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Before and after implementing EOS as CEO of Yapster
116 Plays1 year ago
In this episode of the First-time Founders Podcast, host Rob Liddiard explains how the Six Key Components of EOS (Vision; People; Data; Issues; Process; and Traction) impacted his life and business as the Cofounder CEO of Yapster (a software company with 100,000 paid users, serving companies such as Brewdog, Caffe Nero, Krispy Kreme, Next and Wagamama).
Rob spent 5 years (2015-2020) running Yapster without knowing about EOS and then nearly 3 years on EOS until the company was acquired in December 2022. Today Rob works as a Professional Implementer of EOS, helping other entrepreneurs and entrepreneurial leadership teams get what they want from their businesses more quickly, with less frustration.
Interested listeners, please contact Rob on Rob@mission-group.co.uk (or to book some free time, visit https://www.eosworldwide.com/rob-liddiard).
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Transcript
Introduction to Rob Liddyard and EOS
00:00:00
Speaker
Hello, I'm Rob Liddyard. I'm a professional implementer of the entrepreneurial operating system, or EOS. Before I became an EOS implementer, I was the co-founding CEO of a software company called Yapster, co-founded in 2015, and was ultimately acquired at the end of 2022. The entrepreneurial operating system came into my life whilst I was running Yapster in 2020. So that means I spent five years as the CEO of Yapster without having EOS in my life, without leaning on the tools of the entrepreneurial operating system,
00:00:29
Speaker
and nearly three years running on EOS. So today I'm going to talk you through the six components of the entrepreneurial operating system and talk to you a bit about the before and after, what my life was like as the CEO pre EOS and how each of the six key components positively impacted my business, helped me get more of what I want from my business and ultimately allowed us to exit that organization and gave me the confidence now to share the gift of EOS with other entrepreneurial organizations through my implementation work.
00:00:59
Speaker
So let's get started. So the first key component of the EOS model of my business, of your business, of any business is the vision component. You need to know where you're going and how you're going to get there in order to ultimately make the trains run on time and get what you want out of your business. Now, for the first five years of Yapster, I had a broad sense of what I wanted to achieve.
Vision for Yapster and EOS Influence
00:01:26
Speaker
I observed that
00:01:27
Speaker
Millions and millions of people in the frontline economy working in the UK where I live, so working in hospitality, retail, various frontline services, transportation and the like, didn't have corporate emails and actually didn't have any real meaningful way to communicate with company leadership or in many cases, each other. They were relying on informal communication networks like WhatsApp and Facebook. And so the vision was to create a secure, affordable,
00:01:56
Speaker
inclusive mobile-first communication platform for the forgotten majority of frontline employees that didn't have corporate email addresses so that they could securely and easily connect with one another and corporate HQ. From a fundraising and corporate perspective, from the foundations of our startup, the vision was to try and realize a life-changing financial outcome, millions of dollars in recurring annual revenue or sterling in my country.
00:02:25
Speaker
by licensing our technology on a per user per month basis, a pound or two per user per month, and achieving some level of market penetration. Because there are so many millions of people working in the observed target market, we assumed that if we could get to a low single, low double digit market penetration, that would have equated to probably tens of millions of recurring revenue. So that was the vision. Product vision put secure, inclusive mobile technology in the hands of people that hadn't previously been given it by their employers.
00:02:55
Speaker
and create a transformational financial outcome for our team and shareholders by capturing some share of that game. Sounds good. It was good enough to raise money. It was good enough to recruit a team and get started. Unfortunately, there's quite a lot of gaps between what I've just described to you there and an adequately articulated vision from an EOS perspective.
