Tlao Cover Art 2023 Vector

Ayo Phillips & Peter Lohmann – All Things EOS

Both Ayo Phillips and Peter Lohmann operate businesses and property services and management and also run Traction EOS in their companies.

Episode Description

My guests on this episode are Ayo Phillips and Peter Lohmann. Both operate businesses and property services and management and also run Traction EOS in their companies. EOS rightfully gets a lot of attention in the small business world for providing a structure to grow and being what Peter calls it as a culture in a box system. But every operator uses EOS in slightly different ways, and I wanted to hear from two operators using it to hear how they’ve customized the model for their businesses.

This episode is a breakdown of why they decided to implement EOS, choosing between self-implementing versus hiring an implementer, benefits they’ve realized from using EOS, how EOS impacts company culture, and their advice for other operators considering us for their businesses.

Also, Ayo’s previous episode, episode 56 on Think Like An Owner, was a very popular episode for good reason. Ayo has quite the story to share, and I highly recommend book-ending that episode with this one for a great story and more background. And now enjoy our all-things EOS conversation.

Clips From This Episode

Setting goals


Building teams

Live Oak Bank — Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle-market companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to

Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected]

Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.

If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at Or reach out to August directly at [email protected].

Interested in sponsoring?

(5:08) – Ayo Phillips’ & Peter Lohmann’s backgrounds

(7:17) – What prompted you to implement traction?

(11:20) – What were some of the lightbulb moments from Traction?

(18:17) – The decision to self-implement EOS

(25:32) – When did you notice that the implementation was working and a culture was being developed?

(30:11) – How much movement had to happen within your teams to successfully implement EOS?

(35:49) – Building the base layer of EOS

(38:59) – How do you think through picking “Rocks” and setting goals? Did you ever have to refine any of them?

(44:31) – How have each of you personalized EOS to best fit your respective companies?

(52:28) – What advice would you give to operators considering or struggling with EOS?

Alex Bridgeman: It’s good to see you both on the podcast again. I’m excited to have a little bit more focused topic episode on EOS and all things Traction. You guys are both running EOS in your companies but having slight variations to the traditional kind of EOS structure that I’m excited to hear a bit more about. But first Ayo, you’ve been on the podcast before, but folks probably aren’t going to- if you haven’t heard the episode, they’re not going to be familiar with either of you, so I want to start with backgrounds again. Ayo, do you want to start and just share a little bit about your background and the business you run, how you got to it, that sort of thing?

Ayo Phillips: Sure, sure. Great to be on the podcast again, Alex, and excited to be here with you, Peter, as well. So, I run a business called Perfect Surface, and what we do is we perform turnover services for multifamily and single-family rentals. So large portfolios of properties owned by usually institutional investors. I acquired my business in 2017. So, I’ve been running it for about five years now, and I acquired it using the search fund model. So, I kind of went the traditional route in some ways and went to business school and right out of business school searched for two years and closed my transaction exactly on the last day of my two-year search. So, it was kind of an exciting time for me. So, I’ve ran the business for five years now, like I said, and so that’s who I am.

Alex Bridgeman: I like it. Peter, who are you? Tell us about yourself.

Peter Lohmann: Yeah, thanks again, Alex, excited to be here. So, I’m the owner of RL Property Management. We’re a residential property management company in central Ohio. We manage about 650 rental homes and apartments for property owners. So, we don’t own these. We manage them for others. And I started this company myself about nine years ago. It was literally just me in my apartment, no clients, no units, nothing, and I’ve just grown it kind of organically ever since, with a couple of small acquisitions along the way. And we’ve been running EOS for I think about four years, more or less degrees of being fully implemented. It’s a process, which I’m sure we’ll talk about.

Alex Bridgeman: Are you guys willing to share revenue just so folks have a sense for scale for how big your companies are running Traction?

Peter Lohmann: Yeah, I’m happy to share that. We did 1.7 million last year. I think we’re on track to do somewhere between 2 and 2.5 this year.

Ayo Phillips: So, we did about 3.5 million last year and looking to be a little bit higher than that this year.

Alex Bridgeman: Excellent. And so before even just diving into implementing Traction, it seems like folks implement Traction as a result of running into a bunch of problems or recurring issues in their business that aren’t being solved by their existing systems or management structures and processes. Can you both share a little bit about what prompted you to implement Traction, some of the reasons you came across in your business where you felt that you needed something a little bit more formalized within your business to grow and hit that next step?

Peter Lohmann: So, for me, our company was experiencing good growth, and property management is an operationally intensive business. There’s just a million moving pieces. It’s actually like three or four different businesses in one. So, as you grow, you face these operational challenges, and it doesn’t get easier. It’s not like all of a sudden, you reach some plateau, and the operational challenges disappear. They only get bigger and harder. So, after like the sixth or seventh time hearing another property management company entrepreneur talk about EOS and how it changed the game for them, I was like we’ve got to get on this. So, I re-read Traction. I had actually read it years prior and completely bounced off it. It made zero impact on me, set it aside and thought there’s a book I’ll never use. And just didn’t- just for whatever reason, I don’t think we were at the place in the company where the tools were useful. The problems didn’t resonate. We just weren’t there yet. So, I read it again and it was like a totally different book for me. Everything clicked, everything made sense. And I was like we’ve got to get on this because the problems- they have you take like an organizational checkup, it’s like a little quiz or survey in the beginning of the book, and you end up with a score and that kind of shows you how close or far you are from like the ideal state of a small business, organization, systems, process, people, there’s all these different parts to it. So, it shows you how far away you are from like perfect or whatever, not that you get perfect with EOS, but it drives you toward major improvements. And so that kind of gives you a roadmap on what you need to work on and outlines what can be done using the EOS system.

