How to Set Rocks (Organization Wide) in the Entrepreneurial Operating System (aka "EOS")

After I listened back to our last podcast, I realized something. There's a lot about EOS that is not about just knowing all these tools. It's contextual to experience. So you can learn how to use these tools, but knowing how to use the tool is not going to matter as much as knowing when to use the tool and when not to, how deep to go and how deep not to go. And that takes practice.

Foreign we're back for Round two with Jeff Schaefer, EOS Implementer, SaaS Founder Just really excited to jump right in. Talk about rocks is the first thing on my mind today. I have been getting a lot of questions about the differences between and the relationships between company rocks, departmental rocks. I've heard the word personal rocks. I love any light you can shed on the different flavors of rocks.

Sure, yeah. And thanks for having me back. I appreciate it. Scott, this is. It's always fun talking to you. You asked the right questions, so I appreciate it.

We have great customers helping give us all those questions.

Sometimes they're called personal rocks, but they're really individual rocks is what we call them. Individual rocks are a lower priority rock. You decide upon your company rocks first. So before we solve issues, we list all the issues. We list all the issues, we stare at them, we look at our VTO and we decide what are the three to seven most important things we need to solve. So when you got three or four leaders or more sitting around, they all think different things are going to be the hero move for the quarter. Everybody thinks differently and some of them just think it's just their department that's, that's going to save the, save the company. Sometimes in some companies and other times we all just know, oh, it's all sales or oh, it's all finance or whatever it is. They all agree, whether they agree or disagree. The whole point of getting it all out there, getting it all written on a board so that everybody sees where everybody else's priorities are and then discussing and debating what the actual 3 to 7 most important are. It's a really important step to put all those together so that folks can feel like they're on the same page and they can leave with the united front to the company and say, hey, this is what we're doing this quarter. So those three to seven rocks, once you've got them, you just have to make sure they're written smart. Smart goals make sure they're written smart and then you commit to them after that. Then you build individual rocks. The ones that didn't make the Cut. Maybe some of the issues that are still left. Maybe some of the things that now we look at the department level and we say, hey, as individuals, what do we, what are the three to seven that each person can take? So these are things that are best. When you've got a room full of equals, your leaders are equals, you let them suggest it to you. The thing that the other leaders do in the room is they say yes, they all kind of vote on it to say it's a good use of their time and it's written smart. Because nobody wants to hear about your individual rock in every level 10 meeting if it wasn't written smart and you don't trust that it matters or if it wasn't good use of somebody's time. So you read out your individual rocks. And then the rest of the group says, so I'm going into process a little bit. But that's how you go from building company to individual rocks. Now when you go back to your team and you've got, oh, I run the say, I run the digital operations department and I'm the leader and I've got one or two company rocks assigned to me and I've got a bunch of individual rocks. I go back to my team and say, look, here's what the company's doing. You saw the company state of the company address. And now as an individual, like as an individual, I'm bringing, I've got my team of 12 people here and we got to figure out how are we going to make this department get this department's rocks done and my stuff done and what else do we need to do? So departments end up having their own quarterly meeting where they build their own department level rocks. And department level rocks are what the folks in that department will have. They're similar, synonymous to the company rock, but really just in the department. And then each individual, after deciding what the three to seven most important things for the department are, get those done then, or you write those down. Then each individual in the department, depending on the size and who's in the meeting, they'll have three to seven. Sometimes it's a smaller number for sometimes just one or two rocks, depending on the level in the company. But the idea is that eventually everyone has a rock, everybody has a scorecard number, everybody has a rock.

So the leadership team comes out and they've got some individual rocks. They then turn those into their departmental rocks. Or is it different?

It the department should meet and decide what the department rocks are. I run the digital department and I've Got a, I've got a head programmer, a UX person and a DevOps head. And they've got three people under them each, let's say. So I'm meeting with my three leaders and they've got 1099s under them. They've got W2s, you name it, they've got it. And some departments are smaller than others. I meet with my three leaders and I say, hey, so here's which way the company's going the next 90 days. What does this department need to do? How can we make this the best for our department? Now, there's things that the department will say that the company doesn't want to hear about. We're going to move. Moving over to JIRA from whatever. Yeah, but some, there's a discussion and debate and they decide that's the most important thing this department must do in the next. And everybody else in the company may or may not care about that, but the department does and everybody in that department does. So the department has their own meeting to decide as a department, what do we need? And they list that. And then out of some, one individual will be like the DevOps guys. I have an individual rock to update environments and to build a policy manual around usage. And I need to write a document for project managers so they understand what they're supposed to do and not supposed to do things like that.

