PDF Summary:Traction, by Gino Wickman
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1-Page PDF Summary of Traction
Traction offers a helping hand for beginning entrepreneurs and others whose businesses are stuck at a point where hard work and determination are no longer enough for them to survive and grow. Business owner and consultant Gino Wickman explains how to structure your business using his Entrepreneurial Operating System to remove typical frustrations, so it regains momentum, it runs seamlessly, and you don’t get mired in details. The system is based on practical experience, not theory. Numerous tools and templates lead business owners step by step through processes to create a structure and core focus that strengthen and reenergize their organizations.
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- Depict the major functions or departments as well as the sub-functions that report to them as boxes on an organization chart.
- In each box, list the key roles of each function as bullet points. For example, every position on the chart with direct reports has at least three roles—leading, managing, and holding people accountable (LMA).
- Then put the right people in the right positions.
Besides the major functions or departments, businesses typically have two other roles: an integrator (a CEO or president who coordinates the work of the departments) and a visionary. Often these people are partners or co-founders.
The visionary is a creative idea person, whose new ideas keep the company growing. In contrast, the integrator manages the business nuts and bolts: profit and loss, and overall business objectives. On the chart, department heads should report to the integrator/CEO, who reports to the visionary.
The GWC Tool
To determine the right positions for people, assess them with the GWC tool. Ask yourself whether they:
1) G: Get it: When someone “gets” or understands a job, they fully grasp the role and responsibilities, including the systems, deadlines, and the way the job relates to other positions and the company’s mission.
2) W: Want it: The person also must have a strong desire and motivation to do the job, as well as truly enjoy it.
3) C: Are Capable of doing it: Being capable means having the intellectual, physical, and emotional capacity to do the job. For instance, a position may require more than 40 hours a week, which not everyone will want to commit to, or it requires certain knowledge or interpersonal skills.
3) Data
The third component of the EOS™ is data. Many entrepreneurs are like pilots flying blind with no data to indicate where they are or where they’re going. However, a handful of key numbers comprising a weekly “Scorecard” will let you check the vital signs of your business weekly, spot problems and trends, and make course corrections before problems become crises. The Scorecard will enable you to let go of control while remaining connected.
Here are the steps for creating a Scorecard for your business:
- Step 1: Choose the 5 to 15 numbers that are the best indicators of how your business is doing on a weekly basis—for instance, revenue, sales activity, customer complaints, and accounts receivable. Create a template or spreadsheet with the categories listed in the far left column, followed by a goal column, and columns for entering numbers below week dates running across the top. It should be designed so you can see 13 weeks of numbers at once.
- Step 2: For each category, list who is accountable for the number.
- Step 3: Decide on a weekly goal for each category (for instance, a sales goal) and fill it in. The goals should align with your one-year plan.
- Step 4: Review the Scorecard with your leadership team every week to monitor how the business is doing and take any steps necessary to stay on track to reach your goals.
4) Issues
Issues are the fourth component of the EOS™. Unresolved issues or problems drain your company’s energy. The Entrepreneurial Operating System provides two tools to help your leadership team uncover problems, drill down to the cause, discuss solutions, and act: the issues list and the “Issues Solving Track” (a three-step process).
The issues list is a tool for getting issues on the table and in one place where they can be dealt with. Organizations should keep three types of issues lists:
- A quarterly meeting issues list: This is where you list non-urgent company issues that can be addressed in future quarterly leadership meetings. Examples include: technology needs, HR issues, and capital needs.
- A weekly meeting issues list: These are strategic, non-departmental issues that should be addressed at the weekly leadership meeting. Examples include: priorities being off track, a low Scorecard number, or major client issues.
- A departmental issues list: This list contains immediate departmental issues that must be handled at a weekly departmental meeting. For instance, sales department issues might include: not hitting call numbers, upcoming sales presentations, and closes.
With these three issue lists, issues will surface regularly. Once you’ve identified and listed them, the tool for solving them is the “Issues Solving Track,” which has three simple steps: Identify, Discuss, Solve (IDS). Start with the three most important issues to be solved, then:
- Identify: Drill down to the real issue or source of trouble. The problem on the list may be a symptom rather than the real problem.
