EOS and the Importance of Organization Structure for Start Ups with Daniel Davis
Arin V., EA , MBA
Arin is an Enrolled Agent (EA), authorized to represent taxpayers in front of the IRS, and holds a BA and MBA (Management) degree from California State University, Northridge.Creating a start-up is just the beginning, it is vital to have a strong organizational structure to bring life to the purpose of your business.
On the second episode of the Start Up Nation Podcast, Polo Tax CEO Arin Vahanian chats with expert guest Daniel Davis on the Entrepreneurial Operating System and what it means to live an EOS life as an executive.
To listen to the podcast, click play below:
Transcript:
Arin: Thank you very much for joining us today on the Polo Tax Startup Nation podcast. I’m joined today by the esteemed Daniel Davis. Thanks very much, Daniel, for taking some time Talk to us about executive organization and EOS, and I think at this point it might be helpful if you would introduce yourself to our listeners just so they can get a better understanding of who you are and what you do.
Daniel: Sure. Thanks, Arin. Nice to be here with you. So my name is Dan Davis or Daniel Davis. I get called both. And my role is the community leader of EOS here in APAC. So the Asia Pacific region. For those of you who are not familiar with EOS, it stands for the entrepreneurial operating system. And basically what we do is we work with leadership teams to help them gain traction. So we specifically focus on three things that we call vision, traction, and healthy. Vision from a standpoint of getting everyone aligned and clear and what the vision is. Where are we trying to go with this business? What does that look like? And are we all rowing in the same direction? Because often at times we find there’s lots of lots of energy, lots of people working hard, but we’re not necessarily aligned. Traction from the standpoint of giving them the tools, disciplines, and accountabilities to bring that vision into reality. We have a saying vision without traction is really hallucination and damn frustrating and healthy from the standpoint of creating a healthy, cohesive leadership team that has the ability to be open and honest and share what needs to be shared. No elephants in the room, so to say, So that’s what we do. And we say when we get those three things working well, we basically get teams that perform really well. They’re far more satisfied and enjoy the work, and the business performs well, too. So that’s a little bit, you know, about EOS, how it works.
Daniel: As a brand, we started out of Detroit, Michigan, nearly 20 years ago. Our founder, Gino Wickman, started the business. Some of the listeners may have heard of the book Traction by Gino, and it’s a great read. And over the years, we’ve we’ve kind of built up to a global fund. We now have 450 EOS implementers like myself, so they’re franchisees that work with leadership teams to help them implement EOS. And we’ve implemented EOS with around 12000 companies out there. So that’s a little insight to EOS and our background. Personally, it all started for me at the age of 10, I got my first job, fell in love with it and found my purpose. I really enjoy work. I never fit in at school, so that probably was another reason why I enjoyed it so much. And at 21, I got my first business. A retail business and worked 18 hours a day trying to build the business up, and I think I made just about every possible mistake that you could make in business, and I guess that’s what sparked my passion for learning.
Daniel: So despite making mistakes, it just meant that I had to work harder. But by year three, I had a fantastic business. We had the number one IGA supermarket in Australia, and from there I went into property investing and a whole bunch of other things. But my interest in the science of business began at that age when I when I entered that ownership position and trying to work out, how do you run a great business that customers love and the employees love? And at the end of the day, it’s a viable and profitable entity, too. So I’ve had that interest for a long time and as a result had a firm that I bought when I was 28. Built that business consultancy offering came across EOS in 2014. I read the book Traction; loved it, reached out to Gina. The business was much smaller back then, we had 70 implementers and I looked at what they were doing in North America and was privileged that he gave me the opportunity to bring the brand down to the Asia Pacific region. And we’ve now grown. So to what I shared with you earlier, a much bigger organization and able to help more people.
Arin: Well, that’s incredible, Daniel, 10 years old, you know, you just don’t come across that very often, When I look at the age of 10, you know, maybe just playing a little bit of sports, some video games and that was really about it, right?