Okay, so they, what I'm hearing is, I think they, they're the rocks that individuals are going to get done to contribute to those departmental rocks, which, well.

It'S hard to speculate what those rocks will be. It's really what's important is the order that you ask the question of what the rocks are, what are the company rocks, what are the leadership teams, individual rocks, what are the department rocks, what are the individual rocks in the department. Then if you have to go down another layer and you have different layers of management, you do the same thing. Do the same thing could mean there's a trickle down of lots of rocks. But there's always an integrator in the meeting or a department lead or an integrator at the leadership team. And they are the ones who are always asked for each individual. Do they have too many rocks? Do they have not enough? What else? What other rock could they have? And the integrator really right. Sizes the rocks for each individual. If you're doing it right. So you give them permission to do that.

And so are you thinking in terms of an integrator per department? If it's a larger company, I mean like a de facto integrator. I know they're not the integrator, but they serve that role for their team.

From my perspective, I make sure that is at the leadership level that that person exists. And then I let them figure out, based on the size and form and shape of their department, they figure out who's going to, who's going to be the integrator of that department. You don't have to have a visionary integrator for each department, but you do need ownership. So when they see how their visionary integrator works together, they will figure it out from there. And it can't. It doesn't have to be perfect. It just, you just need to make sure that there is a leader who will make the call on things and there's somebody who runs the meeting. You have to make sure that somebody's recording to do's so the person running the meeting doesn't have to write the to do's down. All these little things make it work better. But I wanted to tell you, after I listened back to our last podcast, I realized something. There's a lot about eos that is not about just knowing all these tools. It's contextual to experience so you can learn how to use these tools. But knowing how to use the tool is not going to matter as much as knowing when to use the tool and when not to, how deep to go and how deep not to go. And that takes practice.

I like that.

Yeah, it's practice and discipline. You have to stick at it. Now when you have a coach, they'll help advance. They'll just make you go further, faster because they see all these people and they know, oh, you're this size. Oh, you have one of these types of dilemmas. Oh, it's a family business. Oh, I see. We need to talk about that. There's all these things that help when you have a coach.

Yeah, that makes sense.

You don't need a coach. You can do this all. But I'm just saying that I was somebody who had a coach and then I did it on my own and I was like, I know how to use these tools, I'll figure it out. But it's this like you might spend eight hours, figure four hours doing a quarterly meeting, however long you spend. But it's the five or 10 minutes when people decide to change or decide that they want to be better leaders. When you're looking at your leaders, those moments are the ones that you are worth the whole day. So you just got to ask yourself how many of those moments are you going to be able to procure or lead? And with or without a coach? So that's essentially what keeps me employed, is that I produce. That I produce those moments. But it means that it's contextual. I have to like, study and understand my client, understand what experiences to bring them. So anybody without a coach, I'd say, hey, as long as you have a system, that's great. But don't get too caught up on the do's and don'ts of the system. First practice the system. And then to be a great leader, you have to want to be a great leader and manager. And you got to love your people. If you truly love your people, if you really want the best for them, it'll work.

I think that's great advice in all domains. We can get so hung up on the tool and the process, forgetting that getting something done imperfectly is better than not doing it. Going to the gym and having not as great of not a perfect workout. Every. Every rep isn't perfect, but you got in and you went, you're going to get the health benefits of it. And I think you're describing a similar thing. And a coach can absolutely help you identify things that maybe you're not able to see because you're in it. Right?

Yeah. I hope that clarifies some of the rock confusion. But again, rocks are contextual. So one group's journey with rocks and another's are going to be different. So the boundaries of what you do and what you don't do with certain situations with rocks are better understood with practice.

I'm hearing people throw around the different names. How many different types of rocks are there? Is it just departmental? Sorry, company and departmental and individual?

Yes.

