S3e14 The Entrepreneurial Journey Edition with Mike Paton

James Nathan 0:54  Hello and welcome to The Only One Business Show with me your host James Nathan and a fantastic guest today. Now that we’ve got the the time difference, right from Central Time and London time, this gentleman is a is absolutely passionate about helping entrepreneurs. After growing up in a household full of teachers and entrepreneurs and cutting his teeth in banking, he spent 10 years leading entrepreneurial companies before discovering EOS®, the Entrepreneurial Operating System® in 2007. Instantly drawn to its timeless concepts and simple practical tools. He’s become one of the first professional EOS® implementers and since then, he’s conducted over 1200 sessions from more than 120 companies, co authored the book “Get A Grip” with Gino Wickman, conducted action packed talks and workshops all around the world and spent five years as EOS® Worldwide’s visionary. Today spends all of his time helping entrepreneurs implement EOS®, running better businesses and living better lives as well as chatting to people like me. Please welcome Mike Paton. Paton, how are you?

 

Mike Paton 2:03  I’m terrific. Thanks for having me. Couldn’t be happier.

 

James Nathan 2:06 It’s a pleasure to get you on and how things over your side of the pond today?

 

Mike Paton 2:12  Well it’s a glorious spring day, I’m in Minneapolis Minnesota which is about as far north as you can get. And so a glorious spring days are few and far between and great thank you.

 

James Nathan 2:26  But look, take take me through…. I’m obviously gonna love chatting to you about EOS®, but just how did you get to where you are today? What was your story?

 

Mike Paton 2:36  Yeah, so I grew up like so many entrepreneurs, entrepreneurial as a young child. I was always doing something typically for money, money was an avenue to independence for me. So rather it was buying bulk candy at five and dime, selling it illegally out of my locker or a paper route or you know, any number of ways I might… I’d be used to make aeroplane models and try and sell those to my friends, although I wasn’t particularly good at that. So that didn’t work very well. But, you know, I just, I’ve always had an affinity and passion for business. And, and so when I took a job out of college as a management trainee at a Savings and Loan, it was a next step in what I had always sort of subconsciously felt would be a path towards entrepreneurship. And it was a great, great place to learn the art and science of business and the psyche of successful and struggling business owners and leadership team members, that I got to know up close and personal for a good long run. And that’s what prepared me for the four entrepreneurial ventures that I ran or helped run. And it was in the fourth of those where I was really struggling to get on the same page with a business partner would hired me to take her business to the next level and, and unfortunately didn’t want to change a thing, that I discovered EOS® and fell in love with it and felt like this was what I was put on the planet to do. So that’s the, that’s the journey.

 

James Nathan 4:21 But working with people who ask for help, but then really don’t want to change that can’t be uncommon.

 

Mike Paton 4:27 Yeah, it’s, it is tough, right? I mean, for a lot of entrepreneurs, the organism that you build, the business that you started and built from scratch is like another child or your only child. And so surrendering any aspect of control in a relationship that you care about so deeply is really hard. And you know, when you bring in people from the outside, it is accurate to say that they don’t really get it. And they don’t have the same level of practical experience that you’ve had in growing this business from the ground up. And so it’s very easy to fall into the trap of believing that therefore that lack of experience means you’re never going to be right. And, you know, it’s it’s one of the reasons why so many entrepreneurial companies hit the ceiling, why the owners and leaders get stuck after a period of, you know, unfettered growth and, you know, thank goodness for that because it creates an opportunity for a person like me a professional EOS implementer, to go in and help instil discipline and accountability in a business without changing it at its core or sacrificing the entrepreneurial spirit or the flexibility or the nimbleness. That’s what EOS is it brings a little discipline, accountability, structure, prioritisation and alignment for an organisation without fundamentally changing it at its core. And that’s an exciting thing to do for a living for sure.

 

James Nathan 6:02  But what is it? What so why is that different to other coaching systems or business systems? Why is EOS unique?