Ayo Phillips: Yeah. So, from my perspective, I think my journey to EOS was quite similar to Peter’s where I read the book initially and initially thought this is just a repackaging of classic business concepts, and having spent a decade of my career in the corporate world and learn about continuous improvement, lean manufacturing practices, and other things, that systems that you use to kind of run businesses, I didn’t think there was any use for the tool. So, I read a portion of the book and quickly put it down, and about two and a half years or so into running the business, one of my employees came and dumped the book on my desk and essentially said, “Listen, you’re driving us crazy. You’re making us run in a multitude of directions, and you need to read this, and we need to execute on it.” So, she put the book on my desk, and also, it happened to be behind me. I had the copy still sitting behind me in my office. And so, when your team and one of your key employees comes to you and says something like that, just from the perspective of retaining them, it makes sense for you to kind of listen. So, I ended up reading the book again and realized that the book was defining me. So, there’s a piece of EOS or a role within EOS called the visionary, and that person is typically the ideas person and is typically trying to do multiple different things and trying different things out. And it talks about kind of the impact of that individual on the organization. And it immediately clicked, and I said, you know what, we have to do this, just out of respect for my team and because I wanted to retain them. So, we all read the book and decided to move forward with EOS.

Alex Bridgeman: And then before diving into implementation, there must have been- you both talk about kind of light bulb moments through reading the book. What were some concepts you read about or sabbing done in other companies that were using EOS where it was that light bulb moment for you where maybe it was the thing that was most missing in your company or some of the biggest stress points that Traction addressed? What were some of those light bulb moments for each of you? And Peter, maybe we’ll start with you.

Peter Lohmann: Yeah, I’m trying to think back. This was a number of years ago now. I mean, there’s a few concepts that we started with right away, so those must have been my pain points. I think the first one we did was there’s a concept in EOS called a Level 10 meeting or L10 for short. And it’s just a weekly leadership meeting, that’s all it is, but it’s very structured. So, it has you go through the same exact agenda every week, and it has to start and stop on time, and attendance is mandatory. And that Level 10 meeting, it forces you and your team to come together, and you bring what’s called issues. So, through the week, if you notice something that’s not working right or something you think we need to do, you write that down, you bring it to the meeting as an issue, and then together with your leadership team, you prioritize those issues in order of importance. And then you start with the most important issue first and you talk through it. There’s a process they call IDS, identify, decide, solve I think; it’s basically just figuring out the problem. And that’s really powerful because as the entrepreneur or founder, absent that, a couple things happen. One, just like Ayo was saying, you end up shooting ideas to your team at all hours day after day, and they just don’t know which direction to run because you have so many ideas and some of them are actually good. And so, there’s just like kind of a chaos that goes with that. Whereas with the issues list, it kind of forces you to bring it to the team in a structured way and get feedback from them. So, that’s really key. And also, the other thing that can happen as an entrepreneur or solo founder is you end up just taking on too much. It’s like you feel this incredible burden of not only thinking of great ideas, but then implementing them. And you feel like you don’t have any help, whereas at the leadership team, these Level 10 meetings, what you realize after a while is like, oh wow, these people actually really want to help, and they’re like asking to take on things that I would have just kind of by default done myself, but oh yeah, I guess it does make sense for Jeff to take that on. And then suddenly, you’re like getting stuff off your plate, which means you’re going to be thinking more clearly about things coming down the road. And so, I found that to be really, really valuable.

Ayo Phillips: In my case, for the first couple years of me operating the business, the business was in crisis for most of that period, which kind of led to some of my just shooting, trying to find anything that could potentially work to get us out of- solving the situations that we were in at that point. And like I mentioned, it was driving the team crazy, and we needed some way to kind of structure the way we did work. And we needed it not to come from me because in some sense, in some ways, I had lost some credibility with the team because I was always starting things and trying things and doing things, and just like Peter said, they didn’t know where to go, and I did not have credibility. And EOS as a structure brought some credibility in the sense that it wasn’t Ayo, it wasn’t coming from me. And this actually ties into I think another question you’re going to ask later, which is the choice to self-implement versus get someone in to help you implement. My decision to bring in an implementer was to take me out of that role of I am the driver for this and to bring someone else in who had the right to tell me, “Ayo, you need to shut up now. And the team needs to be heard in this way. And you guys have to jointly develop a vision and a strategy and something that you all could strive for, not just what your own personal goals are.” And I think one of the things when you’re going through a crisis, like we were early on, was you’re thinking about your debt covenants, you’re thinking about the financial metrics, you’re thinking about the potential outcome of the business, which is selfish – for me, it was selfish – and you’re not thinking enough about the team that you have and the people that you’re bringing along. And just that process of it’s called the VTO, vision, traction, organizer, where you go through and the entire leadership team gets to have input into where the business is going was a very powerful thing for our business. And just like Peter said, I mean, there’s several things within EOS that have been transformative for us, but if I were to say what was the initial thing that really got us going in this direction and really buying in it was the vision traction, organizer.