The other question that we were talking about is using this information now, everybody's got a number, everybody's got rocks. How do we then have that conversation on our quarterly cadence and how you're doing, how do those things all fit together to enable that conversation?

So after the VTO has been reviewed and the new rocks are built and the major issues. The key issues have been resolved in a quarterly meeting. That's having a clear vision and getting on the same page as leaders, having a clear plan and resolving key issues. Those are the objectives of a quarterly meeting. When you've done those three things within a week or two, you have a state of the company address. You let them know where you've been, where you are, and where you're going. Ideally you share the VTO with them or parts of it at least minimally you find a new and creative way to describe your core values minimally. But you got to show giving them the answers to all eight questions that are answered in the bto. Show them all the things that you've that you see, even your issues. List your long term issues. You let them know the things that you're still working at solving by showing a little vulnerability by showing them things you didn't get done. Showing them things you're still and show them the things that you accomplished. They realize you're working for them and we're all working hard. It encourages trust. So yeah, the state of the company address is done a week or two after and it's best done after the leaders get on the same page with those three things.

And then what about for individual and in a one on one environment like.

The quarterly conversations or yes, the idea there with the 555, which I think we're going to rename it to just quarterly conversations soon. And the idea with the quarterly conversation is really simple. You just want to get off site with your, with each of your direct reports for maybe 20 minutes, maybe 40 at the most. And I did this the wrong way by the way. I learned, I did everything wrong before. I learned how to do it right before I was an implementer, I was self implementing and even when I had an implementer I still was like, I'm going to try this instead. I hear what you're saying, I'm going to try that. I tried everything. So you want to be off site with the quarterly conversation and you want to make it all about them. Shut your phone down. You're basically focused on them and you're there to just talk about what's working and not working for them in their role. Every once in a while you want to ask the question and you really want an answer in one way or another. Would you do it again? Would you take this job if you had to start it again, Would you do it? Because when they say yes or no to that, you really are at a great reset point for moving forward when they say yes, it's when they say yes to that they've committed, right, they've recommitted. So you're there to listen in a quarterly conversation. You're not there to write stuff down. You shouldn't be writing things down makes them feel insecure. It's oh, what are you doing? So you're there to listen. Now the whole 5, 5, 5 what that is, there's roughly five core values. There's usually there's roughly five. There's roughly five roles and responsibilities, and there's roughly five rocks, like including company and personal or individual. Sorry, don't call them personal. Individual rocks. So those are fodder for the discussion. You could talk about those things. You don't have to. They're just things that you could talk about if you feel that they're not enjoying their role. You could talk about the five or six roles in their function on the accountability chart, or if they're in multiple seats, talk about the 10 to 12. So if you talk about that, say, how's that going? Let's read it out loud. Let's look at the accountability chart. You could talk about the core values. Do you feel you show this most of the time, some of the time, or never? And then their rocks, you just check in on their rocks. If the. You can. These are things like, if you're not sure, what should I talk about with this person? 555 gives you a little bit of structure, but that's there if you need it. What you really need is to talk about what's working and not working from their perspective and listen. And if you get a chance to tell them, echo that and say, here's what I hear you saying, and here's what I see. Here's what I see that's working and not working. Sometimes you got to give them a shot in the arm, let them know, hey, you're doing great work. Here's what I see that's working. So it does great things for them to have that quarterly conversation. And it's off site and informal. That's the quarterly conversation I'm hearing.

Again, the context plays a big role. It's. You're given a structure that you can use to set up that context, and then you're able to focus based on the situation and what's required to make sure that you're getting the result you want out of the conversation.

So when I did this, when I learned to do this, I took it further because I thought more data, more information would be better. And I really thought I was serving my direct reports better by having a longer meeting, writing stuff down and really looking through every one of the five, five and five. Basically doing a people analyzer, doing a GWC fit on there. Like, I did everything with my direct reports. And I found that some of my meetings would even go over an hour. And I'd be right. I'd have it in my notebook and I'd be saying, okay, what do you say? And I did. What I didn't realize was I was making them very nervous. To me, it was, like, enlightening. But I felt that the intensity of the. By the end of the meeting, I was like, they didn't like that. And honestly, I don't know what all this data is going to do for me. So it was years later that I really heard it. You have to hear it seven times here. The first time I learned later that's a great structure. You don't have to go that deep. Just find out what's working and not working. It's funny, I added to my old format, I would always add a working, not working to the end of it. And it would. That would be the best part of the meeting.

