Podcast: Why an Entrepreneurial Operating System Can Be a Business Changer, an Interview with Mike Paton

By Ryan Tansom
Published: March 22, 2018 | Last updated: March 29, 2024
Key Takeaways

Mike Paton brings us his years of knowledge in operating systems to advise on how using an entrepreneurial-specific one can smooth out both work and cash flow.



About the Host

Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

After a childhood and early career surrounded by successful entrepreneurs, Paton ultimately embarked upon his own entrepreneurial journey. He spent more than 10 years running (or helping run) four entrepreneurial companies. While trying to take a successful $7 million market research firm to the next level, Paton was introduced to Gino Wickman and EOS. He quickly became a passionate advocate of the system and leader of a vibrant and growing community of professional EOS Implementers, clients and fans. Today, Paton is proud to be a leading EOS Implementer who works closely with Gino to spread the word about this holistic management system. Part of that is the establishment of Achieve Traction, through which Mike is growing a talented team of certified EOS Implementers.


If you listen, you will learn:

  • Mike’s book with EOS Worldwide’s founder called Get a Grip.
  • Mike’s business background.
  • What is EOS?
  • How to use EOS in your business?
  • The 6 components of the EOS process.
  • The importance of working with the “big picture” in mind.
  • Common results Mike sees with his clients.
  • Why EOS works.
  • How to clarify roles within the company.
  • What is the integrator role in a company?
  • What is the visionary role in a company?
  • Finding and maintaining passion in the business.
  • How EOS works for family businesses.
  • Why EOS is a great option for businesses.

Full Transcript

Announcer: 00:04 Welcome to Life After Business, the podcast where your host, Ryan Tansom, brings you all the information you need to exit your company and explore what life can be like on the other side.

Ryan Tansom: 00:14 Welcome back to the Life After Business podcast, this is episode 85. Have you ever wondered how to get out of the day to day quick getting sucked into the business, how to rise above, get all of your people and your business humming on all cylinders, like a machine that you used to enjoy or that you want to enjoy getting up and going to every day? Well, that's exactly why we have Mike Paton on the show today. He is a speaker, author, and then the visionary for EOS worldwide. He wrote a book called get a grip with the creator of EOS, Gino Wickman, and today we talk about what is EOS? How do you implement EOS within your business? Some of the results that happen about getting your people and your culture and your vision all in line and what that does for you as the entrepreneur who deserves to enjoy what you're doing every single day because you're taking the risk, but also it allows you to rise above and focus on your growth and exit plan so that way you can actually hit all the goals and objectives that you want. I really enjoyed the episode with Mike. He has tons of information on how EOS works, what are the challenges and why it's worth it, and how you can have the life that you actually want as an entrepreneur. So without further ado, here's my interview with Mike Paton.


Announcer: 01:24 This episode of Life After Business is brought to you by Solidity Financial's growth and exit planning. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your timeframe to the right buyer at the price you want.

Ryan Tansom: 01:46 Good morning, Mike. How you doing?


Mike Paton: 01:47 I'm terrific. Good to meet you.

Ryan Tansom: 01:49 I'm super excited to have you on the show. I'm a huge proponent of traction, a lot of people in the twin cities where this has been the hotbed of the traction philosophy is, and you've kind of stepped up and be kind of become one of the figure heads. So. So maybe for those listeners who may not know a little bit of your background, maybe go back to where you came from and then how you got into EOS and traction and where we are today.

Mike Paton: 02:12 Yeah, happy to share that. So I grew up in an entrepreneurial household. My parents were entrepreneurs, my grandparents were teachers and so there was always business and teaching going on in my household. And uh, out of college I got my first serious job, uh, as a private banker helping entrepreneurs, um, uh, with their personal financial needs. And I found that I loved hanging out with my clients and I didn't love, uh, hanging out with other bankers.

Ryan Tansom: 02:44 I don't blame him.

Mike Paton: 02:49 Well, my dad, when I, when I first went into banking out of school, my dad sat me down and gave me the Mark Twain quote about a bank, a bank or somebody who gives you umbrella when it's nice outside and takes it back when it starts. So that's unfair. I have a number of clients who are bankers and bankers are fine, but I certainly felt more at home with my entrepreneurial brothers and sisters than I did a, you know, in a big corporate meeting room. And so ultimately I became an entrepreneur myself running or helping run for entrepreneurial companies to successes to train wrecks and a much more grateful for the train wrecks in hindsight because that's where I learned of the important lessons. And uh, the last of those opportunities brought me to Minneapolis where I was trying to run a $7,000,000 company for a founding entrepreneur.

Mike Paton: 03:40 I was frustrated and scared and stuck and I was looking around for help and a neighbor introduced me to EOS. And, uh, I really fell in love with it's simplicity. It's practicality and its ability to positively influence not just companies that are really struggling and the people who are running those companies, but really good companies that just can't quite break through the ceiling and get to become that great company whose owners and leaders are living a great life. And that's what really resonated with me. So, uh, I flew off to Detroit, met Gino. I got trained as an EOS implementer and uh, I was a little more than 10 years ago. The rest is history.