Defining Vision with EOS's Eight Questions
00:03:16
Speaker
In EOS, we encourage leadership teams to answer eight questions
00:03:20
Speaker
which constitute their vision, which takes them from where they're trying to get to down to how they're going to get there in 90-day increments. And the eight questions are, what are your core values? What's your core focus? What's your 10-year target? What's your marketing strategy? What's your three-year picture, your one-year plan, your 90-day rocks, and what's on your issues list? Are you the things that aren't going to be attended to in the next 90 days? Very quickly, going one at a time,
00:03:48
Speaker
Core values I'd heard of from my prior career as a corporate lawyer, but I'd never really experienced what it's like to be performance managed or recruited to values. For the first five years of the App Store, we didn't do that. We just recruited people that we liked. We hired some really good people, but we weren't crystal clear on what it was that linked those people to one another, what made them a coherent fighting force. And consequently, what that meant, between 2015 and 2020, we had a lot of great people, but not necessarily a great team. Once I discovered EOS, we got clear on what our values were,
00:04:18
Speaker
We started to recruit and performance manage to them and everything else got easier. Core focus is about working out what your sweet spot for the organization is. And then the discipline comes from staying in that sweet spot. So we eventually realized that our sweet spot for Yapster was providing secure mobile technology primarily to hospitality organizations that operated between the 100 and three, 4,000 employee marks.
00:04:45
Speaker
It's interesting because our best customer was someone like a next PLC that had 30,000 employees, and they were very successful on the product. But our sales and marketing motion wasn't really set up to deal with big enterprises like Next, where we were strongest and most successful, where we could do deals with founder-led organizations where the primary beneficiary of the technology was also the person that was going to sign the checks. We didn't have a big sales organization that was looking to engage with procurement departments, for example.
00:05:16
Speaker
a truly enterprise-oriented software company is going to be very different. They're going to have a big professional services function generally,
Marketing Strategy and Customer Targeting Shift
00:05:22
Speaker
and a sales team that likes doing complicated, long-running deals where they deal with procurement and RFIs and the like. So eventually we got to a place where we understood our sweet spot, and it meant that we could focus our sales and marketing energy much more efficiently, which I'll come onto in a minute when we talk about marketing strategy.
00:05:41
Speaker
Our 10-year picture was always very fuzzy. It certainly was for the first five years of the Abster because actually, and this is very common in people that raise money from investors, you really limit the horizon of your vision to whenever the expected investor return might be because you're encouraged to do that because it's that horizon that inspires investors.
00:06:03
Speaker
to give you the funding. And then unless you're a total sociopath and you raise the money and then don't think about them again, you're sort of morally anchored to talking about your vision in the context of the promises that you've made to investors. Once we discovered EOS, we discovered that we could still try and honor our promises to investors, but we could be much clearer of our organization about the impact that we're trying to make. And for us, that was a market share definition of our addressable market. So that when any of our employees were walking down a British high street,
00:06:32
Speaker
there was a better than not chance they'd bump into a Yapster user by virtue of serving 25% of our addressable market. So one in four people working in our addressable industries, i.e. every British high street in the country, would be a Yapster user. That was something that we could really tangibly sort of feel and inform all of our efforts going forward as a team. And I'll come on to how that connects to the three and one year plan shortly.
Adapting Three-Year Plan and COVID Impact
00:06:59
Speaker
The marketing strategy is just defining the demographic, geographic, and psychographic profile of the ideal fit customer, and then figuring out how you're going to talk to that customer through your unique defining characteristics, a proven process for how you look after those customers from the moment you meet them through to when they become long-term partners, reference, case studies for your organization, and ideally come up with a guarantee that de-risk stepping off the ledge for your customers.
00:07:27
Speaker
For the first five years of Yapster, we were just kind of fumbling through trying to sell to anybody that was interested in the problem of running their business unofficially on WhatsApp and the lack of connectivity between head office and colleagues and colleagues and one another. It was only after EOS that we started really thinking about the fact that these founder-led mid-market hospitality businesses were the ones that found it easiest to buy Yapster and got the most value from it most quickly.
00:07:51
Speaker
And what that then meant is we could focus our unique value proposition much more clearly on that defined target market. So one of the uniques that we used to explain to customers on sales calls is we would say the reason people would buy from the app store over something like a Facebook workplace is because we joke, I'm much easier to get on the phone for a bollocking than Mark Zuckerberg is. And the point there is our target market, we're much more interested in feeling a connection, a human connection to their supply chain.
