EOS’ Traction or Gazelles’ Rockefeller Habits?
“If you want to teach people a new way of thinking, don't bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking.” - R. Buckminster Fuller
What is EOS®? What is Gazelles' Scaling Up?
Scaling Up (formerly Gazelles) and Entrepreneurial Operating System's (EOS) Traction are both frameworks that help entrepreneurs manage daily operations better and provide a playbook for driving growth. They both rely on a series of educational materials, mainly books and coaches (called Implementers by EOS).
EOS's Traction is typically for small and mid-size companies (size $2-20M in revenues) where their people management and execution practices need focus.
Gazelles' Scaling Up is typically for larger, more sophisticated, middle-market companies (size $10-500M in revenues) and hyper-growth startups where strategy and cash management in addition to people and execution disciplines are needed.
Gazelles Inc., rebranded as Scaling Up in 2019, was founded by Verne Harnish, the founder of the global renowned Entrepreneurs Organization (EO) and chair for 15 years of EO's premiere CEO program, the "Birthing of Giants" held at MIT. Following the release of his book Mastering the Rockefeller Habits: What You Must Do to Increase the Value of Your Growing Firm in 2002, entrepreneurs asked him how to implement these Rockefeller Habits into their companies. Verne Harnish and the Gazelles team wrote the book Scaling Up: Why Some Companies Make It and The Rest Don't in 2015. This book introduced the Four Decisions™ framework (People, Strategy, Execution, Cash) that every leadership team must get right to scale up.
EOS®, founded by Gino Wickman, an original member of the Detroit chapter of the Entrepreneurs Organization, founded EOS a handful of years later while attending Dan Sullivan's Strategic Coach® program. EOS, an acronym for Entrepreneurial Operating System®, is a model of six critical components in a business that must be managed and strengthened to be great in any industry regardless of your company's size.
Gino Wickman wrote Traction: Get a Grip on Your Business in 2007. And has since followed up with several other books: Get a Grip: How to Get Everything You Want from Your Entrepreneurial Business, How to Be a Great Boss, Rocket Fuel: The One Essential Combination That Will Get You More of What You Want from Your Business, and What the Heck Is EOS?: A Complete Guide for Employees in Companies Running on EOS.
There are many commonalities between the two systems. While EOS® does appear to be more of a derivative work, it has done a better job of making an operating system that is more accessible to smaller businesses and the employees within companies running on EOS®.
Foundations of Both Systems
The foundations of both systems share similar philosophies and approaches and target entrepreneurs with the same needs. Both certify their coaches in their methodology.
While EOS® is more straightforward with its 20 business growth tools, it is robust enough to handle a mid-size company with slow and steady growth. Its founders' philosophy is to keep it simple, and thus, they firmly believe in staying "purely EOS" and holds to its 20 tools. EOS consultants are called Implementers and stay rigidly to their growth tools ecosystem and teaching their process from start to finish in a methodical manner. They are a closed-architecture system (e.g., think Apple) and do not add tools, thought leaders, or other approaches or ideas to their system. They do not typically cite the thought leaders behind their tools or concepts. Thus, they have a handful of easy-to-read e-books, books, and pamphlets designed for the leaders and managers and don't burden them with the extra reading from business thought leaders.
Scaling Up offers a much larger set of tools, including some strategy and cash management tools and honors the thought leaders that contributed to their system. Thus, it is an open architecture system (e.g., think Google) with over 35 growth tools. Verne's two books are filled with hundreds of case studies and company examples to engage the reader. Its consultants are called Scaling Up Coaches, who frequently introduce other thought leaders' materials and content into the consulting engagement. Scaling Up has no readers digest for company managers or leaders making it more challenging to implement than EOS®.
EOS® Six Components
In the EOS® world, there are six components of any business which must be managed and strengthened to survive and thrive.
The six key elements are:
Vision. Improving this component means getting everyone in the organization 100% on the same page with where you're going and how you're going to get there.
People. Surrounding yourself with great people, top to bottom because you can't achieve a great vision without a great team.
Data. Cutting through all the feelings, personalities, opinions, and egos and boiling your organization down to a handful of real numbers that give you an absolute pulse on where things are.
With the Vision, People, and Data Components secure, you start to create a lucid, transparent, open and honest organization where everything becomes more visible and you start to "smoke out all the issues."