Ryan Tansom: 04:20 It's so crazy the, the speed that traction's been hitting the market, even though, again, you know, 10 years ago was kind of chugging along, but the, I think it's picked up a lot of traction to use the word, um, with a lot of peer groups, facilitations and communities out there and entrepreneurs. And there's a lot of reasons why, which I think we'll kind of dive into, but I mean, you know, for, for the listeners, maybe give us a little bit of the background of EOS, some of the, you know, some of the core principles behind it that gravitated you towards it. Because there's a lot of different philosophies out there, there's the Gazelles Rockefeller habits, there's all these different things that I think would probably expand on that or become a little bit too daunting or too complicated, which is what I loved about EOS, but maybe kind of give us the framework and what drew, what gravitated towards it.

Mike Paton: 05:07 Yeah, so a EOS is just a simple way of operating an entrepreneurial company that helps the people who own and run it get three things, uh, quickly and permanently. The first is vision. Getting everybody in the organization a hundred percent on the same page with where the company's going and how it plans to get there. The second is traction, which is instilling discipline and accountability top to bottom, side to side in the organization. So everybody, everywhere you look, people are executing on your vision. And then the third thing is healthy. Making everyone a more cohesive, functional, open and honest team. So it feels like you're all working together towards a common good. And that was built by my friend and colleague and business partner, Gino Wickman, to be a simple, practical, real world accessible, timeless set of tools and concepts that will help the people who own and run companies get more of the right stuff done every week, for lack of a better term. Thus the term gaining traction to, uh, execute on your vision.

Ryan Tansom: 06:16 Well, um, you know, I think it's fantastic too because what it does from experiencing with our business and with our customers to is. I mean the alternative is what most people are probably familiar with, where you walk into a management meeting, you've got 17 people that no one has too many people, the wrong people, and you spend an hour talking about the Fedex return system in, you walk more frustrated than you were when you walked in and you just have this constant friction feeling versus the alternative. So, you know, what is, how do you go about doing that? And maybe we can start with some of the framework because I think the biggest challenge is getting to that universal language that everybody understands in the business.

Mike Paton: 06:58 That's right. And you mentioned this earlier, you know there are lots of ways to run a business out there and EOS is just one of those ways. So I can't impress upon your listeners enough this idea that we don't believe you should run your business on EOS. We believe you should run your business on one operating system, one way of operating, so you're not spending a lot of time and energy arguing with each other about how to run your business. You can focus on the important issues. So there are companies out there that are a great fit for EOS implementation and companies that aren't. And so your people just need to figure out whether this is a good fit. Once you decide EOS is a great fit, then what you need to know is what Gino discovered in working with entrepreneurs in the trenches, rolling up his sleeves and saying, what are your problems, challenges, and obstacles.

Mike Paton: 07:48 How can I help you? What he discovered is that everything that prevents business owners and leadership team members from getting what they want from their businesses, the root cause is weakness in one or more of the six key components of the business. Those six key components are vision – getting everybody on the same page with where you're going, how you plan on getting there; people – making sure you have great people in your business so you can achieve your great vision; data – running the business on a handful of objective numbers rather than the feelings, egos and emotions that's so often the subjects in a, in an entrepreneurial company. And then that brings us to the fourth, uh, key component, issues – because when your vision, people in data components are strong, your organization is transparent, so all your problems, challenges and obstacles are smoked, I contend with, um, and so issues being good at issues solving is just getting good at recognizing, prioritizing and resolving your issues for the long-term greater good.

Mike Paton: 08:55 The fifth component is process. Um, and that's getting the most important stuff in the business done the right and best way every time, even when you're not there to manage everybody closely. I creates consistency and scalability and then the sixth component is traction, the art and science and bringing a vision down to the ground and ensuring that everybody executes on it. And so that's what EOS does it help a company get better at those six things are to smoke out the root causes of their issues and create the kind of mechanism where the company is able to execute on a vision that it's not able to have when you aren't good at those six things.

Ryan Tansom: 09:37 Shed some light on what you mean by like an operating system to. Because we're not referring, referring to like earpiece or project management tools and this is like this is a way of having dialogue for when you go into those meetings, there was a purpose behind the meeting with the right people in it or versus notch because is there any other way that you would expand on what that operating system kind of means?

Mike Paton: 09:58 Yeah, so it's very much analogous to an operating system in a computer, so it's the stock you don't see if you're using your computer, but you do see it if you buy a behind the guts, and so it's how do we prioritize things, how do we make decisions, how do we crystallize what everybody's roles, responsibilities and accountabilities are? How do we keep score? It's a set of rules and tools and concepts that gets us all on the same page with that stuff allows us to go right to the root of why things feel. Yet. You brought up a great example that is really a symptom, not a root cause of an issue, so crappy meetings, so meetings, a meeting full of effective, predictable, efficient meetings is part of the traction component in EOS, but the potential root cause of why you're having crappy meetings could be weakness in the vision component, weakness in the people component. There are 12 people in your meeting and you hate 10 of them. It all of these components are interdependent. You can't just say, hey, our meetings are terrible. Let's solve that by creating a different agenda for our meeting because of you're still hate 10 of the 12. What that means by operating system, you have to work on the wholistic business, not just one little bandaid.