Daniel: Yeah, I guess some of it was just due to that. My my upbringing, my background was a little bit different to what I guess most kids would have. But ultimately getting my first job actually gave independence. And I guess my passion comes from that opportunity because I started to realize, Hey, I can, I can earn money. By the time I was 13, I had three jobs outside of school and I was earning enough money to leave home, so I did. And so I’ve lived a pretty independent life. But if it wasn’t for business and wasn’t for the opportunity that was presented through employment. Potentially I would never have got to where I am now and would have had to suffer a lot longer. So I guess like I said, I have a deep passion for business and it’s not because I’m Steve Jobs and some person who’s got all their ideas. No, I just just I believe in the impact that great businesses can have on the world. And that’s from as simple as just being able to give a young person a job an opportunity because it frees people. So that’s that’s that’s why I started so young. I love it.
Arin: Well, that’s that’s incredible how you were able to rise above all of that adversity and to build a career in life that you have now. So you mentioned you came across EOS when you were 28? What was the sort of value proposition you found there? And because given at that time, you’d already had a lot of experience running businesses? What was sort of a value proposition there and how did you sort of connect your experience along with now this, at the time, a new model?
Daniel: Yeah, I think that’s a great question, I think the the thing that attracted me most was the simplicity of the way in which it all comes together. So the book Traction, it’s like, you know, when you read something and you just connected with it so much that you feel like almost you wrote it, or that the book speaking to you directly. And it certainly had that impact on me. And I find that it happens basically with all leadership team members, anybody. It’s not necessarily just the business owner, anybody who’s on a leadership team. They just read it and say, “Hey, this, this makes sense. I get it, you know, and it’s helpful.” So it was it was the way that it brought together the concepts to make it just just work. And and it really highlighted the impact that getting the leadership team right has on a business and equipping them with the tools that they need to succeed. So that’s what attracted me to EOS.
Arin: Wow, that’s great. And so you just mentioned leadership teams and success. I’m curious, what are some of the mistakes that you see in leadership teams, especially especially in startups that you come across? what are some of the really big mistakes that startups make in terms of leadership and organizational structure, which prevents them from gaining this organizational excellence?
Daniel: Yeah, great question. So the first thing that I would say first and foremost, right from the get go, where they start a company is: I often will come across people that, you know, just even the simplest of business, right, that maybe they’ve got a plumbing business or an electrical business, or it could even be, you know, a physiotherapist, you know, a doctor. And they say, “Dan, I’m just struggling this business things really hard, you know, and I just think I’m not cut out for it.” And I say, “tell me more about that. You know, tell me a bit about your background.” And so they say “I became a plumber and I learnt my trade.” “Tell me more about that. How long did it take for you to do the trade?” And they’ll say, “Well, well, it’s four year kind of apprenticeship and you learn.” “Okay. And when you finish your apprenticeship, you’re really good at what you do?” And they say, “Well, yeah, I was competent” and I said, “Were you as good as like the best?” And they said, “Well, no, I wasn’t as good as the best. Takes a bit of time.” I say, “That’s interesting. How long do you reckon it takes before you get really great at something like you’re a master plumber?” And you can see them sitting there and they say, “Oh, probably like maybe more like seven, eight years.” And I say, “well, interesting. You know, studies show that to become great at anything, it’s approximately 10 years, right? Ten years of anything, whether it’s, you know, a trade or an art, it’s 10 years.” And they say, “Yeah, I guess that makes sense.” “How long have you studied the subject of business management and what it takes to run a leadership team and all of that?” And they said, “Well, none, I haven’t studied” and often what you’ll find, they come to the realization, you’re not bad at this, you just haven’t learnt about it. And like when you go to medical school, even they teach you how to fix people. That’s what you’re there to do. When they when you do plumbing, they teach you how to fix broken pipes and make sure that plumbing works. They don’t teach you how to run a business. So first thing is, don’t knock yourself and think that you don’t have the gift here. Very rarely does anyone naturally have it. So that’s the first thing I think being an important lesson is if you want to get great at something, you need to put effort into learning how to do it. EOS, I think, is just a methodology that helps simplify that process and helps you hold your hand to be able to learn how to run a great business. So that’s the first thing.