- Discuss: The discussion step is where everyone gets a chance to weigh in. Many teams flounder at this step because they didn’t identify the real issue first. They talk a lot without solving anything.
- Solve: In this step, you determine a solution or conclusion, with an action for someone to take. Add the action item to a to-do list, and when it’s carried out, you’re done with the issue.
5) Process
The fifth component of the EOS™ is process. Your company has a few key processes that keep it running—together they constitute your unique “way” of doing business. Honing your processes so they run without constant oversight frees you to focus on building your business rather than being mired in its details. Also, when you have a defined way of doing business, your company becomes scalable and more valuable should you decide to sell it.
There are three steps to systematize your business:
- Identify your key processes: Identify the processes for carrying out every major activity of your business.
- Document each process. List the most important steps with a few bullet points for procedures under each. Follow the 80/20 rule: document the 20% of the process that produces 80% of the results.
- Ensure that everyone follows the processes: As the company’s leader, make clear your expectation that everyone, including your leadership team, will follow the processes.
6) Traction
With five components of the EOS™ (vision, people, data, issues, and process) in place, you’re ready for the sixth and final component—traction. Getting traction means executing, or making your vision a reality. To create traction, set 90-day priorities and establish a meeting structure.
90-Day Priorities
You and your senior leaders should meet quarterly to review the vision and set priorities for the company and leadership for the next 90 days. Here are the steps:
- Step 1: After reviewing the vision, list things that must be accomplished in the next 90 days to move toward your vision. Narrow the list to three to seven priorities.
- Step 2: Set the due date for meeting each priority. Define each so that it’s specific, measurable, and doable. For example, a priority might be to “close three major sales.”
- Step 3: Assign an “owner” from the leadership team to each priority. This person will be accountable for achieving it, by creating a timeline, assigning tasks, and ensuring people complete them.
- Step 4: After the company priorities are set, each leadership team member should set their own priorities, including the company priority they “own.”
- Step 5: Enter the company and leadership team priorities on a spreadsheet or one-page document and review it each week at the leadership team meeting.
- Step 6: Have each department set up to three priorities. Further, each employee in the department should set up to three individual priorities.
A Meeting Structure
It’s a myth that meetings are a waste of time—meetings are where you practice accountability and get traction. But they need to be productive. By following a structured meeting schedule with purposeful agendas, you’ll find that everyone will get more done and continuously advance the company’s vision. You should have two types of leadership meetings: quarterly and weekly.
1) Quarterly meeting: Each quarter, your leadership team should meet to:
- Review the previous quarter: Review the financials, then review the company and leadership team priorities to confirm which ones were achieved (you won’t complete 100% every quarter; strive for 80% or better).
- Set the next quarter’s priorities: Follow the steps for setting priorities. List what must be done in the quarter and narrow the list to three to seven items.
2) Weekly meeting: Once you’ve set your quarterly priorities, you and your leadership team need to meet weekly to stay focused, address issues, and communicate. The weekly meeting is like a drumbeat that keeps your leadership team marching forward in step. The agenda should be:
- Review the Scorecard numbers against goals—any misses should be moved to the issue solving (IDS) part of the agenda.
- Review the company’s and team members’ priorities to see which are on track; when a priority is off track, move it to the IDS agenda item.
- Review to-dos from last week’s meeting—these are action items that pop up throughout the week—for example, a requirement to ship an item immediately.
- Identify, discuss, and solve the issues on your issues list.
The combination of vision, people, data, issues, process, and traction—the Entrepreneurial Operating System—positions your company to achieve your vision. Once you and your leadership team have mastered the tools, roll them to the rest of the company, one level at a time.
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PDF Summary Introduction
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Part of the problem is you’ve become so wrapped up in your business you’ve forgotten that it’s separate from you. To reach the next level, you need to build it into a self-sustaining entity, powered by an effective system rather than just your determination.
The Entrepreneurial Operating System or EOS™ builds or strengthens six key business components the author discovered while turning around his family’s company; he now teaches the system as an author and consultant. Clients using the system average 18% annual revenue growth.