Ryan Tansom: 11:41 Well, and I think what's interesting about and what's unbelievably liberating about traction and EOS is that the business owners and entrepreneurs have these ideas and we want to push forward all the time, but you end up getting stuck and you've, you've referred to that, but it's, you hit this like this lethargic that you're running in says because it's the wrong people, the wrong spots, the wrong execution, and as the owner and the entrepreneur getting your ideas and knowing where you know, where you know you need to be, and actually getting you pulled into the day to day stuff so you can't keep striving there. So what w, what are you see the before and afterwards, some of the results as someone goes through this, how does their life as an entrepreneur change? How do they start? How do they actually end up getting unstuck?

Mike Paton: 12:25 Yeah, so, so, you know, the classic entrepreneur starts a business with passion and skill and determination and um, and builds a business to a certain point where passion, skill, and determination from the entrepreneur is really all you need. And then at some point the business needs more than your passion, your skill and your determination. And that's usually where you hit your ceiling. We use the phrase hit the ceiling a lot. And so for your listeners, if you've hit the ceiling, you're just not having fun anymore. You can't solve your own problems as they arise anymore. Uh, you feel like the businesses running you rather than you're running your business, you look around the room at your employees or your business partners or your leadership team members and you don't like them as much as nobody. Nobody cares enough. Nobody has the right skills or passion or, or work ethic like you do, right?

Mike Paton: 13:26 Those are all signs that you're frustrated, you're stuck, you've hit the ceiling. And so that's the before. That's very common when somebody turns to an operating system like EOS to help them get unstuck afterwards. What you've got as a company about two years working with a professional EOS implementer to fully implementing EOS in a typical entrepreneurial company and what we're looking for after that two years is a company that is eighty percent stronger, better in those six key components that I gave you. And so what that means is everybody is crystal clear on their roles, loves most of the work they have to do, and is good at executing every day. The team is more cohesive and functional, working together, you're going to have conflict because that's, you can't run an oc health or conflict though without conflict, but it's healthy conflict that leads to resolution where a lot of the pain and misery comes from and in an entrepreneurial company is conflict that is either not had or unresolved. And so their investors, you know, vision, traction, healthy is what you get at the end. Uh, frustration and feeling stuck is what you have at the beginning.

Ryan Tansom: 14:45 Well, and I've experienced it too, and I've seen it. I've been part of it and other businesses as well. And it is liberating. And because you've got this universal language in this process and I think you, you hit on a key point which is the two years to get out from underneath it and one of the things that we went through was the people getting the right people in the right spots and understanding, you know, and I want to tee this up for you because I think you've got a lot of good wisdom about it, but you know, what we experienced with a lot of people hire their friends and family then the business goes over and then all of a sudden you've got someone in a director spot that is totally not supposed to be there. All this stuff that w that are involved in the people problem. So the two years is a lot of the getting the right people in the right spots to the right key. Can you explain how that flushes the system? How it flushes itself out?

Mike Paton: 15:35 Yeah. So I'm going to start big and try and go here and specific, but. But the company with a strong people component, if you've got 100 employees, imagine 100 of them are the right people in the right seats and so right people fit your company's culture. They share your core values, they're consistently behaving in a way that makes you want to be around them. If they fit your culture, people who are in the right seats are really good at a job that's critical to the success of your organization as simply as I can say it. It's the way they execute in their roles and you need both. Those two things are disconnected concepts. And when an entrepreneur tries to merge them into one idea, it gets really complicated. Really fast. Times your best executors do the most damage to your culture. So, so, so step one is we make clear those two things that are necessary to feel good about your people component.

Mike Paton: 16:43 We help our clients define their core values and use them to hire fire, review, reward, and recognize people everyday in their organization. In terms of rights seats, we use a tool called the accountability chart that crystallizes what the company needs. Before we start thinking about the people we already have on the business and the people we know that we could plug in the gaps and we call that concept structure first people second. So we bought the company tomorrow and none of the employees were available to work for us. How would we structure our leadership team and every department in our organization to get the biggest bang for our buck in terms of Roy from our people. And we start there and then once we agree on the right structure, crystallizing the roles and responsibilities we need somebody to own, then we put people in seats.

Mike Paton: 17:41 And what that does is it exposes gaps were of a major function of our business and we're all of co owning that major function, but none of us is very good at it and we definitely don't have any passion around it. So we've got this glaring hole and nobody to fill it. And that's why in the first year of an EOS journey, eighty percent of our clients experience significant change at the leadership team level of their organization. Um, because you just have to take a step back and really imagine what your company needs and then build those seats with. Right. People were great at that job, love to do it and hit it out of the park every week. And most entrepreneurial organizations don't have that today. And it takes some time to get that work done.