Peter Lohmann: Yeah, I’ve got to agree with that, Ayo. That was going to be my second thing, that VTO. So this vision traction organizer – and you can download it, it’s available online for free as a PDF – it basically just has you write down like your mission or vision, your core values, and then it kind of walks you through setting a ten-year target and a three-year vision and a one-year, I forget exactly the words, but it helps establish a direction. It forces you to get clear on where you’re going and what you’re trying to accomplish in writing, which if you already have that, you’re ahead of 90% of entrepreneurs, believe it or not. So not only just getting it down and getting in writing, but just like Ayo was saying, your whole team is looking at it, so there’s no question on where we’re going, what we’re doing, and that makes decision-making really easy. Because if there comes up a question, it’s like, well okay, is this helping us achieve, boom, the written mission that we have on our vision traction organizer? If it isn’t, we’re not doing it, the answer’s no. So, that’s great. And the cadence that EOS sets up with that three-year, one-year, and then the quarterly rock planning sessions, which we can talk about, man, that’s powerful, just having like a cadence. And then it even goes all the way down to the weekly Level 10s, that’s part of the cadence too. When you start to hit your stride with you hit the quarterly rock, you do the Level 10s, and now you’re hitting your quarterly rocks, and that’s building on your one year, once you start tasting the fruit of that labor, man, it’s really great. It gets you excited about what’s possible. It’s reinvigorating. Your team starts to really get behind it. It’s really cool stuff.

Alex Bridgeman: Yeah, Ayo, you started this a little bit earlier, but I want to hear a little bit about each of your decisions to implement yourself versus go hire an implementer. And Ayo, you shared a little bit about that, but Peter, what was your kind of decision, thinking on that decision?

Peter Lohmann: Yeah, so we self-implemented in the beginning. For the first two or three years, we were fully self-implementing. And I kind of led that charge. You need someone in your company to push it through. It may be you, or it may be a key team member who really loves like systems and process, and that’s me. So, for our company, it was me. So, I sort of slowly built up over time all the pieces and parts of EOS for the most part. It was working decently, but the more I listened to other people talk about EOS and sort of observed it within my company, I felt like there was more potential there that we weren’t tapping into, and I really wanted to make sure that we were getting the full value of EOS out of the efforts we were already putting into it. So, I made the decision about six or nine months ago to bring in a professional implementer. And it’s super expensive, so that was part of why I didn’t do it in the first place, because it’s eye watering the price to bring in somebody for one or two days. And you kind of kick off with like a two-day thing, and then it transitions to a quarterly one day with an annual two day. And bringing in the professional implementer, so these are folks who this is what they do all day, every day. They travel to companies, and they help them integrate and implement EOS. And so, they don’t necessarily have any domain expertise in your area of business. I think it’s actually better that way. So, they’re not coming in and telling you how to run your company. They have no idea how to run a cleaning company or a plumbing company or anything else. What they do know is how to grow small businesses using EOS. So, they’re going to bring a general knowledge that’s very, very powerful and can be used in many different specific companies. And having that third-party facilitator is great because they don’t take any- if they’re good, they just don’t take any crap from anyone. They don’t accept a non-answer. They’re going to make sure that they get input from everybody. They’re going to call out issues when they see it and not let it just kind of get swept under the rug. So that’s really, really cool. And I’ve gotten a lot of value out of the implementer that we’ve been using for nine months or so. But then again, I had to get to a certain size with my company revenues and profits before I felt comfortable laying out that check.

Ayo Phillips: In our case, like I mentioned, we started with an implementer, and we then have transitioned to self-implementing, which is kind of the opposite of what Peter has done. And a few things that have happened as I’ve become kind of a true believer in the processes. As we got that structure upfront of learning how the cadence works and what an integrator should do, what’s the role of a visionary, how you run L10s – L10s are your weekly meetings, like Peter stated before. And the biggest thing that has occurred for me in my business is because of the work we did, we’ve done, we did initially, I’m now in a place in the business in which I have a lot more time on my hands, frankly. And so, taking the process back in after this buy-in within the organization, it’s really worked because I continue to be passionate about it. I lead our leadership team L10s, I’m doing the coaching for each of our leadership team members. And so, obviously, you’re saving some money doing that, but also, kind of having had that initial upfront investment, it’s now starting to pay off in multiple ways. It’s part of the culture now. I’ve been able to step back and different things within the organization are placed in the right hands. And there’s a tool called the Accountability Chart that helps you do that. So, the other thing I would say about EOS in terms of kind of what’s transformative about it is there’s this talk about culture in small businesses and what is culture, and the meaning of culture, I don’t know the meaning of cultural, quite frankly. I mean, it’s what you say and you do, and people have so many different definitions of it. But if you think about culture in general, the culture of the United States, the culture of Nigeria where I grew up, there’s certain things that define what a culture is about. And one of those things is language, common language that everyone understands and everyone speaks to. One of the things that EOS does is for every leader that’s trying to define what is my culture for the business, well, EOS is kind of your first step at that because it has these things that are unique to EOS. So, the L10 meeting, that’s language. Rocks as objectives, that’s language. And several other things like that that your entire team starts to speak in the same way. And it creates a foundational understanding of what your culture is. And you can build off of that. And that I think is an understated piece of what EOS is about. And so, I just thought that would be something interesting to mention. One of the other things too, Peter and I were having a conversation about this, for your people, for your team, as leaders coming into this environment, you think, okay yeah, I know how to- I know what it takes to run a business, I know I have to have KPIs, I know I have to kind of hold people accountable, and I know these things, but sometimes we need to think about a way to kind of get the entire team engaged around something common, a common set of values, a common language, and EOS does that for you, for your organization. So, for those who are struggling with, oh, what’s my culture, what’s not my culture, I think just having an initial foundation set by the language of EOS is worth the price of admission that you can build off of.