Yes.

So I eventually, by the time I was onto my last company, I had. I was. I threw away the 555 format. I'd use it when I needed, and I would just do working, not working. And it was 15, 20 minutes. And they'd leave energized and I'd leave knowing where we stand. And I loved it. I loved it. But I had to keep it simple. And yes, it is contextual, but it is fully focused on them. If you pull anything out to write something down, it's to just say, hey, you told me you need something. I just got to write that down to make sure I get it right. Because as their servant leader, you're saying to them, as their direct. As their supervisor, I want to make sure I get that for you. They will respond well to that, so.

You should do that. That makes great sense. One thing I was going to ask about, and this perfectly ties in because we're talking about several other meetings and the importance of how you use the tools. Do you have opinions on what goes into a good level 10 meeting?

I say stick to the agenda, but I'll tell you some extra tips, because I think I did talk about that, didn't I, last time? I think I did, yes. But I will say that minimally, a meeting pulse should have a measurable in it. So always have something that they bring to the meeting so that you're not just talking. Half of your meeting should be issue solving. If it's level 10, even if it's a department meeting and it's a little shorter than the 90 minutes, it's okay if you got a smaller team, but make sure half of it is issue solving. Everybody understands that. For me, I've always found it really helpful to have a strong segue and a strong conclusion so they know at the beginning, what's going to happen? And they know at the end that they're accountable to having an opinion on how that meeting went. They can't just ride. They got to come in with their personal best and their professional or their business best, and they got to leave with an opinion of how it went. It's like writing things down, like we were talking about before we started. It's. You got to write stuff down, make it. Something happens in your mind when you actually have to deliberate, be deliberate and say, I'm committed to this. It just. It allows you to take further steps. But if your mental attitude is, I just have to. I can ride. I'll just react to them. Then you leave and you just wait for everybody to react and you end up being exhausted if you have a reactive work life. So it's changing the mindset of the folks in the meeting to be proactive so that they realize their life can be better if they're just a little more proactive. Starts with the segue, ends with the conclusion.

I like that. I'm not sure I've heard it stated that way before. It's really about changing everyone's mindset to be proactive in the meeting. Because I've seen people go into their first one. People can be a little guarded. What's this new thing? And frequently by the end of the meeting, they get it and they're like, okay, this is going to be great. But I've also seen people be very guarded, like, why are we here? It's another meeting, like, and you've gotta. Especially if it's virtual, you gotta pull people's attention in. Yeah, but I like that call to action. This is how we become proactive with a leadership team.

You get them to commit to EOS first. When they do, they realize there's a format that works. And when they agree this will work, they often don't agree at the beginning. They're like, oh, I'm not sure. I got a lot of meetings. I don't wanna throw this on there. But then when you point out, hey, this meeting will replace those other meetings magically, you won't have to have them. There won't be as much that you need to exchange. People will figure stuff out. Instead of having to ask you about everything all the time. They don't believe you at first, but then after a few weeks of doing it, they're like, this has changed. This is changing the game. So I'll give you one thing that happens way down the road, like maybe quarter or two Quarters, maybe three quarters down the road, sometimes make a suggestion to clients that when they're in the headline section, use that to call out positive core values in indirect reports. They see, I want to do a positive core value call out. I saw this guy do this and that showed this core value. So you document it in the headline. Everybody says, yay. And then everybody brings them. Then at the end of the quarter, when you're having that state of the company address we were talking about, you just tally all those up and then you give the energy back to them. Hey, we want to do some core value call outs on our core value of positivity or whatever. We've got this person did, this person did, this person did this. Now everybody's participating in the state of the company address because they know it's about them. If they didn't hear their name called, they're like, oh, I wonder if I get called about the next one. So it's a great way to get people to realize you belong there. But you have to do the work as leaders to bring those core value call outs in every meeting. So that headline section, it's, it's a, it creates a culture of accountability, but it takes time and consistency.