Ryan Tansom: 18:29 Well because usually it's, hey, you know what Mike, you know, we're sitting at the, you know, after work and you only, oh we need this new function because we have contracts now with our clients and you know, you've been with the business for like 10 years. You should probably do that for say so and so could do that because you know, they get some extra free time. My uncle used to run an operation as well and there's a really cool, you know, if there was a big takeaway and the people parts, you've got the three things right, the gets it, wants it and has the capacity to do it. That was one of the things that always resonate for me because like you might go, well they're, they're really killer at their job. They can totally, they totally get it. They don't want it, and that's a huge problem.

Mike Paton: 19:14 That's right, yeah, and what that does is a framework, and this is what genome does so well, it's a framework for having tough conversations and coaching conversations with your people. Just the way the people analyzer and the rating system is used to evaluate and communicate on Gw. We do it for core values as well, so what we're trying to do is help owners, leaders and managers crystallize what their expectations of their people are. Here's our definition of a great person at ABC company. They consistently exhibit these core values and they get want and have the capacity to do the five roles in their seat and once you have that framework, then it's just a matter of using those tools and prioritizing the time necessary to create those clear expectations and give everybody the opportunity to coach themselves up into those positions and be great or find another organization or another job where they can fit and be great. And that EOS in a nutshell, simple, not easy because people are involved in whatever people.

Ryan Tansom: 20:25 One of the biggest challenges that a lot of these second stage companies have is when you go through this, it's going to be painful. It's going like, I mean, you have people that had been with you for a long time that you start to realize they're not in the right spot. So I mean, you know, is there things that you have seen that people have done well, that allows this painful experience to go through it or just, you know, you have to be true to yourself and the business or how do you, how do you deal with that internal angst.

Mike Paton: 20:58 Well, to me that your business experience, entrepreneurial business experience was a family business. So, you know, talk about a complicated man at play first base in little league and I haven't forgiven you for that. Don't want to have that conversation at work. But uh, but you know, quite frankly, it's the ability to have the tough conversations to tell the truth even when it's awkward and painful is necessary. I like to illustrate for my clients that I'm on the cover of the leadership team manual. I give all my clients in the First Session Day and the EOS worldwide logo is a big light bulb, shining light bulb and what we do in the EOS process, we simply shine a bright light into all the dark nooks and crannies of your business and, and, and it's very difficult for you to not acknowledge that you have an issue that needs to be resolved because of that bright light.

Mike Paton: 22:02 And so if you're running a business and it's like a kitchen with a bunch of Gut Punch of cockroaches in it, and when we shine the bright light, you just want to turn the light off and go back to the best. Don't implement EOS. Yeah, because you have to want to solve your problems as they arise a. otherwise you're never gonna grow. You're never gonna prosper. You're never going to strengthen the six key components. And in order to do that, you've got to be willing to look people in the eye and let them know, here's your definition of grade, here's where you are. Let's work together. Let's collaborate to help you be great. And that's what I believe a good leader, manager, owner, entrepreneur does, even when it hurts.

Ryan Tansom: 22:50 Well, and it's so refreshing once you actually, it's worth the hard conversation. It's worth the effort because it, that result is amazing. And as we, as we kinda could progress because I want to talk about what the has the entrepreneur's role changes as they get because there's this really key critical component that you have with the roles of the integrator and the visionary that I want to talk about. But you know, for the listeners where we're going with this is how to have a sustainable business that eventually you can get your point, your perspective on how to do the culture brings value to the business as well because it's humming like a machine which has been important in, in the entrepreneur's role changes as this kind of happens. So can you explain the role of the integrator and then also the visionary because I think it's something that's very crucial for the business owner.

Mike Paton: 23:39 Yeah. So it's, it's a concept we advanced right out of the gate when we're working with the leadership team and we're talking about finding the right structure for your business, this structure, first people second approach. And so what we do on the first full day we spend with our clients is we fire everybody. We have a clean white board and we say what are the major functions of this business? And it's typically sales and marketing operations and finance, or some customized variation on that. Typically three to six major functions. It's another major function that we call the integrator because every great business as somebody who runs the day to day who beats the drum, drives accountability. And the other members of the leadership team, uh, has the tough conversations when necessary, they're the glue of the organization and we call that seat the integrator because their primary function is harmoniously integrating the way other headstrong independent leaders play together to achieve the company's objectives.

Mike Paton: 24:46 OK, about half the time I'm working with a leadership team. We build that out on our whiteboard and we stopped there and the other half the time there's this other major function and we don't know what to do with it, and we'd call that major function. The visionary. This is somebody who has 20 ideas a week, is a creative problem solver, loves getting involved in the big relationships so the business doesn't love getting into the nitty gritty, into the trenches, executing repetition, redundancy, tactical issues. OK, and so if there is a person in an organization that is that kind of person, we point out that visionaries and integrators could not be more different. Visionaries are great builders. They're not great runners. They don't like getting in the weeds. They get bored easily. You know that one of my clients, yellow squirrel, every once in a while in a visionary whiplash, so a ready fire, fire, fire, and for the record, I'm not making fun of anybody.