Peter Lohmann: Yeah, I love this, Ayo. And I remember you and I talking about this, and it’s such a great point. I mean, EOS is almost like culture in a box for a young, young company or for a very new company. And that common language thing is such a huge part of it. I mean, not only now is your whole leadership team using common language and feeling like they can understand and also feeling understood, which are so important. But also, when you go and talk with another entrepreneur, you also have that common language if they’re running EOS. And so, you instantly feel a connection with them and you can talk about things like, oh, what’s your three-year vision, or what are your core values, and start to share tips and tricks about EOS, just like we’re doing here. So, it’s a great way to facilitate an easy kind of starter conversation with someone you want to get to know a little bit better, another entrepreneur. So, that’s been pretty cool too.

Alex Bridgeman: Yeah. And on that culture piece, what were some moments pretty recently or soon after implementation where things clearly started to click for your team and that culture was starting to be defined? Are there any specific moments in either of your companies that you remember where something like that started to happen?

Ayo Phillips: I think for us, it was literally after our vision days. So, I think first of all, because it was one of our employees that brought it up to me versus me kind of saying, okay, let’s go do this, I think she had started having conversations with others within the organization about it and kind of making sure that they read the book and were prepared. And so, I will say that just that process of having someone else- that point of having someone else be the initiator of us moving in this direction began the culture change because it wasn’t coming from me. And I will say the other piece that I think was really critical was solving issues, actually getting to the point where we were actually solving issues and not just punting on them but ensuring that if it was a task that needed to get done, we defined if it was going to be a short term execution, a longer term execution, or something that needed a process to codify whatever that issue was so that it would never occur again. And just that accountability to make sure that we actually solved things permanently was a game changer for us. And that started pretty early. It started pretty early for us, going into our vision days and then coming out of the vision days.

Peter Lohmann: Yeah. It’s hard for me to think of a really specific moment. I will say that there’s a great feeling I have coming out of the weekly Level 10 meetings, which stems from knowing that all the issues are on the table. Sometimes, as an entrepreneur, you kind of wake up in the middle of the night and you’re like am I forgetting about something? Or is there an employee issue I’m not recognizing? Or is there an operational problem that our customers are upset about, but just I’m not aware of it? You sort of wonder what’s going on in the nooks and crannies of your business that you don’t necessarily touch every day. But during those weekly L10 meetings, everyone brings their issues, and you talk through them. So, in theory, when you wrap up a Level 10 meeting, you may not have had enough time to get through every single issue, but at least you know what they all are. So, ideally, you’re never going to be blindsided by a problem because it will have surfaced as an issue prior to it really becoming a big, big problem. So, I love the feeling of walking out of my L10 every week because for a few hours, I sort of feel like okay, I have a really clear picture of how we’re doing as a company, what are the issues, where we’re going. Because the other thing you do during the Level 10 meeting is you look at the scorecard and the scorecard is showing you all your key metrics or your KPIs and they’re all up to date. Everyone brings their KPIs that they’re supposed to have updated. So, you walk away from that meeting with total clarity on how the company is doing and what the issues are, and that’s a great feeling. So that’s been impactful for me.

Ayo Phillips: And if I could just add something, Peter has eloquently talked about the L10 and how important it is to EOS and its execution, and there’s a piece of the L10 that gets overlooked. And as someone who, again, lived through some crises, there’s a piece called the segue as a part of L10 that forces you to find one good personal thing and one good business thing to talk about before you start that meeting. So instead of walking into a meeting with an attitude of everything sucks, we’ve got to pay debt, we’re trying to figure how to pay people, customers are not paying, and diving into just solving problems, it forces you to start with something positive about what’s going well in your personal life and your business life. And that in and of itself is transformative in the way you think about meetings. It sets the tone for how that meaning is going to go from a solutions perspective. And so, I mean, the L10 is so valuable for so many reasons, like Peter’s talked about, but that’s another kind of understated piece of it, which is making you institutionalize celebration of good things.

