Operating systems help achieve clarity, cohesion, teamwork, effective processes, and other crucial components of a business by design
If only everything in life came with an instruction manual. Fortunately for entrepreneurs, running a business does—and there are many instruction manuals to choose from.
Achieving a business by design means creating one that can largely run without us. The steppingstones to doing so include becoming a leader by design who understands our own strengths and weaknesses, plus building a team by design that allows us to delegate with confidence. But while people are crucial—and in some respects, everything—all the talent and engagement in the world can only take a company so far.
Essentially, we need systems and processes in place that make many aspects system-dependent instead of people-dependent. This lightens the load while creating efficiencies and redundancies that grow and protect the business. It also achieves consistency, a crucial characteristic for both running a business well and making it attractive for potential buyers down the road.
Enter the business operating system. There are plenty of respected programs developed by some very bright people. Let’s take a look at some of the most popular choices, plus some tips on choosing one and implementing it effectively.
A list of quality operating systems
There are numerous operating systems to choose from and many of them involve a book:
- Michael Gerber’s E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It is the basis for the E-Myth operating system.
- Gino Wickman’s Traction: Get a Grip on Your Business planted the flag for the Entrepreneurial Operating System® (EOS®)
- Verne Harnish’s Scaling Up: How a Few Companies Make It … and Why the Rest Don’t informs—you guessed it—the Scaling Up system.
- The Great Game of Business by Jack Stack with Bo Burlingham and its eponymous system is a popular choice.
- Built to Sell: Creating a Business That Can Thrive Without You by John Warrillow underlies the Built to Sell operating system.
- The Disciplined Leader: Keeping the Focus on What Really Matters was written by John Manning, the President of Management Action Programs.
Reading the books is a great place to start, as each one imparts valuable knowledge while providing insight into how each system (or aspects of it) works.
Some systems are comprehensive and can apply to any business, from large corporations to small ventures. Others specialize in certain aspects of a company or assist specific types of organizations, like startups. Many of them have principles that an entrepreneur can learn and apply independently, while others benefit from a dedicated coach who helps implement them.
The Dos and Don’ts of picking and implementing an operating system
First, let’s cover the big “don’t.” While it’s a great idea to read about as many business systems and philosophies as possible, we should not “mix and match” components. One of the worst mistakes we make as entrepreneurs is learning about different operating systems and tools and building Frankenstein models. This kills the crucial benefits of any system: its simplicity and the common language it creates within a company.
If you pick one, apply only that system—consistently and comprehensively.
That guidance aligns with the next word of caution: Don’t just implement a system halfway. Most of these strategies have interrelated components, and picking a few things to execute won’t necessarily work in isolation. It’s like half-baking a cake.
This warning often ties to executing a system without professional help. Many programs can be successful DIY efforts, but entrepreneurs tend to be busy people. And it can be hard to maintain the distance and objectivity necessary to get the best results. So, don’t attempt to implement a system if you won’t have the time and focus to follow through. As entrepreneurs, we must honestly assess our resources, commitment, and knowledge. If that evaluation signals we need help, bring in a resource—in this case, one of the professional coaches specializing in each operating system.
Do pick a program that matches your business philosophy and needs. Again, some of these are more DIY than others, while others are either complete systems or specialized toward aspects of a business or specific types of companies. It’s essential to choose one that you relate to, fits your organization, and aligns with your company’s stage of growth.
Also, it’s best to choose a tried-and-true system with a track record of success helping many businesses. There is a reason many of those books are best-sellers that spawned or reflect popular techniques, and some of them have been used for decades. One crucial benefit of a track record is that it’s very easy to speak to someone who has tried an approach and get a candid review of the results. And we don’t necessarily want our business to be a lab animal for testing a new program.
Finally, make sure that any system has the following elements:
The essential components of a good operating system
Many of the options listed above are similar, but again, there are variations between them and more choices out there. Nevertheless, any quality system should have some core elements:
- The overall philosophy should be proven and align with what an individual and an organization want to achieve.
- Any comprehensive system must include a shared vision. This includes defining a company vision, a systemized way of sharing the vision with the team, and methods for showing that everyone aligns around it.
- It needs to offer a rhythm of accountability, which usually involves defining and measuring objectives, a schedule of specific meetings, and other methods for improving communication and accountability.
These aspects are vital because they tackle the most common and destructive problems faced by businesses. An operating system is designed to turn chaos into order, inscrutability into visibility, and fuzzy goals into actionable—and accountable—objectives.
Operating systems break down barriers to growth and value
Most businesses, specifically in the startup space, grow to a certain level in spite of themselves. Some combination of passion, dedication, luck, and in-demand goods or services pulls us through those early years to achieve a measure of stability and success. But a company cannot continue to expand and thrive on those traits alone. The business needs to grow up.
An organization in this stage is like a teenager who needs to figure out who they are and where they want to go to become an adult. Applying an operating system introduces structure during an organization’s adolescence so that it can evolve into something better.
It creates this structure by building processes and systems that increase efficiency, accountability, and measurable progress. These are the building blocks for a business by design—one that can essentially run without the founder. This discipline also creates immense value, fulfilling the goal of proactive exit planning. Potential buyers want to see replicable processes, efficiencies, and a track record of hitting objectives, and a well-executed system provides these benefits and more.
In essence, operating systems enable companies to scale, thrive, and, when the owner is ready, sell successfully.
I decided to use the Entrepreneurial Operating System for my businesses, and I loved it so much that I became an EOS Implementer. It has a great mix of completeness, simplicity, consistency, effectiveness, and application to a wide range of businesses. But all the systems mentioned above (and some others) have value and are worth a look. In the end, entrepreneurs should evaluate the options and choose one that’s right for them.
In the next chapter, I go over my impressions of two major business operating systems and why I chose one over the other—while learning from both!