This page is a work in progress, part of a multi-year effort to capture and share learnings, frameworks, tools, and processes to run organizations. See Running Organizations for more.

What Is An Operating Rhythm?

Operating Rhythms, also called "Operating Systems," are the frames around which people understand the business will operate throughout the year. Rhythms are the meeting and communication structures that help staff know what to expect, what format it will come in, and when it will happen.

"Rhythm is a way to set expectations within an organization so that your team knows what they need to do to succeed. It’s also a way for the leader to be sure that the strategy, a healthy organization, the human system, and the execution plan is being thought about regularly and focused on to drive profit." - Shannon Susko (Source: The Metronome Effect)

A Rhythm gives consistency and accountability. An effective rhythm gives a Leadership Team the potential to deliver reliably. If rhythm doesn't sound exciting, it's not supposed to. Products, marketing, and sales are for creativity and innovation. A sizzling product with reliable leadership behind it produces results. A great product with unreliable leadership won't scale.

The biggest benefit of having a consistent operating rhythm is accountability and discipline, two weaknesses in most organizations.

How To Create a Rhythm

There are two ways to create an operating rhythm - you can create your own rhythm, based on your own needs, or you can adopt one of several complete operating systems. Operating systems create a rhythm (and much more), but you don't need to adopt a complete operating system to have a rhythm.

Creating a Rhythm From Scratch

Every organization has a rhythm. Some are underdeveloped, with more randomness than consistency, but every organization of multiple employees has some set of traditions and some set of meetings that take place on a consistent basis.

The question is, what's missing? What communication does the organization need that it's not getting? What do people need on a regular basis that they're not getting?

Map Your Needs

Determine Frequency

If the context changes fast, frequency should increase. If you deliver large projects over long time frames, the frequency might be lessened. If you're working on a turnaround or a reorg, then daily communication at all levels is necessary.

Choose Types

We often default to meetings as the default communication medium in our operating rhythms. Meetings are the most expensive type of communication, and once they're on the calendar, they can be hard to remove.

Writing is cheaper, less disruptive, and can be used as the main form of information sharing or dialogue. Writing can also be used as a supplement to meetings.

There are many types of meetings, including face-to-face meetings and offsites, video calls, and phone/audio calls. See more in Meetings.

"Off The Shelf" Operating Systems

The common Operating Systems that companies use are EOS (Traction), Scaling Up (Rockefeller Habits), and 4DX. The 3HAG Way is another option that builds off of the foundation of EOS and Scaling Up. All of these systems include strong operating rhythms and tools for managing most areas of a business.

The benefit of choosing a pre-baked operating system to determine your operating rhythm is that you can enlist your entire Leadership Team on implementing the system, and you can lean on external consultants to help you get it off the ground. It's more difficult to enlist the team in implementation if you're building an operating rhythm from scratch.

The downside of choosing a pre-baked system is that not every component will be a good fit for your organization and for the ones that are, they may not be optimal for addressing for your most important needs.

EOS At a Glance

EOS has six elements: Vision, People, Data, Issues, Process, and Traction. EOS brings focus to smaller organizations, in the $2m-$20m revenue range who need help with execution and accountability.

EOS is simple, approachable, and easier to understand and implement than other systems. Its main focus is on Rocks (i.e. Goals) and a Meeting Pulse that creates accountability for those Rocks.

Vision

The Vision component includes Core Values, Core Focus, 10-Year Target (i.e. BHAG), Marketing Strategy (mostly differentiators, positioning, target market, guarantee), and Three-Year picture, one-year plans, Quarterly Rocks and Issues.

People

The People component relies on the People Analyzer, which is a performance management tool that allows you to grade people on your Core Values. Wickman makes a strong case for an "Integrator" role to pair with a visionary CEO.

Data

The Data component uses weekly Scorecards, managing against multiple numbers - things like weekly revenue, cash balances, AR/AP, client project metrics, and production metrics.

The framework suggests using activity-based numbers (i.e. input metrics) and using just 5-15 metrics to manage the operation. EOS makes a strong case for the "everyone has a number" philosophy.