Mike Paton: 26:01 I sit in the visionary seat can relate very much to see all of this stuff. Thank God for my integrator, Kelly Knight who keeps me on track. And so what we see in an organization where there is that kind of person and they haven't clarified these two roles, is one of two problems. The first problem is you've got a visionary stuck in the integrator seat making the visionary unhappy and the leadership team exhausted. Typically there's chaos, lots of peaks and valleys. We go this way, go that way. The other problem we see is you've got two people running the organization without clarity around roles and when two people are accountable for one major function, especially when it's running the company and making the final decision, nobody is accountable because they're just getting their fingers at one another. And so that's what clarifying those roles does for our leadership team is it allows a visionary to be a visionary and add value to the business in the things he or she loves to do and his best app. And it allows somebody who is running the day to day and accountable for having the tough conversations and getting into the nitty gritty when necessary to live in their sweet spot or unique ability. Which is a Dan Sullivan term. Describe your love to do on her best ad. There are people genetically encoded to run the day to day of the business and if you're not that person, I urge you to consider getting somebody who is genetically encoded to do that, to help you.

Ryan Tansom: 27:36 It in my, I think a lot of the visionaries that are also the co founders, right? Because they've got the passion and the desire of a percent of the time. That's the case in. By the way. We know when we're out of our element, right? When you were running those meetings and you're just like you have the stomach ache and your board and all these things. Do you create your own problems just to solve them is crazy freeing when you have that counterpart that gets you and understands your ideas and that can implement them, so it's…

Mike Paton: 28:07 And can help you that your ideas and select the one or two from the list of 20 that are really gonna give our business what it needs to go to the next level right now is that the. The the issue is fitting great ideas or seemingly great ideas into the bandwidth available to execute on ideas and concern, so that's what the visionary integrator relationship and a successful company running on EOS. There's some tension there. There's some disagreement and conflict there because we can't be great at 11 things at once. So help me Mr. Visionary, which is what Kelly says to me, less polite feelings helps me pick the one thing we're going to execute on this corner that's going to get us where we need to go and that's a fun and meaningful conversation because quite frankly, if I have 10 ideas and we never execute on any of them, I'm frustrated way more than if we have 10 ideas, we focus on one and actually execute it two or three quarters from now, then I can be a little patient with the other night.

Ryan Tansom: 29:20 Yeah, because you only have so much capital in so much time, so he can send me your name and your employees will go crazy if you're trying to do all those things because they don't know exactly because again, it's the ripple effect that goes all the way down. My Dad always says you should say that.

Mike Paton: 29:35 So one of my clients, I love this visual, so one of my clients said he felt like all the employees of his organization were wildly coyote at the bottom of the Canyon for the little umbrella that says help and there's a bunch of boulders falling down from the top of the kinsmen because so frequently your priorities are changing. The direction is changing. You know, most organizations in most organizations or most people in most organizations need clarity of purpose, their jobs consistently well.

Ryan Tansom: 30:09 And be happy and be happy that they're, they can self assess that they're doing their jobs correctly. So as the, as a visionary, uh, you know, as a, as a founder and an entrepreneur that's going in creative and you're, I think there's this whole, I'm getting worked out of my own company. So maybe we can kind of talk about like how, what does, how does that actual job change and what, you know, working on the business. You and I were talking about that before we went on the air, but working on the business versus in the business and knowing that it's OK to have your jobs changed where you don't have to make the decision on the Fedex receipts.

Mike Paton: 30:42 All right, so what the first thing I want to say to your listeners right now, while it's top of mind is I'm the visionary integrator concept is clearly described and all the books of the traction library, which I know will be in the show notes, but there's one book about this called rocket fuel. It's all said, and any of your listeners who want to know more about visionary and integrator should look at to help understand this concept a little better. But you know, the visionary and an EOS company is not someone being put out to pasture. It's someone creating value in the organization by living in his or her unique ability, which I mentioned is big ideas. Imagining what's next. Um, creative problem solving, often the visionaries, the person on the leadership team asking the why not, where are we going from here? What do you mean there's a barrier there.

Mike Paton: 31:41 This whole business is a barrier that we would be here if I hit, you know, you know, that is a visionary's unique ability. And so when you get sucked into the tactics of the business, you don't have the opportunity to do that. And you use the analogy in our earlier conversation of, you know, a lot of running a going concern is just playing checkers. One obvious move at a time and so vivid being a visionary is playing three dimensional chess where you have to be thinking seven moves in advance and that's what I want your visionary listeners out there to go find the time to do so if that's figuring out how you're going to succeed out of your business by transitioning the business to the next generation or the management team or a buyer, that's a strategic problem that needs to be solved by a visionary. I'm not a a, you know, somebody in customer service isn't very good at answering the phone we've had a confrontation with. So that's what we mean by that.

