched the concept for EOS while advising companies on business and leadership in the 1990s and early 2000s. He and co-founder Don Tinney launched EOS Worldwide in 2008. The company – of which Wickman and Tinney are no longer a part – claims that more than 190,000 organizations have adopted EOS, with over 2 million books sold and nearly 700 EOS “implementers” guiding adherents through the process.

On its website (eosworldwide.com), the company offers pages upon pages of tools, guidelines and eBooks at no cost and with no commitment. The “framework” is open and free; the company makes its money by helping firms that adopt the system to implement it.

A Fishing Story

Kenny Smith, CEO of civil engineering firm T. Baker Smith, heard about EOS for the first time from a hunting and fishing buddy whose satellite communications data services company uses EOS. Smith didn’t give it much thought at the time; he’d read dozens of management books and knew the latest leadership trends. EOS, he figured, was just another attempt at a better mouse trap. Then the third-generation leader of the century-old firm noticed something that changed his mind. “I realized he was hunting and fishing a whole lot more than I was,” Smith says. “So I thought, maybe I ought to look into this.”

T. Baker Smith began its EOS journey in 2019. The COVID-19 pandemic slowed down implementation, but more than two years after the firm launched “The TBS Way” in May of 2021, it is seeing solid results. “We still have a ways to go, but we’re over the implementation hump,” says Smith. “I’m a staunch believer in EOS. I have more people all on the same page, working together, rowing in the same direction. That’s the fun part—when  you realize that the battles aren’t inside the firm, but outside of it. When you have all your folks working together, you can step back and see how easily it can all work.”

The most difficult aspect of EOS for Smith wasn’t in adapting the system’s framework to the company’s operations – though this can be a challenge. It was achieving a core tenet of EOS – getting the right people into the right seats.

“We’re 110 years old with 280 people in 9 offices along the Gulf Coast,” says Smith. “We were overdue for a good revamping. To really step back and redefine ourselves. To figure out who we want to be and where we want to go. The system did a good job of helping us establish core behaviors. We built a 3-year picture and a 10-year vision.”

Smith laid out the vision to the company and, with the help of their EOS implementer, assessed key people in the firm through the “People Analyzer.” EOS Worldwide says this tool helps firms “cut through the complexity and clearly identify if someone fits in your culture and is filling the right seat.” The analysis revealed that T. Baker Smith had the wrong people in some very important seats.

“We had some really good people leave the firm,” says Smith. “Though it hurt to see these people leave, it was the best thing for the firm and for them. We’ve realized this even more as we’ve moved forward over the last two years. We’re hiring people who know exactly where the firm is going. When you have the right people in the right seats, it’s pretty fun to watch.”

One of the most difficult departures was a senior leader who had been with the firm for over 20 years. “We established that we want to be a regional business, and he really didn’t want that,” says Smith. “He’s a super guy and a great engineer, but we finally came to the conclusion that we want different things. So he went to work for a local competitor. That was tough, but we replaced him with someone fully engaged with the growing firm that we want to be.”

Another long-term employee who initially didn’t buy into EOS was turned around by the process and its success. He is now one of its biggest advocates in the company.

Flexibility Makes It Work

One criticism of EOS is that it is a one-size-fits-all solution. But T. Baker Smith and other firms using EOS are free to adopt the aspects of the program that fit their needs and abandon those that don’t. Smith says that they threw out the recommended performance reviews and renamed “Issues” as “CHOPS” to reflect whether something is a challenge or an opportunity.

He adds that one of EOS’ greatest contributions to his firm is its ability to rein in his mercurial tendencies, largely by redefining the role that “visionaries” and “integrators” play. “I’m a dreamer. A strategic planner. A visionary. EOS has a component – the 90-day world – that forces me to stick with the plan and to let the integrators do what they do. It says I can dream up a bunch of stuff in 90 days, but until then, I need to stay out of the way.”

The 90-day program grows out of another key concept in EOS – “Rocks.” These are the 3-7 priorities to focus on for the next 90 days.

A Focus on Efficiency

TSP, Inc., a 60-person A/E firm based in South Dakota, has had a similar experience. It changed the EOS “Leadership” team to an “Ops” team, and chose to adopt some aspects of the program and reject others.

TSP gave EOS a try after an emerging leader came across an integrator and brought the idea to CEO Jared Nesje in 2017. The firm was undergoing substantial internal ownership transition, so it seemed a perfect time to get the right people in the right seats.

“It didn’t feel like a flavor of the month,” says Nesje. “We didn’t feel like we had to throw everything out and start fresh. We could pick the structure we wanted and the speed we wanted. There are some things that are non-negotiable if you want to do EOS, but other things might not fit you, so you don’t have to do them.”

One of the main attractions of EOS for Nesje is its focus on meeting structure. “We were having meetings to set agendas for meetings,” says Nesje. “We were getting bogged down. The EOS framework focuses on the efficiency and effectiveness of meetings. What you’re going to cover, what’s important now, what you can deal with later. It really opened my eyes to being more efficient and getting back to business.”

Like T. Baker Smith, TSP found that it had some people in the wrong seats, and it had to make some painful decisions. “EOS shined a bright light on our efficiencies and inefficiencies,” says Nesje. “I found that the difficulty for me was managing the people who were in the wrong seats. I was learning my new role and I didn’t like that part of my job. We realized that for the greater good, we had to change any and all people and processes that weren’t good for the business. This is a 93-year-young legacy firm that we were tweaking, and at first we wondered if we were just changing for change’s sake. Now that we’re on the other side of it, we look back and know that those changes were badly needed.”

Can EOS Help Everyone?

The cost of implementing EOS varies based on how much help you require with implementation. Both T. Baker Smith and TSP paid EOS implementers initially, but have either taken tasks in-house or cut back on the frequency of the implementer’s involvement.

Scaling Up, an organization similar to EOS Worldwide (and that notes forcefully that it pre-dates EOS), says that EOS implementation can cost between $14 for the paperback version of “Traction,” Wickman’s first book outlining the basics of EOS, and $50,000. T. Baker Smith chose to invest in an EOS-trademarked and licensed software system to manage its program. Smith says it’s “not extremely expensive.”

Critics of the EOS system argue that it can be difficult to implement in large, complex organizations. Transworld Business Advisors, a Minnesota-based consulting firm, suggests that EOS is best for firms with between 10 and 250 employees. It also may be a good option for family businesses where dysfunction and in-fighting are common, the group says, because it helps to build structure.

Others caution that not all implementers are equal. Most are franchisees, and the level of experience In business strategy varies because EOS Worldwide relies on its system, not the experience of its representatives. A/E/C firms may also want to seek out an implementer with experience in the industry, or potentially augment the EOS advisor with a strategic consultant that knows the A/E/C business.

Smith says that visionary leaders should absolutely give EOS a look. “It’s a way to put an organized system in your firm. It gets the right people in the right seats, including you. You get to do certain things that you love to do. Visionary things. The integrators get to do what they love and dive into the details. We always fell a little short with that, but this all makes sense to me and I’m having more fun than ever.”

The big question, of course…is Smith fishing and hunting as much as his buddy is? “Definitely more. Still not as much as I’d like. But I hope to get there soon.”

What are your thoughts on EOS? Experiences? Questions? I’d love to hear them. Please write to me or call (508) 276-1101.