 

Mike Paton 6:10  Yeah, you know, I would start by saying I’m only an expert on EOS®. And so I’m eager to not opine on why it’s different. Certainly not why it’s better. There are lots of great systems for running a business out there. All I can say is there’s a couple things that are true about EOS® that really resonates with the typical entrepreneur. The first is that it was built by a lifelong entrepreneur for entrepreneurial companies. My co-author and business partner, Gino Wickman, when he was trying to run his family business was frustrated that all the resources he reached out for help with seem to be written for corporate leaders, right, bigger organisations where you might have a team of people who bring you decisions to make and what he wanted to create was something uniquely suited to an entrepreneurial company where the owner and and senior leader of an entrepreneurial company is picking up cigarette butts outside the front door every morning, because nobody else was going to do it. And also has to be a strategic leader make decisions, hire and fire people, etc. And so, you know, number one, it’s made for a very unique audience, privately held entrepreneurial companies with 10 to 250 people. And it was built by somebody who was learning how to be a great leader, a manager running his own organisation very much like that. And then the second thing is related to that. It’s simple and practical. There’s no management fads or abstract theories or highfalutin’ concepts that drive the thinking in EOS®. In fact, I say to everybody I meet, I’m not likely to teach you anything new. I’m going to give it to you in a way that’s really going to work. And you’re going to be able to migrate the tools you master at the leadership level down into your organisation because somebody on the frontlines can get value from running a better meeting and being clear on his or her role and having one priority a quarter that’s written down, that there’s accountability for etc. It’s simple, practical stuff that helps teams of people get more of the right stuff done every week. And so those two things I think, really resonate with our target market.

 

James Nathan 8:35  And he said just for it just a smaller businesses? Entrepreneurship is a difference, you know, varies in different in sizes. It is it really those kind of smaller businesses benefit from a system like yours or is it anyone really?

 

Mike Paton 8:47  Yeah, so I would say 80% of our clients or more, 80 to 90% fall into that privately held 10 to 250 people market. And, there are some smaller, some larger, some that are not privately held. Some that are nonprofits. And so EOS® is working in a broad range of organisations, but it’s important that your listeners know it was built for the prototypical founder led, privately held entrepreneurial company.

 

James Nathan 9:26  Tell me give us a nutshell in What is it? What is the system?

 

Mike Paton 9:29  It’s a, EOS® in a nutshell is three things. It’s a model, and I’ll talk about the model in a minute. It’s a toolbox a set of simple practical tools. And it’s a process for implementing those tools that gets you the maximum amount of permanent impact in the least amount of time. And the model is really the journey. an entrepreneurial company embarks on when it implements EOS® and it’s a journey to strengthen the six key components of any business. We believe that, you know, that a lot of entrepreneurs describe themselves that as problem solvers at the core. And one of the discoveries Gino made early on is all their problems, challenges, obstacles, new ideas and opportunities tend to fall into six areas, or what we now call the six key components. And when you’re implementing EOS®, you’re just getting better at those six things and they are: Vision, which is getting everybody on the same page with where you’re going and how you plan to get there. People, which is attracting great people to your organisation, defined as great in your unique organisation. Data, running the business on objective information rather than the feelings, egos and emotions that so often drive decision making. Issues, the ability to solve your problems as they arise. Process, which is getting the most important stuff in the business down the right and best way without you there, having to nudge everybody out of the way and do it yourself. And then Traction, which is bringing discipline and accountability to everybody. So, when your vision is clear, and you’re walking around your business, you see everybody executing on that vision, helping make it more real, more present, more possible every day.

 

James Nathan 11:23  Why do people need it then? So when you talk about getting stuck, or you know, hitting ceilings, but you know these things don’t sound terribly complicated.