Ryan Tansom: 32:40 Well by even learning to play 3D chess in seven moves in advance takes time, just learning itself. So you know, and then I, you know, I think that's what some of the listeners have heard in some of the other shows is that we, you know, understanding where you want to go and why with your business is super important for everybody because everybody wants to have a purpose and a vision for that. And so as that you and I have talked about, you know, creating the value, creating the business that's this machine and the business owners as looking at the, you've had some entrepreneurs that have gone through transitions as well and how maybe my kind of give us some ideas of how traction has helped with that process because there's an operating system there and how that, that helped the visionary actually focus on that whole scenario.

Mike Paton: 33:27 Yeah. And I want to set that up by saying something really clearly to your listeners. I've had a huge number of clients begin their EOS implementation journey. Thinking the way to break through the ceiling was selling the business. That's a really good point. And then once we build this mechanism for executing on the vision and there's a leadership team and I'm sitting squarely in the visionary seat, solving problems, creatively creating and managing big relationships, asking what's next, challenging the status quo. I love my business. Again, I don't want to sell, right? To know that happens probably more often than the sale or the exit. Uh, happens.

Ryan Tansom: 34:15 Well and, and that, if I can a piggyback off that, Mike, is because what I think it's Super Fun about that is I've been through that experience and I've seen that where these, they're so exhausted and it's, I think the biggest challenge that it takes work to do EOS. So you said it's two years and you got people problems, hard conversations, but the outcome at the end, not only do you enjoy it, but you should be having a better cash machine that's kicking out an annuity for you and you're having fun. But you know, what we see is that in that process of the integrator, you've got your potential management buyout or t next level team that could potentially buy it from you instead of. So they kind of shift the gears from the third. The third party sales is the only option to, hey, I might build, enjoy this, and have the team that actually runs it for us.

Mike Paton: 34:59 That's exactly right. And so what we've found, one of the most common traits of entrepreneurs is that they are excellent at things they're passionate about and not excellent at things they have no passion for. And, and, and entrepreneurs tend to believe more than the rank and file that it's not your lot in life to be miserable every day. And so what I try and do is free entrepreneurs up to pursue their passions and it could be better than running a profitable growing business, spending eighty to 90 percent your time doing work you're passionate about, you feel like is your, you know, the way you're genetically encoded to do this kind of work and loving the people around you that are working with you to achieve a vision.

Ryan Tansom: 35:51 That's what I, what I think is really cool about EOS and the process of clarifying all this stuff is, you know, one of the purposes of the show called life after business is selling to the wrong person. Not, you know, you might have the financial reward, but you didn't get the right circumstances, the right culture. All these different things is being able to know what you want and having the time to know and actually clarify that. You know, maybe because I know you've had a owners and clients that have gone through these exits it while they're running us. And then they have this kind of clarity of what they have. Finally, how has that helped guide them in the decision making processes? And then how does EOS and you know, work throughout the transition of, of, of a potential sale?

Mike Paton: 36:32 Yeah, the decision to exit or transition summer, all of your eggs out of your businesses basket is a complicated one with financial and family. And so, you know, I encourage my clients to, to embark on that journey and study their options and make an informed decision about what works best for them and whatever they decide I tend to celebrate. OK. So, and I think all EOS implementers, we just want our business, our business owners are entrepreneurs to get what they want from their businesses, be that a sale or not. And then some of the common things I see is, you know, most of my clients are just as interested in their legacy as they are in the financial outcome. And so, you know, they, they, I would urge your listeners who are contemplating a transition to think about what kind of transition is going to protect their legacy as much as they think about the financial transaction.

Mike Paton: 37:39 So what does legacy mean? What do you want for your employees, your fellow leadership team members, your family members, your business's reputation with its customers, vendors, other business partners, and be clear about that and do everything you can to engage potential transition partners in a dialogue around those non-financial metrics as much as or more than you do. The financial metrics wouldn't be one thing I would say is really important because just like running a company, if you haven't clearly identified your own definition of success, very difficult to get the people you're working with or that you employ or you're selling to on the same page with what the definition of success.

Ryan Tansom: 38:28 Well, and you had a good example before we kicked it off where you know, those intangibles are the unforeseen ramifications or you know, like the kind of the, the, the ripple effect of, you know, selling and not knowing what's going to happen to the integrator that helped you get there and how that's going to be taken care of. Or like you mentioned, the exact example was they may or may not run EOS. So if you're really proud about this machine that you have, it's not going to be your machine anymore. So explain the, you know, elaborate on that story a little bit.

Mike Paton: 38:58 You know, the most common thing is most leadership teams take for granted the luxury they have of having all of the decision making minds in the business in the room and their leadership team meetings on a weekly basis for their level tens and on a quarterly basis for their quarterlies and annually. And when I've had a client that sold and they become an independent autonomous operating division of a larger organization, even if all of that stuff is true, OK, you are independent and you are autonomous at the end of a meeting when we've made a decision to prioritize these three to seven rocks this quarter, there's some flagpole somewhere. Your business plan needs to be run up to make sure you've committed to something the company wants you to follow through on. So it's little things like that that you know, I find people need to spend a little more time thinking about. Most entrepreneurs don't know what it feels like to have somebody else they need to check with Ed to determine whether the decision they just made is gonna fly. So just be aware of those things. Um, you know, independent, autonomous is true when the, the decision makers are all in the room and it can't be true when they're not. Period.