Daniel: Second thing is: In the beginning, you’re running off the back of that. They then try and do everything so so they they might be qualified in accounting, but now they’re when they start a business, they need to be the marketer, the salesperson, you know, the accountant. They need to deliver the product Like suddenly they’re wearing seven hats. And what they find is they’re overwhelmed. And when when it’s time to bring on people, they struggle because they think, Do I have the money to do it? You’ll often get people say, “Hey, do you know a cheap accountant or lawyer?” And I said “Cheap doesn’t normally like coincide with great.” And so it’s a mindset. A lot of it’s a mindset.
Daniel: And the third part is, as you build out an organization, it’s making sure that you surround yourself with the best people. As you build that leadership team out and you’re handing over those hats to other people, that you’re bringing on quality people that can really help you. And and I guess if we go to the next step, if we think about great sports teams, they’re surrounded by people who sit there. Their whole job is to go and find the best player for every position on the team. And what I love about watching these sports teams is they don’t have any, they don’t have any challenges like the workplace rules, right? So if you don’t kick goals, they just end your contract and they put somebody else on the field. Dude, you’re not kicking goals or you’re not stopping goals or whatever it is that your role is. You’re either doing it or you’re off the field. And we don’t have quite that freedom in business, but we do have freedom to still choose who we put on our team. And I’ve been fortunate enough to to have spent time with Richard Branson. I’ve been to his island a few times, and when you sit and chat with this guy, one of the gurus of business, first thing he’ll tell you. “I’ve made more mistakes, far more mistakes than I’ve had successes. In fact, 80 percent of the things that I’ve backed have failed. They haven’t been the unicorns. Just the unicorns paid big dividends. So that’s why I’m here on this island. Second thing, I’m not the smartest guy in the room. In fact, I’m far from it. My gift is I find great people – the best people – and I create a culture where those people enjoy spending their life as in their their work life. That’s what I can do. I make it a fun and productive place to work, and that’s why I have a great company.” And so I think that there’s some really great insights as to where the challenges are for a lot of entrepreneurial companies.
Arin: Yeah, well, that’s just a ton of good advice there. And thanks so much for sharing the story about Richard Branson. You know, what you’re saying about him, I think is totally true in terms of what we’ve read about him and what he says about building a successful company and building the sort of teams that are more likely to be successful. So related to that then, we just talked about some mistakes that entrepreneurs make or startups make. On the flip side, what are some things that you’ve seen out there in the business world that startups have done right? And in some cases, maybe maybe they’ve done something that seemed not intuitive to you, but they ended up succeeding. Maybe if you can share some examples that you seen out there in the business world of startups, organizationally, operationally, some things that some successful startups have done that you’ve seen and of course, it doesn’t have to be an Atlassian. It could be, you know, it can be a smaller company, right?