 

Mike Paton 11:32  They aren’t. There’s a great study called the evolution and revolution of business by Dr. Larry Greiner written up in Harvard Business Review, you can still buy the article on their website. And in that article, this is from the 70s, 1970s and so what he did was he studied the growth arc of literally thousands of successful organisations and he found that not one of them had a growth arc that was uninterrupted by periods of chaos.They were all following the same general pattern, which is the company would grow for a while, then it gets stuck. And if it was successful, emerging from that period of stuckness and chaos, then it would grow again for a while, and then it would get stuck, etc, etc, etc. And so, one of the reasons so many small businesses fail is because the owners and leaders are not able to emerge from those periods of being stuck or chaotic activity, because they’re unable to reinvent the way their organisation works to be appropriate for the next level of growth. And the bottom line is, when you’re growing a company from one employee, you, to 10 or 15 or 20 employees, you need to use tools and techniques and philosophies and decision making hierarchies that are completely different from a company that’s growing from 20 employees to 100 or 100 and 1000. And so most entrepreneurs rightfully so won’t reinvent themselves unless they’re in a tremendous amount of pain because they’ve been successful. And so why would I change what works Paton? I hear that all the time and I emphasise, empathise with that for that’s the primary reason so many people get stuck in or unable to get themselves unstuck as things get complex really fast, and typically faster than we’re able to change and adapt.

 

James Nathan 13:40  You know, while you’re talking, I was just thinking and sort of almost half answered this but you were talking about it. I was thinking right, well you know, most entrepreneurial businesses are all about the person who started them as their vision, their drive, their ambition, it’s their baby. Then you bring other people in. And that vision piece that you talked about is something that people very rarely when I’m…. certainly in conversations I have with my clients, is it almost never that they have that sort of documented well enough. Is that something you see a lot of?

 

Mike Paton 14:15 Yeah. So, one of the components that a lot of entrepreneurs struggle with the most is the process component, because the perception and an entrepreneurs head is often that, you know, that’s not the way we work. We’re not a big corporation with a 750, you know, page SOP manual, that five page are devoted to how you excuse yourself from a board meeting to use the restroom, right? So there’s this sort of, that’s not entrepreneurial. And yet what most successful entrepreneurs are really good at, James, is they’re really good at learning from their successes and failures, and almost automatically integrating those lessons into their day to day regimen. So that they repeat often the things that work well. And they avoid like the plague the things that lead to problems, challenges and obstacles. It’s an automatic sort of gut level visceral approach to process, man management, not a, hey, we’ve got to get the 40 or 60 or 80 people in the organisation to do it the way the lessons we’ve learned over the years have taught us to do it every day approach. And that’s all we do when we’re strengthening the process component in an EOS® company, is we help the rest of the organisation learn the lessons from the founder and the longtime members of the leadership team or the staff, so that they learn right out of the gate, how to avoid those mistakes and repeat those successes. That’s the approach that works.

 

James Nathan 16:02  And that’s that kind of holistic way of operating that he talks about in your talks.

 

Mike Paton 16:07  Yeah. And it’s that’s what that’s what I mean by simple and practical as well. Most entrepreneurs are busier than one armed paper hangers in a windstorm. And they don’t have time to create an SOP manual. And if they did, they know nobody would read it. And so, you know, it continuing to yell at an entrepreneurial leadership team to create an SOP manual doesn’t seem to work. So saying, how about we have a one or two page pilot’s checklist for how we onboard a new customer and every time we win a new piece of business, we just have everybody involved and even one step in the process. Follow those, you know, seven to 12 major steps for successfully onboarding a customer. That approach really seems to work. That’s kind of the philosophy of an EOS® run company, right there.

 

James Nathan 16:59  Awesome. I see. So you, we use the word entrepreneur all the time at the moment. The EOS® system is based on entrepreneurs. But what is an entrepreneur and a business owner?