Alex Bridgeman: Yeah, I like that phrase – institutionalizing celebration. That’s a good one. One other thing that happens with EOS is you start to figure out who is in the right seat in your company and where people need to be moved around if need be. I’d be curious on each of your teams, how much moving have you had to do, either moving someone to a different role or letting someone go and bringing someone else new in. How much of that type of turnover and seat moving have you each had in your companies as a result of implementing EOS?

Peter Lohmann: On that note, the implementer that we use, when we started with him six or nine months ago, during the kickoff, he said, “In all my years of doing this, I’ve never seen a leadership team remain the same one year after working with me or starting to work with me to implement EOS.” And he said, “I’ve worked with hundreds of companies. I’ve never seen it happen.” And that speaks to the effect that EOS has in that it does tease out those right person, right seat issues. And it forces you to confront them instead of just kind of turning a blind eye because it’s the old owner’s daughter or it’s your buddy from high school, or they’ve worked for us forever and you kind of know that they’re not right for that seat or they shouldn’t be on the bus at all, but it’s easier to do nothing. Working with an implementer, they’re not going to allow that. They’re basically going to show you how important it is to solve that and help you do it. So, in terms of our company, we’ve definitely, especially the quarterly off sites, the way that your leadership team behaves during those meetings, you’re going to learn a lot about them. You’re going to learn some information about them that doesn’t come out during the day to day. I’ve been amazed at, good and bad, what’s come out during the off sites or not come out that I never would have predicted just based on the weekly L10s or my interactions with one of my managers. So, the accountability chart that EOS walks you through helps you figure out what are the roles that should be filled to make your company successful. And then only later, do you think about who the right person for that role is. First you define the role and what kind of like the KPIs are for that role. And then later you make decisions on, okay, do we need someone for that role or is the current person who’s in that role right or wrong? And there’s an exercise you go through to help determine that; it’s called GWC. And in order to determine if someone is right for a seat, they need to get it, want it, and have the capacity to do it. And if they’ve got three out of three, they’re amazing. If they’ve got two out of three, you can work with that. That’s pretty common. It’s coachable. If they’ve only got one out of three, they’ve got to get out of that seat. Maybe there’s another seat on the bus that’s better for them, or maybe they’re just not on the right bus. So, it’s scary stuff really because who wants to make major changes to the personnel in their company? But you have to confront that reality if you want to continue to grow, or you’re going to hit a ceiling. There’s a lot of people that say what got you here won’t get you there. And the people on your team who took you to a million in revenue probably aren’t going to be the same exact people who take you to ten.

Ayo Phillips: I agree with that. And I will say this is kind of one of my weaker areas that I continue to get better at. And it becomes really apparent to you when EOS is telling you every day, well, this person does not meet the get it, want it, has the capacity to do it. And you keep extending the period or trying to find different places for them to fit within the organization, and they’re not a fit. And immediately after our vision day, or actually as part of the vision day preparation, or I think it was during the vision day I think, you go through this exercise, like Peter said, you go through the people analyzer and then the get it, want it, has the capacity to do it. And so, we had I remember specifically this one individual on our team who, I mean, we all had the same grade. I mean, it was kind of across the board, not a fit. And that person still was with us nine months later. And that’s a reflection on me and the fear of, well, if I lose this individual, who’s going to take on those responsibilities and how do we execute against that? But the process is there, and the process tells you exactly what you need to be doing. But on our leadership team, I think, which was I think the question you asked, we’ve had our leadership team change. So, there were three people on our leadership team when we went into the EOS process, there are four people on it now, two are brand new. So yes, I mean, you will see that change happen. And in every case, it’s been for the better. It’s been people self-identifying and realizing that well, this is not for me – either I don’t want this level of accountability, or I don’t really believe in the vision, even though I might’ve helped set it, but it’s not something I want to do. And that’s what it’s supposed to be. It’s supposed to be a sign on the wall, not always coming from the CEO of the company or the president of the company saying, okay, you’re no longer here. Well, if we say this is the vision and you have to constantly reflect upon it every week and see that it doesn’t fit who you want to be, you can make that decision that you’re not going to be a part of the organization. And that has happened for us in certain circumstances. So, in some ways, it’s been great for us.