Ryan Tansom: 40:25 Well and even being in the employee is way different than not being an employee and you know, but also you had mentioned that, you know, they may or not may, may or may not even run EOS. So you finally taken all this work, all this hardship to get you had this universal language that it makes you intimate with your culture and then they might just have the six sigma or whatever, or different way of, of dial the different type of dialogue that doesn't mesh. So that's, I've. Have you seen that happen before?

Mike Paton: 40:57 Sure. So, so, um, you know, the, the EOS is a target market is a privately held entrepreneurial company whose leadership team is growth oriented, open minded, wants help, more afraid of the stanza. And so it works really well for companies that are privately held with between 10 and 250 employees that have that psychographic profile and it doesn't work great outside of that. We've got clients that are smaller and clients that are larger, but there are a bunch of reasons for that. A big company wants to run itself differently than a small entrepreneurial company. Most of the time they're more factions are competing philosophies about the right way to do things in a big company. There's a higher potential for back channel politics and dialogue and to be creative, the more people you have in an organization, the more room there is for those kinds of things to develop and take hold.

Mike Paton: 42:06 And so you know, EOS runs best when that stuff isn't present. Very honest with my clients who say a week that the potential buyers want to keep running the business on EOS. I said, well, it's more difficult is when you're part of a large organization and I'm here to help you as long as they and you want it. But again, you can't run a great business on multiple operating systems. You, you got to choose one, and so if the parent company is running this way and you're a little division is running on EOS, I'm going to urge you to choose one and most timeless little division isn't going to convince the executive suite to change the way it operates because we're using EOS over here. It's just reality.

Ryan Tansom: 42:52 Right? And it's, and again that kinda comes into the intangible is outside of the finances, like you said, we're, are you OK with that? And you know, knowing that it's not your quote unquote baby to use a cliché term again. But it is true. I mean it's your, you should have shed, should be proud of how hard it is to get that, to run like that. And it's difficult to watch that happen. Have you watched a Mike, you know, as, as far as like a family transition, how that's helped because that's my internal transitions going to be a heck of a lot easier because you've got this platform operating system to be able to make that switch. Um, I ran into the problem personally, but then I know some other people have where, what happens if the child is the visionary and all because that I experienced going from the integrator to also the visionary because it was the next generation of the strategy. How have you helped people kind of separate or clarify those?

Mike Paton: 43:48 It's back to structure first, people second. So one of the, you know, we got to figure out what the business needs and then if you need a visionary and you got a person in the organization who would be the logical visionary because they're the next generation owner of the company, but they have zero skill or passion around being the visionary. It's a mistake to put them in the visionary. Right, right, right. OK. And one of the EOS tools is something we call partnership rules of the game that says, you know, your status as an owner or a family member or a good friend of the founder has no bearing in the business when you're working in the business, you're an employee and if you'll want to run a great organization, all the rules and standards and requirements and responsibilities and benefits of being an employee should be common to everybody else. Whether you own a hundred percent of the company, two percent of the company or you're just an employee.

Ryan Tansom: 44:49 I think that's a huge point because, uh, in some of the stuff that we do, it's separating the business from the family estate. So you, everybody in the business should be run like at a normal employee with normal comp. But you can also be an owner. So you're separating the two from each other, which is super important.

Mike Paton: 45:07 That's right. And for the family members out there thinking about the next generation in their family and wanting to take good care of them. The message for you is if your sons, daughters, nieces or nephews, brothers or sisters, aunts or uncles, can add value in your business. You are helping them and your business at the same time. If they can't help your business, you are hurting them and your business at the same time because plugging a family member into a seat they're going to fail at is a mistake. That's my passionate plea that you just be realistic about the strengths and weaknesses of the people around you and give them opportunities to shine, not fail.

Ryan Tansom: 45:57 So as we're to wrap it up here, but I think, you know, shedding some light on the process because I think we've got, we talked about the EOS framework and everything like that, but there's an actual process that US worldwide goes through that makes the, you know, this might sound like a lot of work, but I think you guys do a very good job at how to actually take, take the bites and chunks. Can you kind of, you know, maybe your lay out the process for everybody.

Mike Paton: 46:19 You know, everything for us starts with getting a leadership team in a room and exchanging some basic information. And so the, the first conversation I have with a company interested in running itself on EOS is about a 15 minute call. The purpose of which is to schedule time for the owner and the leadership team to spend 90 minutes in a room with me. There's no charge for that time. We, it's a valuable teaching and learning experience. What we're doing is painting a picture for the leadership team of what a company really running on EOS looks and feels like and we want them to walk away and make an informed decision about whether or not they want to move forward with EOS implementation because it's simple, not easy and it's not for everyone. Um, and we want them to make a decision about whether or not they can stand spending full days in a session room with somebody like me. A lot of people out there.

