Max in conversation with Andrew Larson, CEO Gustave A. Larson
On the occasion of a US visit to the MDM award ceremony for Ludwig Meister, Max Meister took the opportunity to arrange two podcasts with Andrew Larson, the family entrepreneur in the third generation.
In this, second podcast, Andrew Larson and Max discuss the topic of Traction and EOS. The fascination about the book of the same Name (link below) and the topic is another common feature of the two. In the case of Gustave A. Larson, Traction or EOS is deeply anchored in the management of the company. How? More about this in this podcast episode.
Enjoy listening to today’s podcast episode. Transcript and links can be found below. And as always: your opinion please. We love comments, suggestions, criticism at firstname.lastname@example.org.
MAX: Welcome to Max and the Supply Chain Heroes. Your entrepreneurial podcast about challenges and changes in procurement and distribution in the context of digitization. Thoughts, experiences and above all findings by experts in supply chain management. Completely free of any consultancy mission, easy understandable, just plained business prospected. I am Max Meister and I hope you enjoy this episode.
Welcome to new episode of Max and the Supply Chain Heroes. My Today’s guest is Andrew Larson from Gustav A. Larson, but we’re not talking about his company, especially, we are talking about a company structure model called EOS / traction. That’s a book I can recommend to everybody, because it’s a very interesting read. And even though we haven’t decided to choose this model, I think it’s important for all the companies to reduce distraction, and really execute in the daily life. So Gustav A. Larson is using traction already for five years. So I think they’re very, very good in it and you can learn a lot, so I hope it will be interesting, 20 minutes. It’s not supply chain stuff, but I think it’s interesting. So whenever you have feedback, just write me an email to email@example.com. And now have fun.
I’m still sitting in Boulder, Colorado, next to Andrew Larson. And I asked him to make a special episode because when I travel to conferences, round about digitalization and the future of distribution, I always see that many companies struggle with some kind of organizational form, to really bring the company forward or really work on the important topics. And I know that Andrew organized his company to a model, it is called traction, and I asked him to explain it a little bit. Because I think it’s very inspiring. And if you really want to get the job done, I think you need something like this. I don’t say this is the best model ever. But I think it’s a very interesting one. And I hope you enjoy it. And even though it’s not about Supply Chain Management directly, I think, it’s worth to invest some minutes and listen to it. So welcome, Andrew.
Andrew Larson: Thank you. Nice to be here.
MAX: I also read the book traction but it’s already a couple of months ago. So maybe you can start framing a little bit out the whole model, how is it working?
Andrew Larson: Sure. So we run a process in our business, it’s called the entrepreneurial operating system, which stands for EOS. So we like to call it EOS but the book written about it is called Traction. So many people use this interchangeably. Some people say traction, some people say EOS, it’s the same thing. You know, there are six key components. There’s the vision component, there’s the people component, and the data component, issues, and process are the five components. And if you do all those, right, they lead to the sixth component, which is traction or execution in your business. So we’re trying to make sure we’re focused on all these different avenues. But to distill it down, you know, what is it? For us, EOS is about vision. We want all the leaders in our business 100% on the same page, with the vision of our organization. Who we are, what we do, where we’re going and how we get there. We do quarterly meetings with the entire business, sharing what we call the process, called RVTO. There’s a vision page and a traction page. There’s two pages that share everything in our business. And I’ll jump to that detail later on. So that’s really the vision component. Sharing and getting everyone aligned in the same direction.
MAX: Who is working on this vision?
Andrew Larson: I’m responsible really for that vision along with our leadership team. And then we share that with our board of directors. But it’s really my brother and I run the business with our leadership team and are responsible for sharing that vision. Creating and sharing the vision. And we’re also making sure that we are honoring the vision, the mission and the values that my grandfather that founded the business in 1936, and also my father, who carried on running the business for 45 years, that we are honoring those same values and mission, if you will. So that’s the first component really is the vision component. Getting everyone on the same page. The second component, really, as we talked about, is really, I guess the traction component. Is helping the leaders in our business, and all the employees, to become disciplined and accountable to make sure we’re executing consistently with the things we want to accomplish. And achieving our vision through that. And the third part is making sure that we’re healthy. Helping the leaders and all the team members in the business to become really healthy, a functional and cohesive leadership team. So it’s really vision, traction and health.