Issues. Strengthening this component means becoming great at solving problems throughout the organization – setting them up, knocking them down, and making them go away forever.
Process. The secret ingredient in your organization processes, which means "systemizing" your business by identifying and documenting the core processes that define the way to run your business. You'll need to get everyone on the same page with the essential procedural steps and then get everyone to follow them to create consistency and scalability in your organization.
Traction®. It brings discipline and accountability into the organization – becoming great at execution – taking the vision down to the ground and making it real.
Scaling Up's Rockefeller Habits and Four Decisions
In the Scaling Up world, there are the four decisions every entrepreneur needs to get right to scale their business: People, Execution, Strategy, and Cash. Get these decisions right, and you'll have success.
People Decisions. You know you have people issues when you are not enjoying running your company due to a problem with one or more employees, customers, or suppliers. Getting the right people in the right seats doing the right things right is the first order of business. To succeed in this methodology, you must have a strong team that engages in constructive conflict and can say you would enthusiastically rehire them all.
Execution Decisions. Execution is about getting three disciplines correct: Priority, Data/Metrics, and Meeting Rhythms. To execute well with a minimum of drama, you need clarity about the goals, measurable data from financials, customers, and employees to evaluate how we're doing, and a regular rhythm of daily, weekly, monthly, and quarterly meetings to synchronize the team around strategic thinking and execution planning.
Cash Decisions. Understanding that growth companies "suck up cash," entrepreneurs find ways to accelerate the cash's movement through a business using their Cash Acceleration Strategies tool. The Power of One tool shows which of the 7 levers (variables) drive the most cash flow. Finally, removing the distortions to build a foundation for better growth and wealth through fair market compensation of owners, tax provision set-asides, debt management harvesting profits for dividend and bonus payments, and establishing a core capital target to build a cash bugger.
Which system is better for you? How to choose between EOS® and Gazelles?
The advantages of EOS® are clear. Their tools are easy to use, simple enough, but not too simple, and their books and publications make it easy to push down into the organization's rank and file. The disadvantages are that if you use a certified implementor, they are limited to using only EOS® tools as that is one of their core values: EOS® pure. They don't consult or advise, so if you are confronting cash or strategic issues or seek a more customized approach with personal attention paid to meet your needs, that is not part of their offering.
The advantages of Gazelles Scaling Up are clear. Their tools are also easy to use and simple enough, but not so simple for some leaders. Scaling Up is a more robust system for the larger, middle-market company. There are many more tools, including those to help with the Cash and Strategy decisions. Scaling Up is an open architecture system meaning Scaling Up Coaches can introduce tools and methodologies from other people. Since it is essentially crowdsourced by the thought leaders inside and outside our community, if attribution is given for the thought leaders' intellectual property, introducing it to clients is encouraged.
My Philosophy and Approach
As a 30-year experienced business and executive coach to entrepreneurs and family businesses and author of the book Disruptive Successor, (available on Amazon) I have my business growth tools. My philosophy is to give clients what they need when they need it. Also, I believe most smaller business owners (under $10M revenues) require more frequent, i.e., weekly, check-ins and conversations.
I see my job as to deliver the best tools from the best system for that client at that time. My role as their coach is to open up possibilities, hold them accountable to their stated commitments and deliver an experience that will transform their company from what it is when we first met to what they want it to be in the future. The tools are just tools, which change their way of thinking.
Entrepreneurs of closely-held companies and family business owners contact me because they are growing and need to better manage their growth. They want to improve their systems and business processes, which frequently are poorly defined or missing. They seek to learn how to lead better, drive more profitable sustainable growth and get financial management advice from an advisor with a track record of growing business profits.
Some of these are growth companies; some are fast growth or scaleups. And many of them experience "growing pains." Inadequate systems challenge those who have already grown a lot recently.
Typically when they contact me, they are looking for guidance, help or just getting a new lease on life with their business. They come looking for someone to burn off the fog, get them excited again or remove the overwhelm. They may come wanting a system or framework, and they leave with a set of tools of new ways of removing obstacles.
Sometimes they contact me because they have heard of EOS' Traction or Gazelles and Scaling Up – both with methodologies/systems to make the growth more manageable. Indeed, it is easier to level up their business if they have read one of these books referenced above, but it's unnecessary.
My book, which is simple and easy-to-read, includes materials that neither of these books touches: navigating family business conflict and how to transition from a founder to a successor.
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