00:08:17
Speaker
than they were in the size and balance sheet strength of a big American rival, right? So when we got clear on that, we were able to position what in another target market market might've been seen as a weakness, our relatively small size as a strength. It was that we were able to be a technology company that was also service and relationship led. Our three year picture, now this is interesting because EOS came into my life in 2020 and we sold the business at the end of 2022. So just coming up for the first
00:08:46
Speaker
kind of the end of the first three year snapshot. In EOS, you're constantly reevaluating your three year picture as each year moves, but you do hold yourself accountable for where you set your original three year. Now, our three year, we intended at first to just grow independently on a profitable basis and get to a place where we didn't need any more investor support and we could just build a great company that returned value to shareholders, did great work for customers, but on a sustainable basis.
00:09:16
Speaker
We did pretty well in getting close to that, but part of the reason we decided to sell the business in the end was the clarity that EOS gave us as we got into our one year in rocks, which I'm about to come on to. It was just really clear that the three year of a high growth independent business wasn't going to be realistic because of the lasting impact of COVID on our target market. Of course, COVID hit in March 2020. The UK hospitality market was opening and closing persistently through that first year. And then in the year afterwards, there were a series of really
00:09:44
Speaker
really intense aftershocks hitting the UK hospitality sector, cost of living increases were squeezing the consumer, increases in the cost basis of the hospitality market meant that they were just really vigilant about taking on new costs on their P&L. And unlike something like a scheduling solution or an Epos solution that they already had line items on their P&L and they had to have to run their business,
00:10:09
Speaker
a team communication system whilst it would make their company much better. And there were companies that couldn't imagine living without it. Those that had never had the software category were minded to push out those buying decisions six months, sometimes 12 months. And that delay in the maturity of the market just meant that we were able to take a grown up view and say, do you know what? Yapster is going to be better for its customers and stakeholders as a division within a bigger company rather than trying to see out that 10 year vision.
00:10:39
Speaker
So the clarity around that in the vision part of the VTO and EOS really, really helped us. And that's how our three year took hold. So when you do a three year, you typically define revenue, profit, and measurables. And measurables will be things like number of users, number of employees, number of sites, general profitability, or the sort of the drivers of profitability.
00:11:01
Speaker
Then on the document that we keep the answers to our eight questions in, the vision traction organizer, at this point of the three-year plan, we turn over the page, it's a two-page document, and we get to the one-year picture.
Yearly Planning and Pre-EOS Challenges
00:11:12
Speaker
And ideally, if we've done a good job of our three-year planning, then that sets us up for really good one-year planning, because as a leadership team, we're able to close our eyes and all picture the same future that we're trying to get to in three short years. For Yapster, the one-year was often just about keeping costs down and driving revenue up,
00:11:30
Speaker
to a place where we could plausibly look at our three year and say, do you know what, we're going to be able to grow at a fast rate independently if we hit this plan. So we had our revenue and profit objectives for our one year, and then we had three to seven goals for the year. In our case, the goals were often self-serve improvements in the product.
00:11:50
Speaker
And increasingly streamlining the onboarding account servicing and renewal processes, again, so that we could hold on to as much revenue, given the best customer experience that we possibly could, and do that in a way that enabled us to not increase headcount constantly, which, of course, many venture-backed companies don't mind so much because they're intending on deliberately losing money forever.
00:12:11
Speaker
But with our 10-year and three-year pictures, we knew that we had to implement initiatives that drove us to profitable growth, i.e. increasing revenues with ideally decreasing, but certainly no more than flat lining employee growth. And then once you've got your one-year picture defined, and by the way, I should add, in the five years prior to all of this, we never really thought in coherent three-year and one-year pictures. The furthest we went is doing
00:12:40
Speaker
detailed financial projections, but predominantly for the purposes of unlocking investment, which is very, very common in investor backed companies. You do the plan and you do mean it, but it's largely a sales asset to underpin the fundraise. And then once the money hits the bank and you start missing targets,
00:12:59
Speaker
It's not that common to go back and recut the whole plan because that would involve telling investors that the basis they invested on is no longer plausible, which would probably be the right thing to do in many cases. But what a lot of founders do and what I was guilty of doing pre EOS is you then lean into trying to catch up the plan and you'd be doing more and more and more desperate things in pursuit of the originally intended growth rate. So we talked about our one year goals for the year, our one year plan.