MAX: Okay, so this is how you at Gustav A. Larson summarize traction.
Andrew Larson: Summarize traction, correct.
MAX: And you have different priorities or a little different priorities, because it’s your company, your DNA. So you adapted it. You were talking about the first part, it´s the vision? What is the second most important for you?
Andrew Larson: Well, you know, let me just add. I’m going to go through a little bit of each segment. So the vision segment really is: What is our vision? What is our mission? What is our values? It’s to make sure that we are focused and everyone understands exactly what that is, where we’re heading. The second component is the data component. Saying what are the scorecards for the company, and for each leadership team and each department in the business? What is the scorecard? So there are key measurements. And part of the process here, with discipline, is prioritizing. What are those absolute key measurements you need to see on a weekly, monthly basis? Because, I’ll jump into the meeting cadence after this, but we look at this scorecards weekly. The people component is another one. It’s do we have the right people in the right seats? We are doing quarterly conversations. They have a process, called the People Analyzer, where we look at: are they living the values of our organization? And then we do something that is called GWC, which is: does that person get it? Do they want it? And do they have the capacity to do it? So we rate them on that. And if they’re not, we coach them or give them action plans to make sure we move them to the right seat, or they may not be right for the company.
MAX: Not the right fit.
Andrew Larson: Right. And then we’ve got the process component, we look at all of our key processes to make sure they’re as efficient as they possibly can. To make sure again, we’re executing those processes as seamlessly as we can. And then there’s an issues component. So this is where we come to the meeting cadence. We have a weekly meeting, we call it the level 10 meeting. And then that level 10 meeting, it simply means you are rating this on a scale of one to 10: How was the meeting? But in every meeting every morning, we talked about both kind of a good news check in for personal and business. We then talked about, you know, are we on track with our rocks, which are quarterly rocks, so we set annual goals, and we set quarterly 90 day rocks in the business. We’ll come back and talk more about those later. But are we on track with those rocks, and then we look at our scorecard. And if we’re off track with a rock, or if any number is off track, we then actually put that into what’s called our IDS list weekly. IDS stands for to identify, discuss or solve. And we work on that, to make sure we’re solving issues every week and making the business better by solving issues. We also look at our to-do-list, to make sure things are on track for that as well. And if not, that can go down too to our IDS list. So we really try and capture this, the mean to the meeting is problem solving. Solving these issues. So we try and get through everything else in 30 minutes. So we can spend an hour each week on solving the key issues in the business. And we also, from a meeting cadence perspective, have two day annual leadership team meetings. And then we also have quarterly rock setting meetings. So in an annual meeting, we set our annual goals. We revisit our 10 year target, we revisit what do we want to look like in three years. And then we focus on our annual goals. And then our first quarter rocks. And then every 90 days, we re-meet as a leadership team, it seems to be a great time to make sure we re-meet, recentre everyone on what we’re focused on and set the next quarters rocks as well. So that’s kind of the meeting cadence. And we also have those quarterly meetings, also IDS key issues of the business, where we can spend more time on those as well. So that really is the issues component. And then all those again, lead to the traction component, which is which is all about execution, as well.
MAX: Okay, before we go to execution, I want to try to summarize.
Andrew Larson: Sure.
MAX: Because it’s a lot of abbreviations. It’s a lot of tools and stuff like this. But, first of all you work on the vision. And then, when you have this, you look, if you have the right people on the right seats to achieve this vision. Then you, maybe together with the leadership team, decide which data should be on the scorecards for the company and which department. And then with the process part, you describe the most important processes or you document the most important processes. And with the issues part, you try to structurize the weekly meetings and the quarterly meetings. And if you do this all together, for quite some time, you will get a lot of traction. Is that it, maybe?
Andrew Larson: I think you’ve hit it right on. I mean, you’ve read the book as well. But that is exactly it. And I think we use as a guide, what’s called the VTO. And the VTO was called the Vision Traction Organizer. And it basically is two pages, there’s a vision page. And there’s also a traction page. And that’s what we share with everyone in the company on a quarterly basis to be as transparent as we can. Again, then they understand exactly where we’re going, what our goals are and what we’re trying to accomplish. And let me just go through with you real quick, what is on the pages –
MAX: Yeah, just describe how it’s structured?