Peter Lohmann: There’s a couple of things that we haven’t touched on yet that I think are really important and valuable as part of like the vanilla EOS or the base layer of EOS. One is the rocks. So, the quarterly goals that you select at the beginning of each quarter, they call them rocks. And the analogy is that if you picture like a jar and you’ve got some sand and some pebbles and some bigger stones and some rocks, if you want to pack that jar as full as you can, you’ve got to start with the rocks first, and then the small stones, and then the pebbles, and then the sand. If you go in the opposite order, by the time you try to get the rocks in, there won’t be any room. So, it’s an analogy for the time that you have available during a quarter to complete priorities. If you just work in the business or in your email inbox all day every day for 90 days, you’re suddenly going to find there was no time to get the big, important things done. Whereas if you make time for them, you identify them ahead of the quarter and then you execute and prioritize them, the other stuff will sift through and find a way to get done it turns out. So, the importance of those rocks is critical, and the concept kind of makes sense intuitively, but what I want to hit on in case it’s helpful for other people running on EOS, the rocks themselves, the specific rocks that you choose, you can’t overstate the importance of those and getting it right. So, it’s not something that you just kind of want to rush through and check off a box, okay, we figured out the rocks for the quarter. You really want to think carefully about are these rocks in service of our mission? Are these rocks in service of our one-year goal? If we complete them by the end of the quarter, are we going to feel like that was an amazing accomplishment, we’re going to feel so great? And I think the mistake, the classic mistake that 90% of people make with rocks is they pick too many and they’re too vague. If you’ve rolled out EOS, you know exactly what I’m talking about because you’re optimistic and you start thinking about everything that’s possible. So, the master level of rocks, which I’m not there yet, is you have like two or three and they’re super specific. And maybe even you break out some stuff underneath the rock, like rather than just a few words in a rock, you actually set some things that need to be a part of that. So, I just want to say that about rocks because I’m kind of in that learning process right now. The other thing about EOS is the- so that scorecard, the scorecard that you look at every week, man, those key metrics being reported and looked at every week by your whole leadership team, that is killer. That is so important and critical. Maybe before as the entrepreneur, you were the only one looking at them, and maybe you were only looking at them monthly, if that, now you have your whole team looking at them together every week. It just, it paints a picture, and you can’t argue with the numbers. So, it helps set priorities, it helps chase down issues and highlight problems. So having those metrics visible is really, really great.

Alex Bridgeman: Yeah. Ayo, how do you pick rocks? How do you- I guess there’s a couple of layers in there just picking rocks generally, but also keeping numbers up to date every week in your L10s. How do you think through picking rocks and setting goals like that?

Ayo Phillips: There are tons of books that are how you pick goals, smart goals, and all these other things. And for us, the way we pick rocks is by looking at our one-year goal, financial goal. And then a lot of times it’s been on the white board and determining all the things that fit into that one-year goal. So, let’s say we decide that we have a $1 million revenue goal for a particular part of our business. We think about, okay, how many visits do we need to make to be able to make that goal for that goal that we set? How many technicians do we need to do that? How many email campaigns do we need to be able to do that? So, it becomes very methodical and mechanical. The way we pick our rocks is we really just look at that goal and put a line to every single thing that we need to be able to reach those goals and then put a number associated with those activities. And then those become our rocks, and they get assigned to specific, well, to the leadership team and specific people on the leadership team to execute against. So that’s how we do it in our business. It’s kind of pretty mechanical and just really looking at- and they are always numerical for us.

Alex Bridgeman: Can you walk through maybe an example of a rock that you had to refine a little bit more where maybe you had one and it was too vague or it didn’t make sense as a goal, it was more like a means to a goal? Are there any goals you can think of off the top of your head that you had to think through or refine a little bit more?

Peter Lohmann: I mean, one example that comes to mind for us that’s happened a few times is during a quarterly planning session, a rock suggestion will be like hire two technicians. And we kind of did that like once or twice. And then I got to thinking, like, is that really a rock? I mean, that’s more just like a manager- like one of the manager’s jobs is to keep the technicians staffed. So that’s not really a rock. That’s just like a part of someone’s job, even though it is important that we get that done. The implementer that we work with often forces us to go through- Like, we throw all the rock suggestions up there and then he’s like, all right, we’re going to go through these. I want you to think, is this a rock or is this like a task? Is this just like someone just needs to go do it and it’s going to take 90 minutes? Like that’s not really a rock. So, we’ve made that mistake, too, where it will be like update the website with such and such. And it’s like that’s not really a rock. I mean, it’s important and it does need to get done, but it’s not really going to move the business forward and something that justifies taking up an entire quarter.

Ayo Phillips: Yeah, I would agree with that. I think for one rock where maybe it was a little bit vague and we had to break it down a little bit more was update our marketing program, something like that. So, that was one. Well, what does that mean?

Peter Lohmann: Increased profits.

Ayo Phillips: Yes, exactly, increase profits. So, for us, the way we broke that down was okay, we needed to get to a point where we were sending out- where we were going to send out 50 email campaigns by the end of the quarter, we were going to have 230 or so social media posts by the end of the quarter. So, it was more- it became more metrics driven than just update the marketing program. It’s these are the numbers that we were trying to hit, and this is how it lines up with our goal for the year. So, I think some of these vague things that we sometimes bring up, it’s not that they’re bad, it just might mean that we need to drill down one level deeper to get to the specific, measurable piece of that specific rock. And so, yeah, it’s a process. And this actually leads me to something else. Peter and I kind of briefly talked about this. EOS is a system, but it does not do the work for you. I think it’s important for people to know that. So, one of the things that I admire most about Peter is his deep process orientation and he builds out great systems for his business. Now, EOS is not going to exactly teach you how to build processes. You need to go and do the work to build the processes. So, for us, we’ve had rocks and tasks and to-dos that have been about building things, building a hiring process for our customer service reps, thinking through the processes within your organization that need to change. EOS kind of leads you there by saying, okay, well this is something that needs to change and now it needs to become to-do or maybe a rock to actually execute on it. So, EOS is an identifier of problems, so to speak, or issues or things that need to improve to get you towards the goals that you’ve set, but you still need to do the work to actually get there. And I think that’s a very important thing to note about this is that a lot of the work happens in between the meetings, but the meeting is great at identifying what needs to get done.