 

Mike Paton 17:11 You know, our definition of entrepreneurial is growth oriented, open minded, more afraid of the status quo than they are of change, respectful and appreciative, want help, flexible, nimble, adaptable, aware that you have to create value in the world before you ask for anything in return. That’s entrepreneurial. And the vast majority of business owners on the planet are hardwired that way. Some aren’t. And if they aren’t, EOS® probably isn’t for them.

 

James Nathan 17:47  Right. So what would stop them wanting to be like that? Is that just a personal choice?

 

Mike Paton 17:54 Well, you know, I’m not a trained psychologist, although I’m occasionally accused of doing that for a living. Because we’re an entrepreneurial leadership team around a conference table, some really crazy stuff happens, but I don’t know, you know, at all kinds of things, a desire to never make a mistake and an unwillingness to be vulnerable. You know, fear of failure, as I mentioned already, so, there are all kinds of psychological reasons to not want to be that. And, you know, again, if you want to achieve your maximum potential as a human, and a business owner, you know, letting go of some of that stuff is really valuable and important.

 

James Nathan 18:46  So, I often love to learn by kind of looking at what people do wrong and saying, you know, how do I avoid those mistakes in the future? What are some of the kind of common things that you see, going into a new client, having those initial conversations, what are the big kind of issues you see more regularly than not.

 

Mike Paton 19:03  Yeah. So it’s funny that you say it that way, James because I am the same. And I tell everybody I encounter in this crazy EOS® journey that it’s the greatest gig in the world for me, because basically, I’m trying to help prevent other leaders from making the terrible mistakes I’ve made my whole life. You know, letting go, the ability to let go is what you were referencing earlier to create clarity of desired outcomes, what is it you want to accomplish in this business and then empower other people to independently execute in a way that achieves that vision. That is a common difficulty for entrepreneurs and it requires a tremendous amount of personal growth in order to generate the ability to let go and I have struggled with that my whole life and so do a lot of entrepreneurs. The desire to solve everything right now is another common predicament for entrepreneurs. Either my organisation is perfect, or it’s totally broken and I want to shut the darn thing down. It was, you know, sort of the two perspectives and you know, manic behaviour is not uncommon when you’re leading and running a great organisation. Again, this is a personal flaw of mine, I will frequently say, I was the classic entrepreneurial leader who after a good week, when you want a new piece of business you’d have been working on for a while you got a nice letter from a customer and an employee high fives you in the hallway and says, Man, I love working here you go home that week, and you’re gonna conquer the world, and inevitably, because God has a sense of humour or is vindictive, whatever mindset you have, inevitably the following week, you know, the poop hits the fan. And, at the end of that week, I wanted to sell the business, right? This is no fun anymore. I’m miserable. And so, you know, you just have to create an even keel recognise that everything is just an issue, prioritise and resolve your issues one at a time, take a one step forward, everyday kind of approach. Those are new common challenges for entrepreneurs and leadership team members that I see.

 

James Nathan 21:42  You mentioned Gino there, Gino Wickman. Obviously, well, not obviously. But wrote a fantastic book called “Traction”, which I guess is part of the starting point for a lot of this but how does traction fit within the model?

 

Mike Paton 21:55  Yeah, so Traction is the name of the first book in the Traction library. There are now five books and it’s the primer. It’s the how to manual for implementing EOS® in your business. It’s a fabulous book very engaging for a how to manual, a lot of great stories and real world applications. But the… it describes the mission of a company running on EOS®. And the mission of a company running on EOS® is to achieve its vision, whatever that vision is. And the number one reason companies don’t achieve a vision when the owners or leaders have one isn’t a lack of vision. It’s actually there’s too much vision. You’re not all on the same page. And it comes down to you can’t execute, you can’t generate traction. You can’t achieve your vision without clarity of vision, and then discipline and accountability. And so that’s the role, the traction component plays. It’s instilling discipline and accountability throughout the organisation. Starting at the leadership team, and I speak to entrepreneurs all the time, James and I’ll say, we bring discipline and accountability to an entrepreneurial company. And I’ll have a visionary raise his hand and say, oh boy, that’s what we need Paton and I say, tell me the truth. Are you thinking I’m going to come in and make everybody else discipline and accountable Sally? And Sally will say, well, yeah. And I’ll say, well, I just need you to know I’m going to start with you. Because if you’re not disciplined and accountable, its impossible to have a an organisation of people reporting up to you, that are also disciplined and accountable. And so that’s part of the secret sauce, who is, we started the leadership team and we make the owner and the leaders more disciplined, accountable, focused on the right stuff, a few essential priorities rather than everything being important and from there, traction flows from the top down.