Andrew Larson: – because I think, even though we talked about the six key components of EOS and traction, by going through the vision traction organizer that gives you a feel for exactly what everyone else really sees as part of the process. So on the vision page, it shares our core values of the business. It shares what our core focus is, which really is a combination of our vision and our mission: And shares our core target, which is what is our 10 year goal for the company that we want to hit to? It’s kind of a big, audacious goal we want to hit in 10 years. And from a philosophy perspective, we set that goal as an aggressive goal. We feel like, if we hit it: Wow, we hit the ball, we hit a home run. But even if we don’t achieve it, because it was so aggressive, we probably achieved a lot more growth than we would have otherwise. We also then have a marketing strategy component which goes through what is our target market or our key customers we’re focused on. It goes through what are the USP´s in the business, what makes us truly different. The proven process, which is part of the process component, with, both not just from processes in the business, but also our process of attracting and retaining customers. We also have guarantees in the business. And it’s something that we do, to make sure that we are backing up for our customers and honoring what we’re trying to accomplish. So they see that we’re really guaranteeing what we say we’re going to do to our customers. And then, also on this vision page, has a three year picture. And on it, basically it says, in three years, here’s what we want to look like both from a numbers, turnover and profit, perspective. But also, what does it look like. And so for us, we look at things like our return on total assets, new business opportunities, growth and attrition with customers, market share growth. Key things we want to have done in the business. To make sure we have the right people on the right seats. To make sure we’ve got locations that are hitting all of our profit metrics across the business. So when we set our annual goals, we want to make sure they’re always aligned with that three year picture and moving us in that same direction. So that’s what’s on the first page of the vision page that we share. The second page is – are there any questions on that at all?
MAX: No, if I understand, right: the vision page is the big picture. So you really have all the important stuff that you want to achieve, the big picture you have on one page.
Andrew Larson: Correct.
MAX: So actually our listeners cannot see it. But it’s just in DIN A4 page, I think it’s very well summarized. I really like the concept there.
Andrew Larson: And the second page is the traction page. The VTO, vision traction organizer. The traction page is all about discipline, accountability and execution. So this, I’m showing you one now, is for the leadership team of our company. For overall that we share with the company, but also each leadership team, each manager below has their own weekly level 10 meeting. They have their own, they don’t have their own vision page, because that’s for the company, but they have their own traction page with their annual goals, which is part of it, which is their one year plan, and also their next quarter’s rocks that they have to accomplish. And there’s also an issues list. And I talked about that. So we want to make sure that everything we’re doing with another departments traction page, that their annual goals are aligned with what we’re trying to accomplish as a company. And then when you look at the quarterly rocks, which are the 90 day goals or rocks, as we say, those have to be aligned also with accomplishing the annual plan. So those are all aligned with what we’re trying to accomplish. But part of the discipline is that we have so many things we want to accomplish. But if we look at all those, we will not get them done well at all. So it’s all about prioritization and what’s essential. So we’re saying… The process actually says you may have five things you’re working on. Or seven. We’re trying to get and distill it down to three things, if possible. That each person says: listen, these are the three most important things I’m focused on for the next 90 days that can make the biggest impact in the business. What are those? Let’s get those done, accomplished and done super well. So we can, again, make that big impact on the business. So that’s what the rocks are. And the same thing with the goals. They are just the very prioritized goals for the business as well. And so the issues list, as essentially a parking lot, is saying: we know that we’ve got to accomplish these things, but they’re not the things we want to focus on in the next 90 days, we’re going to park those in the issues list, we’re going to revisit those at the next quarterly meeting and determine if they become one of the next quarters rocks that we have to focus on or if they remain on the issues list.
MAX: I think this is a very important point because I know it from myself that you have so many topics that you discuss every week, and you’re not able to solve it. So it would be better either to make it a rock, or you park it and decide next quarter what you’re doing. So this is one thing, what I really like about this concept. It is very interesting.
Andrew Larson: Yeah. So that is the vision page and the traction page. And it’s as simple as that. That’s what we share. But then there’s some other tools, obviously, in the business we use from quarterly conversations. Because it’s so important, that we will work with the people and have the very best people on team and right people right seats. So there’s other tools around this. But the vision / traction page is the meat of the business. To make sure everyone’s aligned, going in the same direction. And that we’re executing the plans we set forth for ourselves.