Alex Bridgeman: Yeah, well said. I want to spend the last few minutes on a few of the variations that you both have made on your version of EOS in your company where you found maybe something in EOS didn’t fit your company just right and you’d say made slight changes or you made some unique edits to the EOS process to fit your company. Can we walk through a few examples of different ways you’ve used EOS in your business? Peter, perhaps we’ll start with you.

Peter Lohmann: Yeah. So, when I think about how we’re running EOS, I would say we’re running a very- I would say mostly by the book. I haven’t found any big reason to modify any major portion of EOS. There’s a couple of things I can mention. One is that the vision traction organizer, which is like a PDF, I found an Excel version of that somewhere on the internet. And then I copied that into Google Sheets, and I modified it a whole bunch to make it easy to update – PDFs are kind of annoying to update. And the other thing about the Google Sheet is now I can share it with the whole leadership team. Potentially, I have in mind to like display that on a big monitor in the office so everyone can see it. So that was kind of something that I did that was like extra where I’ve gotten value out of that. The other thing we do is, we just recently started doing this, during the Level 10 leadership meetings, we do like a book club at the very end. So right now, we’re working our way through the book Who, which is an amazing book on hiring. I read the book myself and it helped us hire an amazing COO. And I got so much out of the book, I was like I want our whole leadership team to read and internalize this book, and I want us to use this for our hiring process. So, we’re kind of reading one chapter a week and then just chatting for a few minutes at the end of our L10 meeting about what we learned from that chapter and how it applies to our business. Maybe lastly, EOS has a concept of a visionary and an integrator; Ayo mentioned he felt he resonated with the visionary. I also resonate with the visionary. There’s a saying in EOS which is like be true to yourself. If you’re a visionary, be free. If you’re an integrator, be stressed. You have to like be true to your authentic self. And it turns out that something like 90% of entrepreneurs are visionaries. And so, there’s a lot of discussion around finding your integrator, and the integrator role in EOS sits right below the visionary and sort of pulls together all the departments and makes sure that they’re all communicating and effectively working together and all pulling in the same direction, and by different departments, I mean like finance, marketing, operations; EOS defines a few, like four or so major categories of a business. So, it turns out finding a great integrator is super, super difficult because most entrepreneurs need one and they’re really valuable. So, when we hired our COO, I was looking for an integrator type person, and I think I found one. But to kind of close the loop here, the way I think about it a little bit differently than EOS, like vanilla, visionary integrator, so I’ve retained kind of the integrator role by the definition of EOS, which is that I’m the one that pulls together finance, sales, marketing, operations, because it turns out in property management, finance, marketing, and sales are kind of not that big of a deal. Operations is 95% of the whole thing. Property management is an operationally intense business. And so having an integrator in the role of basically Chief of Ops, she’s pulling together many different departments and making sure that they’re all functioning smoothly together. So, she’s kind of like a sub integrator specifically for operations, if that makes any sense. But overall, we run fairly by the book on EOS, like I said. I just wanted to mention a couple of those in case they’re helpful for anybody.

Ayo Phillips: So, in our case, I would say right now I’m serving as both the visionary and the integrator. And I think even though as entrepreneurs, Peter and I are visionaries, we also are process people. So, I’m a chemical engineer, just like Peter is a chemical engineer, and engineers are-

Peter Lohmann: Electrical, but close. Both engineers.

Ayo Phillips: Yeah, both engineers. So, we’re process people anyway. And so, it kind of- I would say maybe it doesn’t come naturally to us to keep the wheels turning, but it’s kind of part of our training at least and so we can actually do those things. So, I do that. But there’s something else I wanted to kind of bring up from the perspective of modifications. And I generally agree that you shouldn’t go into this with the attitude of, okay, I’m just going to use the pieces that I like and not use the pieces I don’t like, but I think every business has different issues and will result in you kind of picking some tools and using them more deeply than another business would. So, there’s that general concept there. EOS has a toolbox of I think 20 or 26 tools, of which we’ve only talked about maybe five or six of them that you can pick from. One of the areas that I found to be maybe slightly lacking is in the area of holding people accountable below the leadership team or below the departmental level. So, as an example, the book talks about the fact that everyone- Traction talks about the fact that everyone should have a number. Well, one of the things that we’ve done to ensure that everyone has a number that they’re responsible for is that each person on the team, their set of numbers they have to report in to whoever their direct manager is on that number. And so, we have a Google form that we’ve set up where every week, it’s the same set of numbers. So, it’s like that person has their rocks, they have the numbers that they enter in, and they come into that meeting prepared to talk about what’s going on. Those meetings are not long, we’re not a big organization. I mean, we have 15 team members excluding our technician. So that forces them to be ready to talk about the things that are important to drive the results that we want to drive ultimately. So, the Google forms comes in. And then what’s great about that for a manager or for me is we have the Google forms attached to an Excel spreadsheet. And so, when performance appraisal time comes or bonus time comes, I literally just go through and see, okay, what were all the notes that we had throughout this period of time, throughout the entire year or the entire quarter or the entire half year to determine how this person has done against the goals. In the old days, the way people do it, it’s like, oh, how do I feel about this person at the end of the year? What bonus should they get? Well, this is a more valuable way for us to do that. And one of the things I usually do when I’m having those performance appraisal conversations is I intentionally find something that happened really early in the year that I thought was great and I bring it up as part of that conversation. And it usually makes that employee light up because they’re like, “Wow, you remembered I did that? Or you remembered that that happened.” And I think that’s the very important thing to do is, first of all, you delegate the responsibility of tracking the metrics to the team member, so they come into those one-on-ones ready to have conversations about them. But in addition to that, you can use, you can have a more objective way for performance conversations, and then a way to let your team member know that you care because you have all this information and track that you can go back to and say, “Hey, you did this. I thought it was wonderful. It was in February; it is December now, but you did that, and I recognize it and it was great.” That would be like a minor modification that I think we’ve made to kind of make the process work even better for us.