PDF Summary Chapter 1: The Entrepreneurial Operating System
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5) Process: Your processes are the way you do business. You need to identify, address, and document each of your core processes, and continually improve them. Many entrepreneurs don’t fully appreciate the value of having the right processes—however, sound processes create efficiency and make your business scalable and more profitable.
6) Traction: Traction—the ability to execute, or make the company’s vision a reality—requires two things: 1) 90-day priorities for everyone, and 2) regular, focused, productive meetings at every level.
These six components make up the Entrepreneurial Operating System model. In any given area, most businesses are less than 50% effective. Achieving 80% effectiveness in every area will create a smoothly functioning, effective operation. The myriad details that used to consume you will take care of themselves.
PDF Summary Chapter 2: Letting Go of Control
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Many organizations fail to survive their first growing pains when they hit a ceiling. About half of small businesses fail in the first five years. Michael Gerber, author of The E-Myth Revisited, put the number at 80%. Further, he wrote that 80% of those that do last five years fail in the next five. (Shortform note: Read our summary of The E-Myth Revisited here.)
However, you can push through to the next level of growth when you and your executive team adopt five approaches—simplify, delegate, predict, systematize, and structure.
Simplify
Your team must be able to simplify the business to enhance efficiency and focus, by streamlining the system, processes, communication, and the vision. The EOS process is designed for simplicity; the theme throughout this book is that less is more.
Delegate
Reaching the next level of performance for your business also depends on your ability as the leader to delegate. Delegating operational details allows you to take a strategic view of where the company needs to go, which is the best use of your time and talents. By contrast, you hold back the company’s growth...
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Learn more about our summaries →PDF Summary Chapter 3: Defining a Vision
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Step 3: Your core values are among the characteristics you listed. Combine similar values and narrow the list.
Step 4: Decide which three to seven values define your company. Examples are: service, results, or cutting-edge knowledge. Think about them for a month or so, then finalize them.
Communicate them to your employees in a compelling way. Write a speech that backs up each value with stories and examples of people in your company applying the value. Present the speech at a company-wide meeting. Also, explain the values and examples when you interview job candidates—and ask them about ways they have applied those values in their previous work. You’ll make better hires if you determine whether candidates share your values before you evaluate their skills.
When your core values are part of the common language in your organization, they’ll become a way of life.
2) Your Company’s Main Focus
The second step in defining your vision is determining your company's main focus. When talking about their main focus, businesses use different terms for it, including mission, core business, and “sweet spot.” Your core focus is the job your company excels at. It...
PDF Summary Chapter 4: Managing People Effectively
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The Right People
The “People Analyzer” is a report card tool for assessing how well current and potential employees match your company’s values. Download the tool here or create your own version. It helps clarify personnel decisions and makes them less subjective.
The ‘People Analyzer’ Tool
Using the downloaded form or a spreadsheet, list the people you’re assessing in the left column and list your core values across the top.
Rate those on the list for how they align with your core values:
- Give them a plus (+) if they demonstrate the value most of the time
- A plus/minus (+/-) if they sometimes demonstrate the value.
- A minus (-) if they rarely demonstrate the value.
The company’s senior leaders need to decide the minimum acceptable standard managers should apply in hiring and holding employees accountable. For instance, if a company has five core values, the overall bar could be three pluses, two middle ratings, and no minuses. People who are at or above this standard would be right for your company.
How to Implement the ‘People Analyzer’ Tool
Step 1: Have your leadership team analyze each other’s...
PDF Summary Chapter 5: The Data Component
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Step 2: With each category, also list who is accountable for the number—only one person, usually the department head, should be accountable for each. This person provides their weekly number to whoever is in charge of updating the spreadsheet.
Step. 3: Decide on a weekly goal for each category (for instance, a sales goal) and fill it in. The goals should align with your one-year plan.
Step 4: Determine who will update the spreadsheet each week for senior leaders to review at a regular meeting. Determine how the person will get the numbers from each leadership team member.
Step 5: Review the Scorecard with your leadership team every week to monitor how the business is doing and take any steps necessary to stay on track to reach your goals.