00:13:27
Speaker
The next, the seventh question in the EOS vision component is what are your 90 day rocks? And so your 90 day rocks are three to seven priorities that each of the leadership team have. The most important for the company become our goals for the year. And then you'll have individual rocks, three to seven quarterly priorities that you as an individual are responsible for. And the idea is you pick rocks that are going to, if you complete them, you're going to be well on course to hit your one year plan.
00:13:55
Speaker
Um, in the appster world, we, for the first five years, we were often running around, you know, like on fire, just trying to keep up with the expectations of things that we'd already done. So customers that we'd signed, um, product roadmap deliverables that we'd already committed. And so every, I mean, we didn't really work on strict 90 day cycles. We tried sprints and all different sorts of things. We worked really hard, but there was this general set feeling of never being able to do quite enough.
00:14:23
Speaker
When we moved to EOS and we defined our one-year plan and then we started setting sensible 90-day rocks, it was still hard, but it was deliverable because we'd agreed that the things we declared as rocks were sacred and they were going to get done, but it was enough because if we got them done, they'd deliver the one year. And then that brings on to the issues list, the eighth question of the VTO, which I always, I like to call the pressure valve for the visionary.
00:14:47
Speaker
As a visionary, as a founder type person that's got a million ideas a minute, it's really difficult actually to prioritize to the point where you say, these are the things that have to get done in a year. Therefore, the following things are the only things we really can agree to prioritize in the coming 90 days in order to not make a fantasy of our one year.
Managing Issues with EOS System
00:15:06
Speaker
And that necessarily leaves a whole bunch of problems and opportunities unaddressed. And the issues list is a place where founders can put those things that they no need to be dealt with, but they just don't necessarily need to be dealt with.
00:15:18
Speaker
in the next 90 days. So that's the VTO, that's the vision component, and hopefully that gives you a sense of what my life was like before as the founder, CEO of Yapster, and what it was like afterwards. It was still hard, but it was just clear where we were trying to get to. I was clear with my team and where we expected to be in 10 years, three years, and one year, and how it was that we were going to be able to get there taking a 90-day view with a clear definition of what we're not going to take on that's going to be on the issues list to become a candidate for a priority.
00:15:48
Speaker
in a future quarter. So the next key component is the people component, because you can't achieve a great vision without great people. The challenge, of course, with running an entrepreneurial business is that everybody defines a great person differently. Certainly from my perspective, I was always surrounded by great people, people that I really liked, but I wasn't super clear on what it meant to have the right person, i.e. a values aligned person,
00:16:14
Speaker
in the right seat, i.e. a job that they had the genetic encoding, the will and the training, the desire to be able to perform really well.
Role Alignment and EOS Tools
00:16:22
Speaker
The example I give when I'm working with clients now teaching EOS is I say, you might think that I'd be a good salesperson because I'm very enthusiastic about the things I'm passionate about. I'm confident speaking. I'm actually a pretty poor sales executive and I wouldn't be a very good sales manager because I don't have great follow through. I'm really good at doing things the first time, particularly in uncertainty.
00:16:41
Speaker
Pretty good at doing them the second and third time to refine that process. But the type of personality that you'd put in charge of like a high-tech production facility, like a manufacturing facility, the person that gets real, it really makes their heart sing when they shave a fraction of a percentage point off a defect rate of a production line, that's just not me. I much prefer
00:17:05
Speaker
solving problems for the first time and then working with people that are more operationally rigorous to go through cycles of continuous improvement afterwards. Sales Exec is generally a role that's somewhere in the middle. They need to be able to open up conversations with people and present a proposition, but they need to be able to do that in the mid-market, which is where Yapster's target market was. They need to be able to do that 10, 15, 20, 30 times a week, depending on the pipeline that you can create.
00:17:31
Speaker
that kind of repetition just isn't where my heart is. So what you find is when you put someone in a seat that their heart isn't at and their genetic encoding doesn't speak to, you might get a 90-day spike where they perform well by artificially kind of forcing the effort, but eventually they're going to fall off because that becomes unsustainable. So once we implemented EOS, there are two tools in EOS that we use to get right people in right seat, the people analyzer to check. We analyze that each of our people line up with our
00:17:58
Speaker
with our values on a quarterly basis and the accountability chart, where we go from top to bottom, side to side and work out all of the things that need to be performed in the organization and be very, very clear and who it is that's responsible for that and what good looks like in that seat. Once we got to that level of rigor, suddenly it became clear as to why there were some folks where it just wasn't quite firing from the values perspective. Why didn't they feel like a real natural part of the organization? Frankly, why were they irritating me?