 

James Nathan 24:02  So many businesses have have leaders who don’t like to be accountable?

 

Mike Paton 24:07  Well, I think that, I think that if you’re a successful entrepreneur, you have demonstrated the ability to be accountable. What I notice happens is being accountable as a self employed solopreneur is more essential and simpler than it is when you’re the visionary owner of a 40 person organisation with no infrastructure built below you for organisational accountability. That’s the issue. I don’t see a lot of non accountable entrepreneurs who are successful. I think people whose personal accountability they’ve not been able to spread across an entire organisation or hierarchy or structure.

 

James Nathan 24:52  The reason I asked that was just it’s interesting when you look at particularly startup businesses, so I spent a lot of time in the recruitment world and you know, a lot of guys leave the business there and they go, you know what I’m off. And off she goes and sets up their own business and very often or not very often, often, those people are actually people who are not great employees. They’re good. They’re not good at taking advice. They’re not good at working with others. And so they end up being, you know, successful on their own. But then when they bring in people, the point of being accountable, they find very difficult. Can we just step back a little bit though, because, say we’re looking at a business, you know, I’ve set up my business I’m running well, there’s no there’s no Coronavirus, there’s no recession. There’s no crap going on in the world. It’s just a very, you know, normal economic cycles going on. And I’m starting to build up I think, you know what, it’s time to grow now. It’s just been me. It’s been good. I’ve hired in a few extra pieces. I’ve got some support, but I’m going to get some more people in. People is one of the hardest things to get right isn’t it for someone in that situation? How do you go about it? How do you….. how do you decide what kind of person should would fit your unique business?

 

Mike Paton 26:06  Yeah, and this is a great sort of microcosm way of teaching us to from a simplicity and practicality standpoint. So when we’re strengthening the people component, we’re leveraging terminology that Jim Collins included in Built to Last and Good To Great, that getting the right people in the right seats on the bus. And so what we do is we divide those two thoughts into two distinct areas. A right person is a person who shares your core values, the kind of personal characteristics and attributes that you really gravitate towards that you really appreciate and value in people. It is absolutely acceptable to use those things as hiring and retention standards for your people. Life is too short to be stuck in a lifeboat with 27 people you don’t really like hanging out with. And so, we use a tool called Core Values to define the characteristics or attributes of the best people in your organisation today, the folks you can almost count on to help you attract those kinds of folks. In terms of rights seats, someone who’s in the right seat is just consistently excellent at a necessary and clearly defined job in your organisation. And, we use a tool called the People Analyzer, and the Accountability Chart with those core values to clearly define the job requirements for every seat in the organisation and the cultural requirements for fitting the culture. And we ask our leaders and managers to evaluate everybody in the organisation every quarter as to whether or not they’re a right person in the right seat and so it’s work. You got to sit down with your direct reports and say, how do you think you’re doing culturally? And how do you think you’re doing at your job, and here’s some positive and constructive feedback from me. But if you’ll do that, it is pretty simple. And doesn’t mean it’s easy. It just means it’s simple. And that’s all we do with EOS®, we simplify what can be vexing problems. Oh it’s so hard to hire the right people Paton! It is what work have you done to make it simpler and clearer to everybody in your organisation? That’s the EOS® way.