I like that a lot. Speaking of culture of accountability, we were talking a little bit before we started recording about accountability charts and in particular how they evolve and whether and what controls you need in place as they evolve. You said you've got some opinions to share there.

Yeah. What I do is I ask them to come in every quarter and print out their accountability chart, print out all their foundational tools and put them into a paper binder. The binder looks like this. In the back of the binder there's this section where you can actually put those tools. There's nothing in those back things. In the front tools are all the toolbox, all the items that I take them through, walk them through each step and each, every piece of the process. But in the back, it's all blank. And it's there blank for a reason. You should actually print those copies, discuss them as leaders, mark them up on with pen. Put a date. What was the date that this thing was? Post? Put it in the binder. Because over time you'll be able to see how it evolved, how it changed. Now some people are like, I'm digital only this way I do it. I'm like, you're missing out. This is the one time paper really works. Because you want to be able to modify this in a way that you know, it was Your writing, you actually said, I don't want that. I crossed it out. And I'm Mr. Tablet. I like that too. And, yeah, there's probably ways you can convert it over to some sort of OneNote or PDF, remarkable deal or something. But if you actually put it on paper and everybody's got their papers and everybody's together and they've got the same stuff, there's something about that allows everybody to accept the history of work that they've created, because they've all done it the same way and they've all been asked to make notes and they've all got their notes quarter after quarter. When they all look back on it and they all see their own thoughts, it's a great archive for them to see. As their revenue and profit grow and as the company grows, they can see that accountability changes, chart changes as well.

I think we were talking about this a little and it comes up in my mind there is actual research on the way. Even just doodling can help encode information into your brain.

Yeah.

And even we have a digital platform printing things out and writing on them. I do that all the time. I fill notebooks with it. It's just an incredibly useful practice. And as you say, it's delightful to go back and look at how ideas have evolved, how our conception of the company is involved. All those things, I think are fantastic.

Yeah.

Is there anything in particular, top of your mind that you'd like to cover?

Yeah, I want to mention something. There's some practices that you can take on with recording calls, recording your. Recording your meetings, or getting really strict on versioning your documents. There's things that you can do that will definitely create organization and structure. And folks, once they get that structure, they love to work in the structure. I get it. But I want to show the Lencioni trust, period pyramid. I don't know if you can see that or if it's reversed. Yes.

Yeah, it'll come through. If not, we'll superimpose a clean version.

This is in Five Dysfunctions of a Team, which, by the way, has a manga version, which is like a comic book version, which I think is awesome. This thing is pretty fun to read, just a quick, easy read. But it essentially says that you need to start with a foundation of trust and then you can have healthy conflict. When you've got that foundation of trust. From there you can actually get true commitment. After healthy conflict, you'll actually get commitment. If you have enough account of commitment, you can then have some accountability from accountability of results. Now you can get results without all those steps. But it's really painful if you don't really build a nice broad piece of piece of land where you build the trust. So when you're recording meetings, is that adding trust or taking it away? You got to consider, yeah, we're not all researchers. We all don't have time. Some of us, it's the pros versus the cons of having control and structure and every word written down. And it's not necessarily what's great for the visionary leader. The leader, it's what's good for the group. What does the group really want? And this is what the group really needs. If they have strong trust, they will, then they'll have healthy conflict. Healthy conflict looks like, hey, I'm going to say it even though I know that I might be wrong or I'm going to say it even though I know it's not a popular opinion. But those things, those. When you use the brain trust of the entire room, that'll actually get you further than people being guarded. So what makes people more guarded than recording every word of that they say in a meeting? You know what I'm saying? What's going to make them even more guarded? I don't know. That's going to make them guarded. So you don't. It's a trust thing. So version control and versioning also, like, if you're worried about people changing something willy nilly, why not just print it? Just say that's the printed version. Oh, if we made changes, that's fine. But this is the printed version is the one I have. We called it this version. In the snapshot of time. You don't necessarily need to have control. You just say let's. This is when we print it. And this is what we're going to work with for the next three months. If we're going to make any changes. Great, let's talk about it in three months. We'll make some edits, we'll come together. If we know we're going to come together to make those changes, then we don't have to worry about somebody messing with our stuff. It's about trust. It's about creating trust.