MAX: So maybe if, yeah –
Andrew Larson: I was going to say, one more thing really, that comes on the leadership side is that there’s another book that is written by Gino Wickman, who developed this traction up, an EOS process. It’s called Rocket Fuel. It details the tools of the leadership positions, the integrator and the visionary. So we’ve done that in our business, where my brother is the integrator, he’s our president and COO. He’s responsible for leading our leadership team in the company on a day to day business perspective and executing our annual plans and our quarterly rocks. My goal as CEO is the visionary. So my goal is to make sure that I am looking and learning what’s happening in the next five to 10 years. To make sure we’re focused in the right direction for the business. To make sure we’ve got the right culture. We have an accountability initiative in the business, that we’re very focused on that. To make sure we’re looking at new business opportunities, to make sure we’re looking at, obviously, at our strategic planning and board of directors. And that we’re stirring the pot and making sure we’re challenging people along the way. So that’s a big part of my roles along with culture, and key relationships with customers and suppliers.
MAX: Yeah, sure, I can imagine. So, we wanted to make this a short episode. So I don’t want to go into detail with all the tools you use. But when there is an interest, we could do this an extra episode.
Andrew Larson: Sure.
MAX: For me, because the company is now a US rock star, because you do it for a couple of years. I guess, I don’t know. When did you start?
Andrew Larson: We started the process five years ago.
MAX: Yeah. So this is what I mean, with rock stars. That means you really have everything in place, everybody’s used to it. You hired many people that are, knew this from the beginning. So –
Andrew Larson: Two things. I would say that we have people on our team, on our leadership team, that saw the process in the hiring process. And they’re like: I want to be part of that company. I see that they’re disciplined, they’re accomplishing things. They’re going to accomplish the goals they set out. I want to be part of that team, they’re going somewhere. So it’s been a great tool to attract people as well –
MAX: Okay, interesting.
Andrew Larson: – which is quite interesting. And then another interesting thing is: we actually do work with an outside implementer. It is a certified EOS implementer, really a consultant we work with. We work with him with our two day annual and our quarterly meetings. And it allows us on the leadership team to be really focused on the business. As opposed to the process of conducting the meeting. And he has been, he’s comes from a, you know, background of management leadership in many different industries and businesses and has a lot to offer as well. So it’s been a great thing for us as well, to have an implementer help us with the process.
MAX: And this would have been my last question. So if Ludwig Meister wants to start with EOS tomorrow, what would your advice be?
Andrew Larson: Well, certainly, we did… We self-implemented for almost a year first and then had an implementer. And again, I think implementer helped us tremendously. I think there’s implementer all over the US and I hope over the world as well as they grow with EOS. But what I would say is to keep it simple. And as you start, you know, work on the vision traction organizer. Work on one thing at a time. And that’s the most important thing, getting the team aligned on the vision, where you’re going. And then on the traction side, what are your goals and prioritizing what those are. Get that done first. And then along the way, as you develop the cadence and as the team understands and buys into what you’re focused on, then add the other tools along the way. Same thing, prioritizing, keeping it simple, don’t do too much at once.
MAX: Okay, so if anybody has some more interest, just write an email, and I will try to answer it. So what I really think, it’s a very interesting concept. And if you do it right, you can be very successful. And I’m happy that you shared the information.
Andrew Larson: Thank you. Really a pleasure to be here and talk with you about this. You know, after five years of doing this and seeing the results, I think we have, you know, a super healthy leadership team, and with great cohesiveness and communication, and transparency. And the process has allowed that. And after five years, it’s been, I think, such a positive effect for us and our people and our company that we become disciples. And so now we’re actually as part of the value add to our customers. We’re actually now offering sessions to our customers on EOS, helping put them in touch with implementers. And we’ve given them all books to our key customers, to make sure that they can find ways to help drive and grow and get the same level of discipline, accountability and execution in their business.
MAX: Yeah, I think you’re doing a great job. So thank you for taking your time to explain it a little bit and maybe we will make another episode. So thanks.
Andrew Larson: I would look forward to that. Thank you again.