00:18:27
Speaker
all the way through then to like, why is it that this person that we really love, that's a great values fit, isn't able to perform the job in the way it looks in my mind? And by the way, quite often, something looked the way it did in my mind, but I hadn't articulated on paper as to what good looked like. So it was as much me. In fact, it was entirely me rather than necessarily the colleague. But implementing those two things meant that we went from sort of some level of chaos and uncertainty to total clarity around.
00:18:54
Speaker
the people in the organization. So the next key component is the data component. So the data component is just about making decisions based on facts, figures and objective information and not ego and feeling, the sorts of things that drive decision making in most entrepreneurial organizations. From a Yapster perspective, for the first five years, we had management accounts, of course, that's what we reported to our investors on. We were trying to have some sense of how our pipeline was evolving from a sales perspective.
00:19:25
Speaker
And that really was it, if I'm honest. And I wouldn't say either of those two things I've just mentioned were done with any great rigor either. It was really stressful. It was really stressful because you're reporting your lagging indicators, like your revenue growth, to your investors and your team to keep the organization alive. But we weren't super clear on the leading indicators, the things that needed to get done week to week to drive the lagging indicators that we were looking for.
00:19:51
Speaker
when someone showed me the one page scorecard in EOS where I suddenly could see how I as a leader could get an absolute pulse on my business. I wouldn't say actually that, unlike many parts of EOS, that wasn't a light bulb moment because it generally takes about three months to get to a scorecard that you love. It certainly did for us. But eventually we got to a place where we understand the number of meetings that we needed to be having, the number of demos that we needed to be doing.
00:20:17
Speaker
the average speed of response to a customer support ticket so that we could feel proud that we were honoring our customer service promises without breaking the organization financially by overloading it with support staff. Those sorts of numbers ended up getting into our weekly scorecard and we got to a place where we could see if we were on track for meeting our quarterly objectives from a financial perspective and indeed our other measurables.
00:20:43
Speaker
And I'll come onto that a bit later in the traction component. So that made a big difference. And as I tell prospective clients that are thinking about embracing EOS, once you get to a place where you've understood the key components of vision, people, and data, you start to get transparency through the organization. And from transparency comes clarity. And then from the clarity, basically, a whole bunch of crap starts bubbling up in the organization, which is normal and good. And that was certainly the case for me. So that brings us on to,
00:21:11
Speaker
the fourth key component, which is the issues list, the issues component.
Systematic Issue Resolution Post-EOS
00:21:17
Speaker
We have a couple of issues lists in an organization running on EOS. We've got the one on the VTO that I talked about a moment ago, that pressure valve for the visionary. We've also got an issues list that we refer to weekly in our departmental level 10 meetings, which I'll come on to shortly. An issues list is literally what it sounds like. It's a list of issues. And the thing that EOS allows you to do is a couple of things.
00:21:39
Speaker
Founder types often are scatterbrained and a little bit manic, and they always want everything done yesterday when they're paying attention and then they forget about things afterwards. It can give organizations tremendous whiplash when you've got a founder that keeps phoning random colleagues and dumping random issues and ideas on them ad hoc through a week. Having an issues list is a place where founders particularly, but everybody generally, can put their observed issues and opportunities so that they can be tackled in a systematic and rigorous way.
00:22:08
Speaker
at allocated times through the week, or through your meeting polls, through your calendar, to be able to address issues and make them go away forever.
00:22:19
Speaker
Once we implemented an issues list in the App Store, it was incredible how good we got at identifying, being honest about the root causes, and then solving issues as opposed to just this organizational whiplash, which also often didn't lead to deep root cause analysis or long-term sustainable solutions. So that was a big impact in terms of the before and after. The fifth key component is the process component
00:22:46
Speaker
So process is something that a lot of entrepreneurial people shy away from. It makes sense. Many people leave large companies because they don't like process or what feels like bureaucracy.