 

James Nathan 28:36  I love what you said then I really do it. So many businesses talk about you know, it’s so hard to find the right people or we work so hard and we found this person they didn’t work out. You know, miss hiring, miss hiring is such a terrible mistake to make and if you don’t understand the core values of your business, and you don’t understand what the complimentary core values are that you’re looking for, then I think and I don’t know if you’d agree with me but I think you find you’ll miss high more regularly, if you don’t have those two components set your in mind.

 

Mike Paton 29:05  Could couldn’t agree more. And then you feel….. that’s one of the primary drivers of feeling trapped. If you realise you’ve driven your vehicle into a cul de sac, and there’s no way out, and you look around for other people in your organisation to help lead you out, and they’re not the right people, they don’t share your core values, and they aren’t great at their jobs and so you are stuck. So this isn’t an entrepreneur making this up. It’s a series of decisions made without a long term view in mind, or made for expedience sake, has gotten me in a pickle, and I need to navigate myself out and for many that feels overwhelming. And again, the EOS® approach is simply to say, well, let’s take stock of where we are, and if you’re 20% strong and the six key components, including the people component, let’s start prioritising solving that problem. So maybe next quarter, we’re 40% strong the quarter after that we’re 60, etc. I mean, yeah, gotta move in the right direction. And it’s amazing when you do that, James, how quickly an entrepreneur starts to feel like there’s hope, again. Hope is a driver of passion and passion is a driver of a lot of great stuff in an entrepreneurial company.

 

James Nathan 30:27  Yeah, I mean, the world that we’re living in at the moment, you know, going to air in May 2020. The world’s still in the middle of the Coronavirus issues. We certainly hope that it you know, we find a way through all that. But there’s going to be a lot of businesses who are feeling… they’ve just been running through treacle for a long time. And taking time to sort of sit back and look at these things I think is going to be really important, isn’t it?

 

Mike Paton 30:53 Yeah, I started my EOS® implementer practice before the financial meltdown of 2008/2009 and this feels worse for the record. It feels worse whether it is worse or not, is anybody’s guess. But it was very similar in that there was a legitimate concern worldwide about the presence of an actual economy that would allow for commerce to be conducted post crisis and so yes, I do see a lot of companies taking stock but I also see a lot of companies…. I had an entrepreneur I interviewed for a keynote talk I’m delivering at the EOS® conference in mid May. And I said how you doing? I start every interview with how you doing, just personally? And he said I’m okay, he said what is amazing to me is how hard you can work to create zero dollars of revenue in your business. So I think that the people who are assuming that everybody’s sitting around with nothing to do don’t know a lot of entrepreneurs. That’s, that’s my one.

 

James Nathan 32:15  That’s probably a great point to see the big question Paton, what is your one thing? If you could give the listeners a golden nugget, one big thing that they could do today to make their businesses better for today and better for the years to come? What would that be?

 

Mike Paton 32:31 Yeah. So it would be to reconnect with your passion. And surround yourselves with other people who share that passion. Because entrepreneurial companies are typically driven by a combination of skill or gifts and passion for something, be it helping other people. You know, some people are passionate at their trade. You know, I’m the best plumber, I want to be the best plumber on the planet is an example of passion. And so what we find is that when you’re connected to your passion as an entrepreneur, you’re much more comfortable letting go of the things you’re not passionate about to other people. But you will only let go if they are also passionate about your gifts, and what you’re passionate about and helping the same people you want to help and so on. So those two things together, whether you’re in crisis or operating in growth mode, are going to get you through a lot. And if you’ve lost passion for your business, that’s what EOS® is. It’s a mechanism for ensuring the trains run on time effectively, in a way that frees you up to focus on what you’re truly passionate about and what your real gifts are. That’s what I want for entrepreneurs in the world. And that’s what I believe EOS® brings.

 

James Nathan 34:00  Fantastic Paton. Thank you so so much for your time. It’s been lovely chatting with you.

 

Mike Paton 34:04 Ditto James, I enjoyed it immensely. Thank you.