Three Caveats
1) The Scorecard numbers should be activity-based and traceable to an originating step.
For example, new revenue and sales are activity-based numbers, but if you track them only as they come in, you can’t react to sales slumps in time to make a difference. Instead, trace the sales process backward to find more actionable numbers. By tracking the number of new leads received each week, you can see how...
PDF Summary Chapter 6: Resolving Issues
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The ‘Issues Solving Track’ (IDS)
The “Issues Solving Track” has three simple steps (the acronym is IDS):
- Identify
- Discuss
- Solve
First, look at your list and pick the top three (most important) issues to be solved. When you work through issues in order of priority, some issues will disappear because they were really symptoms of a key issue you addressed. Discuss each of your top three issues using the three-step process:
1) I: Identify
First, drill down to the real issue or source of trouble. Probing for the underlying issue can be uncomfortable because problems usually involve people. But it’s important to be honest for the good of the company.
This step may take longer than the other steps. You may spend most of your time identifying the problem, and need only a few minutes to discuss and solve it.
There are generally three kinds of issues:
- A problem to be solved
- Information to be communicated to the team and agreed on
- An idea someone wants feedback on
The person raising an issue should indicate the response needed—for example, she might say, “I just want to make sure everyone understands and agrees with the new maintenance...
PDF Summary Chapter 7: Documenting Processes
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The HR process
- Step 1: Search
- Create job description
- Determine search method
- Conduct search
- Step 2: Interviewing
- Step 3: Hiring
- Step 4: Orientation
- Step 5: Performance reviews
- Step 6: Termination
- Step 7: Ongoing benefits management
The documentation for each process should be up to 10 pages. Your goal is to keep your processes simple. As you document steps, you may find redundant or unnecessary steps that you can eliminate. For some processes, a checklist may suffice.
While codifying your processes, you may find areas where new software can increase efficiency. But do your research so you get the right technology and don’t waste your money on bells and whistles you don’t need.
3) Ensure Everyone Follows the Processes
Compile all of your documentation into a manual, whether printed or digital. Each process should be a chapter. The title should be “The (your company name) Way.” Train employees in the processes you need them to use.
As the company’s leader, make clear your expectation that everyone, including your leadership team, will follow the processes. Also, show how the new system coordinates everything to...
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PDF Summary Chapter 8: Getting Traction
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Step 1: After reviewing the vision, list things that must be accomplished in the next 90 days to move toward your vision.
Step 2: Narrow the list to three to seven priorities.
Step 3: Set the due date for meeting each priority (usually it’s the last day of the quarter). Define each priority so that it’s specific, measurable, and doable. For example, a priority might be: “close three major sales.”
Step 4: Assign an “owner” from the leadership team to each priority. This person will be accountable for achieving it, by creating a timeline, assigning tasks, and ensuring people complete them.
Step 5: After the company priorities are set, each leadership team member should set their own priorities, including the company priority they “own.” Some items on the brainstorming list that were dropped in step 2 could become individual priorities.
Step 6: Put the company’s and leadership team’s priorities on a spreadsheet or one-page document and review it each week at the leadership team meeting.
Step 7: Share these priorities with the entire company at the quarterly company status meeting.
Step 8: Have each department establish up to three...
PDF Summary Chapters 9-10: Implementing the EOS™
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6) Core processes: After the foundational tools are fully implemented, the next step is to document and train people in your core processes using the three steps.
7) Everyone has a number: This is last because without the main tools in place, it’s less effective due to lack of accountability and strong management. However, with the foundation in place, adding a number for everyone increases results.
Once you and your leadership team have mastered the tools, roll them out to the rest of the company, one level at a time. Start with the middle managers who report to the leadership team and present these tools:
- The vision statement (including core values, focus, marketing strategy, and 10-year target)
- Accountability Chart
- Priorities or “Rocks”
- The structured meeting schedule
- The Scorecard
If you have multiple locations, site managers need to be fully on board with the foundational tools before sharing them with the next tier at that location.
Roll-Out Tips
- Be patient, it will take time for the system to “click” with a majority of employees.
- Once you start to gain traction, at some point you’ll hit the ceiling again. Stick with the...