Defining Processes without Bureaucracy
00:22:57
Speaker
Problem is when you're trying to scale an organization and trying to deliver consistent customer outcomes that you're proud of, if you do that without knowing the right and best way to do something on a repetitive basis, you're going to have really varied outcomes. It's going to be varied in customer outcomes in terms of the service they experience.
00:23:16
Speaker
but also varied in terms of the cost outcomes, makes it extremely difficult to run a predictable business financially or from a satisfaction perspective. Once we embraced the OS and we realized we didn't need 700 page standard operating procedures, which is something we tried as we went through the transition, many people do, it's a soul killer, it's impossible to sustain. We got to a place where we were documenting the 20% of core steps that typically would drive 80% of the expected outcome from a core process.
00:23:44
Speaker
And all companies have core processes, whether they've documented them or not. You know, your HR process, a series of operations processes, your marketing process, your sales process, your billing process, just made everything easier, easier to keep track of and easier to continuously improve over time using the issues component. And that brings us on to the six key component. It's pretty simple, the traction component. So the traction component is all about bringing the vision down to the ground day to day and making the vision real.
Traction and Business Accountability
00:24:14
Speaker
We always say there's no coincidence that the traction's at the bottom of the model and vision's at the top because vision without traction's hallucination. Traction is all about building accountability and rigor and rhythm in an organization. This was the thing that was most life-changing for me. Traction's supported by the other key components, but really it comes down to making sure that you've got your 90-day rocks smartly defined where you're rigorously adhering to getting them done.
00:24:41
Speaker
And then your meeting pulse, the most important meeting in the quarterly and annual cycle within an EOS business is the level 10 meeting, the weekly level 10 meeting that a leadership team will do together. And during that meeting, we follow a really rigorous agenda, which I can talk you through another time, within which we do a review of our scorecard measurables and our rocks, no commentary, we just say things are on or off track.
00:25:07
Speaker
And then we spend the bulk of our time issue solving using the IDS, identify, discuss, solve tool to make sure that we're prioritizing the most important issues, which could be things that accumulated on the issues list through the week or new issues that have gone on by virtue of a colleague declaring one of their scorecard measurables or a rock off track. And you could just calmly systematically work your way through, where are we not keeping up with the vision?
00:25:36
Speaker
And as long as you had the right people in the right seats, and if you didn't, that would be an issue. As a team, you would work your way through and you just systematically knock them down and you'd be able to move forward towards your vision. And if you weren't able to move forward towards your vision, which was the case in Yapster towards the end, it wasn't an alarmist thing particularly. It's just, um, the vision that we're all motivated to obtain is going to be very difficult to obtain independently.
00:26:01
Speaker
So then what you're able to do, cause you don't worry that you're not executing very well. You know that you are executing well. It's just, you've got a strategic challenge now and it shines a light on that. And so what you're then able to do is maturely say, we either need to downshift the vision or we need to do something different. Like bring our company under the auspices of a bigger organization with a broader product set and a standing group of customers who want to buy what we do in the context of a wider range of services.
00:26:30
Speaker
in order for us to fulfill our promise. And that's exactly what we did by leaning on the six tools. It was transformational for us. It made the app store a much, much happier place to work, much clearer as to what needed to get done day to day, week to week, quarter to quarter, year to year. And frankly, I went from feeling like an imposter, an ex-lawyer that had gone through various biz dev roles into being a CEO, into somebody that was a fairly capable managing director of a small business.
00:27:01
Speaker
Based a little bit on my personality and experience, but mainly by leaning on these six tools that gave you just some very clear rules of the road and operating rhythms that you and colleagues could buy into and get stakeholders bought into to define where the trains are going and then make them run on time.
Recommended Reading: 'Traction' by Gino Wickman
00:27:18
Speaker
So I hope you found that useful. I would encourage you if you found this useful, first step, read the book Traction by Gino Wickman, or if you'd like me to spend 90 minutes talking you through the model properly and understanding how it could best apply to your organization.
00:27:32
Speaker
My links are in the show notes as ever. Make contact and I'd be delighted to do that for you.