Daniel: Yeah, sure. I think the one thing that I see that brings about rapid success kind of goes back to what I was mentioning before. It’s self-awareness, so it’s one realizing where their talent lies and then surrounding themselves with the people that are required to fill in the voids of what they’re not great at, right? So. And the faster they move towards that, the better they’ll do. So, you know, with the EOS approach, our whole job is to help build a leadership team and kind of going back to what I mentioned at the beginning there. Firstly, we want to get clear and for the founder of the company, what do you want? What are you hoping to achieve here? Let’s simplify that vision that exists in your mind. And you know, the approach that we take is we’re doing doing that with the leadership team, too. So we’re all rowing in the same direction that the team has buy into that vision. And as you build out that team with great players, it works. So you can see some people who have come up. I mean, I’ll just refer back to the Richard Branson story again. You know, he talks about “how did I start an airline” well he’s not a pilot, right? So he’s got no, actually no experience at all in aviation. He had a music background. And so he shared because we were sitting there on his island and he said, “You may find it interesting where Virgin Airways started. It started here because of this island” and we’re like, “Oh, OK, I didn’t know that.” And he said, “So what happened was I was going to catch up with my then girlfriend at the time, who’s now my wife and I was flying in and And he arrived, and they said there’s no more flights for the day. And he said “I noticed there was about 10 other people there and they had the same let down. And they’re trying to work out what motel or hotel they’re going to stay in.” And he said, “I just didn’t want to give up on this.” So he said “I walked around, chatted to some people and realized I can charter my own flight.” And he said, “Now, obviously, I wasn’t a rich guy back then. I just wanted to charter a flight and get there. So I worked out whatever the number might have been, it might have been $2000.” And so he said, “just wait a sec. He walked around to the 10 people and said, Is everyone okay to chip in $200 each, right?” But they all said, “Of course, yeah. Yeah, we’re in.” So he went back, and that’s where Virgin Airways began. The concept was there. He said it was something like within the next few weeks, he was negotiating the purchase of a 747. So like working out how they they lease them and and he said, so that’s how how it all started. He landed, got see girlfriend, he said. We had an amazing weekend and all I could think about was what opportunity exists in this business in this space and and then sort of started the story with the war with British Airways. But you know, how did how did he succeed? He sat there and thought, Well, who are the best people in the industry who actually know how to do this? Who can I bring in here? And so it kind of goes back to that thing. And I’ve seen that multiple times with other start ups that have done well that have just been wise enough to realize I’m really good at this skill. But the quicker I onboard the other people, the faster I’ll go, the more successful will be.
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Arin: Yeah, wow, what a story about, again, about Richard Branson and I actually actually had no idea about how it all started, and so when you’re telling me this story is just incredible, I’m just like glued to the screen here and wanting to hear more. Thanks for sharing that. Really, really. Because I think that’s really valuable for our listeners, not just in terms of just getting some inside information, but I think that it goes back to something we’ve read about and heard about time and time and again. Startup founders saying, you know, there was something I wasn’t happy with and we had to do it because if we didn’t do it, no one else would do it right. But that sort of thinking right has that been your experience – because you started a number of businesses and built them up – has that been your experience as well?
Daniel: Definitely. It’s exactly how a lot of my businesses have started. One such example was dealing with a phone company one day, and I just thought, Oh, the service level was terrible. It felt like I had a business with, you know, 30 staff members and I was sitting there on the consumer hotline as though I was a teenager on a prepaid card. And I thought, How does this work? I spend thousands of dollars with you every month and I’m getting treated like this when what I came to to discover was that the corporates, they got great service and everyone else in this sector didn’t. So I went and started a B2B business in telco that was aimed just for, you know, mid-sized companies, and that’s what worked really well. So we see that time and time again and it works really well. But yeah, I think ultimately, if we think about all of this, we’re just trying to help people achieve success in business, but also live a better life. And I know prior to the the chat today, we were talking about how do we ultimately, I mean, you’re doing this podcast to help people live a better life, right? We want to run their businesses and run better lives and that’s my passion, right? Helping entrepreneurs and I know you have the same passion. We want to help our clients succeed in that business. But ultimately, what does that mean? It’s ultimately there to help people live better lives and.
Daniel: And you’d asked me that you said, What does that look like, Dan? How do you create a better life? And I think if we look at it and we think, OK, you’ve got you’ve got this idea, the faster we on board and surround ourselves with the right team members as well as the right advisors, right? Because these people are not just on our team, they’re our advisor network too: accountants, lawyers, et cetera. So we will get the success in the business, maybe bring in a system like EOS that’ll help us, we’re just equipping ourselves – right tools, right people will bring about success. Ultimately, what that means is that entrepreneurs are not having to wear all of the hats, right. They can surround themselves with the right people, and then they can go and do what they love doing. So that might be. Being the CEO, but it could also be, I’ve got some clients who actually, for example, a plumbing business where they own the company, but all they do all day, they just go out and do plumbing. They love being out with their customers and they have somebody else run the business. They don’t do any of it because they just love being with customers, and I’m sure many of the listeners will relate to that.