Mike Paton: 47:20 So the good news is there's a hundred 98 EOS implementers around the world, part of our community. And they can find somebody they want to spend time with. It doesn't have to be me, but that's the first step in the process and it's really critical even for my friends that are running entrepreneurial companies and say to me, you know, I'm never going to hire you Peyton. I just want to learn more about how to run on EOS. I say, come to my office, let's do a 90 minute meeting. You'll be better at using the tools yourself once I've painted that picture for you than if you didn't do that first. OK? And so that meeting happens. The next step is the leadership team makes a decision and then it's just a series of full day sessions in a conference room where the leadership team gets together, rolls their sleeves up and works through the toolbox and the process to get vision traction, healthy, and to focus on strengthening the six key components. And you know, on average client spends about two years working with a professional EOS implementer. And ultimately they're just meeting once a quarter with that person. And so over two years you end up spending about 10 days in the room with somebody like me, and at the end of that two years and 10 days, You got vision, traction, healthy, you've migrated the EOS tools down into your organization and you're running a organization that's strong and the six key components.

Ryan Tansom: 48:51 And along those two years, in those 10 days, they're able to bring you all the problems of the employee turnover or the, you know, implement, actually integrating it to you guys.

Mike Paton: 49:02 Much of that stuff comes into the session room. So once we get up and running on the quarterly meeting, pulse, those days are about prioritizing and resolving issues. So we're spending four hours each session just prioritizing and resolving issues. And then, um, and then also we're all, uh, we have a core value called health first. So when my client calls, you know, if I got to meet somebody at a bar because there they need to be talked out of the tree, I've done that.

Ryan Tansom: 49:32 That's what we love to do. We love to help people. So there their business related problems. So, and, uh, for the listeners to a EOS worldwide has crazy amounts of resources on your website. I mean like all the pdfs and stuff like that. Um, you guys do a lot of really good job, you know, giving as much as you possibly can before. So we'll include links to that. Um, if there's one thing, Mike, as we kinda wrap up here, is there one thing that you want to maybe shed some light on that we talked about and just reiterate or maybe something that you want to leave the listeners with that we didn't talk about?

Mike Paton: 50:02 But yeah, I think I would just re emphasize a couple of points. The first is, um, if you, if you started a business or if you own or run a business, uh, please stay connected to your passion. There is, it is not. You're not lot in life to be going through the motions and you're going to be a lot better at what you do and a happier if you stay connected to your passion and you create a mechanism that allows your business to execute on your vision while you spend the vast majority of your time connected to your passion. That's possible. I see it happen every day and EOS is a great option for you, not the only option to run a great business. Keep growing it, keep owning it and stay connected to your passion most every day.

Ryan Tansom: 50:55 I think that's the beautifully sad because the whole point is to love what you do everyday when you wake up, because that's why you take all the risks. We got it. What's the best way for listeners to get in touch with you?

Mike Paton: 51:05 Yeah, so my email address is m Paton m p a t o n at EOS worldwide, and I welcome any individual comments, questions, concerns, be happy to point you in the right direction to the right resource. And then lastly, you said it already, but our website was really built to help entrepreneurs and their leadership teams get what they want. So go to EOS worldwide, dot-com, and avail yourself of all the great tools and videos and resources that are there.

Ryan Tansom: 51:36 Thank you so much. Come on the show. I loved it.

Mike Paton: 51:39 Yeah, thanks. I enjoyed it to Ryan. Appreciate it.


Ryan Tansom: 51:44 Thanks for sticking in there. I hope you enjoyed the interview with Mike. There is so many good gold nuggets that came out of that interview and I think the biggest takeaway is you need an operating system to get the entire organization and the people and the goals and the objectives on the same page. There's nothing more beautiful than that universal language that happens within an organization. Once everybody's running in the same direction and it's totally worth the effort, the results are amazing and you finally get to enjoy your job as an entrepreneur. Again, you become this visionary and you focus on the stuff that really matters to you, the future of the business, and you've earned it and you have all the risk. So doing that is totally worth it and it's not easy. It is not easy at all. It takes, like Mike said, it took about two years to flush out the different dark alleys and the dark spots and shed light on them and then align everybody together and that's going to have employee turnover. But once you get the right people in the right spots, doing the right things, I've seen it. We went from a toxic culture to something that was nothing short of amazing and that high that you live on when you have all the right things working and alas thing about of what it does for you is it allows you to graduate from working in the business, to working on the business and working on the business is working on your growth and exit plan to make sure you do know what is important to you from your culture, your legacy, the value that you want to come out of your business. What are the different potential options that you might have to exit and actually educate yourself on all the things that matter. Getting an operating system that runs your business allows you to rise above and actually do the things that are necessary so you can finish big and grow the business and feel happy about what the future holds for you and your company. If you enjoyed the interview to Itunes, give us a rating. Check out the website, g e x p collaborative. There's tons of great white papers and information on there, and until next week I'll see you later.

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Written by Ryan Tansom

Ryan Tansom

Ryan runs industry-specific podcasts on his website which pertain to mergers and acquisitions, and all the life lessons he wish he had known then. He strives to bring this knowledge to his listeners in a way that is effective and engaging by providing new material each week from industry experts.

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