Alex Bridgeman: I like it. On our last question here in the last few minutes, I want to hear a little bit of perhaps advice that you might offer to folks who are considering EOS or implementing it or maybe struggling with it. What are some pieces of advice that you might offer someone in that position?

Peter Lohmann: My first piece of advice would be read or reread Traction. The book Traction is basically the Bible for EOS, and I reference it often. Like I’ll pull it off my bookshelf and reread a chapter, or I’m like, now, how are we supposed to do these quarterly things again? And I’ll read it again. It’s well-written, it’s very referenceable. And so, I think if you’re struggling, if you reread Traction, I think the answers are in there for the most part. That’s kind of where I would start. The other thing I’ll mention is there’s a bunch of EOS books, so there’s other books about EOS, and some of them are written in a different style that may resonate more clearly with you or the way you learn or think. So, there’s one that’s written kind of like a story. It follows an entrepreneur going through the journey of implementing EOS. And instead of being like a textbook, it’s like a story about a real- not a real company, but about a specific entrepreneur going through the process. And so, you may find that you learn differently in that way. The other thing is there’s a huge ecosystem of resources around EOS. I mean, here we are doing a whole podcast about it. There’s probably 10,000 podcasts episodes about EOS. So, if there’s entrepreneurs that you resonate with already, go see if they’ve talked about EOS on a podcast somewhere, maybe you’ll find that valuable, or try to connect with others in your industry who are running on EOS. See if they’ve talked about it on a podcast. I think different industries are going to pick and choose the different tools that Ayo mentioned from EOS that are going to be more or less relevant depending on what industry you’re in. So, there’s a lot out there about it. Of course, if you have an implementer or you can afford one, that’s kind of like the easy button because they’re going to make sure that you’re doing it right and they’ll be there to answer any of your questions and everything.

Ayo Phillips: I’ve had the opportunity to talk to a few people about their EOS implementation and where they’ve struggled, and typically where the struggle happens is in the role of the integrator and them not having the right person on the team to be that integrator. At least that’s what I’ve seen from a lot of conversations I’ve had about this. And that role is important to get right because that person literally keeps the train moving, makes sure that everyone is held accountable. And if EOS is nothing else, it’s one of the better accountability tools that exists out there, which is the most important thing to driving change within the organization. So, I think the first thing I would suggest is, in addition to kind of making the decision of should I get an implementer or not, would be how do I get the right person in the role of integrator and how do I empower them to have the right authority to be able to hold people accountable within the organization. So, I think that’s usually where people struggle is, okay yeah, we’ve done the vision thing and we understand where we’re going, but we don’t seem to be making enough progress on any one thing where we’ve set our eyes to. And typically, it’s because that visionary is the entrepreneurial type and the ideas person and maybe not as comfortable with holding people accountable or defining what metrics need to be. And that causes people to go off course. So, I think that would be an important place to kind of look and ensure that, if you’ve done everything else, you developed your vision and you’re going through the vision days and you’ve done all those other things, getting to the integrator right is probably the next most important thing for an organization.

Alex Bridgeman: Absolutely. Well said. Thank you both for coming on the podcast and talking about EOS. It’s been a topic I’ve wanted to discuss for a while, and so it was great to hear that two folks I admire and enjoy talking with are both running EOS. So, thank you for volunteering a little bit of your time to share.

Peter Lohmann: Yeah, thank you, Alex. This has been great. And I was enjoyed talking to you, Ayo, and good to catch up and hear a little bit more about how things are going with you and EOS.

Ayo Phillips: Absolutely, same here, Peter. Good seeing you, Alex.

Alex Bridgeman: Good to see you.

Thank you for listening. I hope you enjoyed today’s episode. If you enjoyed the show, please consider leaving us a review and telling a friend to help more folks find Think Like an Owner. I also want to thank our show’s sponsors Live Oak Bank, Hood & Strong, and Oberle for their support. For full episode transcripts and more information, please visit our website at And if you want to learn more about the Operators’ Handbook, please visit us at and join your peers in the endless pursuit of better.

Related Episodes

Subscribe to our newsletter

Join small company investors, search funds, private equity firms, business owners, and entrepreneurs in reading the Think Like An Owner Newsletter.

Generic filters