Daniel: Actually, Gino’s just released a book called The EOS Life, and it’s what we ultimately aim for with our clients, and it’s comprises of five things. So we say this is what the ultimate goal is for all of our clients. If you can tick these boxes, you’ve got it made. So the first thing is doing what you love, which is what I was just talking about there. When you start a company, do you really want to be the CEO or the manager or is there something specific that you love doing? And are you doing that every day? If you were to rate it out of 10, what would you rate it? So doing what you love with people that you love? So I think that’s a two parter. That’s the team members we work with as well as our customers. Often we might work with great people, but then do we love our customers? You should be able to take back both those boxes. Right? So doing what you love with people that you love.
Daniel: Making a significant difference. So when we say making a significant difference, it means that you feel like the work that you do is purposeful, right? And you know, what does that look like?
Daniel: Next thing is being compensated appropriately. If we’re doing great work that impacts the people that we’re helping, then we should be paid well and so should all of our team members.
Daniel: And the final piece, this is the icing on the cake, right? And it took me five years to get to this point, but it’s the final one is with time to pursue other passions, with time to pursue other passions. And you know, everyone can think about that. Some sometimes people say, “Yeah, I can tick the other boxes, but man, and I’m making lots of money, but I have no time. I’m working six days a week. My family doesn’t get to see me enough. I don’t get to do my hobbies.” And if that’s the case, then what’s the point? Right. So that’s what we ultimately aim for with with EOS life. And I’m pretty sure you have the same passion, right? You want to help your clients be able to live a great life and that looks different for everybody. But I think you can you can tie in those five points for everyone doing what you love, with people that you love, making a significant difference, being compensated appropriately and with time to pursue other passions.
Arin: Wow. Dan, I’ll tell you what, that last point really speaks to me because I think that’s a challenge for a lot of startup founders, a lot of business owners. We tend to – and I say we because I’m guilty of it too – we tend to end up in a situation in which we’re throwing everything into the business. It might be successful, but then we find ourselves in a situation in which that’s all we’re doing. I mean, oftentimes you think to yourself, Well, this can’t really be healthy. Wouldn’t it be great to maybe do something a little different sometimes, right? So that really, really speaks to me. It’s so refreshing to hear this because it’s kind of flies in the face of what you read and see on social media from successful, successful business founders or owners right there saying something like, Oh, you’ve got to be, you’ve got to be obsessed. There’s no balance, which maybe it’s true. Maybe it’s true. If you’re like, let’s just say if you want to cure cancer, you do have to be obsessed with curing cancer. But at the same time, you know, you probably don’t want to be in a situation in which you fall prey to the very same thing you’re trying to cure, right?
Daniel: Well, it’s interesting, right? So let’s like I guess we can run off that right there around your obsession is to cure cancer or build a great company or solve some problem. We all know everyone can relate to this, think about where your best ideas come from and where the clarity comes from, where you think, “Oh, that’s a good idea.” Two things that people typically answer to me. Number one is in the shower. Number two is on holidays. And the reason for that is in the shower, your iPhone’s not in the shower with you, right? Nor is anyone else. And see, just not being distracted. And so you have like the ability to think and the same occurs when you’re sitting on a beach and you’re not distracted. That’s what Richard said he bought the island for. He said, “My best work is done here”, and he brings his key to key team members there. He said “This is where we come up with those solutions. This is where we have the big thought” and it’s true at works.
Arin: Wow, that’s great. I’d like to thank you once again for joining us today and sharing such valuable knowledge with us and your and your terrific experience. And I really loved today’s session and I hope that our listeners will as well. And again, that’s that’s all going to be thanks to you, Dan. Once again, thanks for joining us today on the Polo Tax Start-Up Nation podcast, and we’re really glad to have you, and we hope we’ll have you again soon sometime in the future.
Daniel: Yeah, thanks for having me. It was great. Thanks for spending the time with me.
Arin: My pleasure. Thanks to everyone for tuning in today.