Issues

The Issues component is about creating a culture of communicating about issues openly, without fear of retribution. EOS uses Issues Lists to store issues as they crop up.

A Leadership team Issues List includes issues that must be resolved in a weekly meeting - Rocks being off track, bad numbers in Scorecards, key employee or major client issues, and other process-related issues.

A departmental Issues List includes issues at a local level, to be tackled in weekly department meetings.

Process

The Process component is about documenting the few Core Processes that run the organization. Each Core Process is named - whether they're HR (recruiting, hiring, performance management, promotions, firing, etc), Operations (1-3 core processes around logistics, account management, service delivery, quality control, customer service), or Marketing, Sales, Accounting, Customer-retention. Each documented process is written in 2-10 pages.

Traction

The Traction component is about Rocks and Meetings. Rocks are the 3-7 critical priorities for the organization over the next 90 days. The organization has Rocks, the Leadership Team has Rocks, and employees have Rocks.

Meetings are Quarterly full-day Off-Sites, Annual Meetings (two days), and Weekly 30-60 minute meetings that ensure Rocks are on track and Issues are being resolved (at both Leadership and Department levels).

EOS Tools I Like

Scaling Up At a Glance

Scaling Up has four areas: People, Execution, Strategy, Cash. Scaling Up covers every area that EOS does, but it also adds a financial component (Cash) that EOS does not offer.

Scaling Up is more customizable and less plug-and-play than EOS. That customization creates more complexity in implementation. Scaling Up generally takes longer to implement than EOS.

People

Three are three People levels and three elements to nail:

Leaders:

• One Page Personal Plan - Each leader with four key areas of work/life
• Functional Accountability Chart (FACe) - Maps functions to accountable persons
• Process Accountability Chart (PACe) - Maps Core Processes to accountable persons

Managers:

• Keep people engaged by removing obstacles to performance, and align individuals to the organization's goals
• Develop people - Uses 90-day onboarding plans and training plans

Team:

• Clarify roles - Define job purposes, outcomes, and competencies for roles.
• Attract the right people who match Core Values, with a systematic process for evaluating Job Fit and Culture Fit

Execution

• Priorities - Set a handful of priorities, the fewer the better
• Data - Gather quantitative and qualitative data to assess performance on a regular basis
• Meeting Rhythm - Review performance weekly to guide decision-making. Set up daily, weekly, monthly, quarterly, and annual meetings.

Strategy

• 7 Strategic Strata - Define the words you’ll own, your Sandbox and brand promises, the Brand promise guarantee and your One-Phrase Strategy. Define Differentiating Activities (3-5). Define your X Factor, the thing that allows you to outperform competitors by a factor of 10. Define your Profit per X and your BHAG.
• One-Page Strategic Plan (OPSP) - The OPSP communicates Vision & Strategic plan to align the organization. It includes Core Values, Purpose, BHAG, 3-5 Year Targets, Key 3-5 Capabilities, Brand Promises, Brand Promise KPIs, 1-Year Goals, Key Initiatives, Quarterly Actions, Rocks, Annual Theme, Accountabilities

Cash

Growing companies need cash, and the financial component of Scaling Up makes it a more holistic solution than the competition.

"It's between $1 million and $10 million that the team needs to focus on cash. Growth sucks cash, and since this is the first time the company will make a tenfold jump in size, the demand for cash will soar. In addition, at this stage of organizational development, the company is still trying to figure out its unique position in the marketplace, and these experiments (or mistakes) can be costly." - Verne Harnish (Source: Scaling Up)

• Cash Flow
• Accounting
• 7 Financial Levers

Scaling Up Tools I Like

4DX At A Glance

4DX is an execution system to deliver on Wildly Important Goals (WIGs) but not a complete operating system (EOS)/performance platform (Scaling Up) for running an organization.

For basic execution accountability on critical projects or OKRs, 4DX is a simple, powerful system. Execution hinges on a goal metric and deadline, leading indicators, and a weekly meeting for accountability.

"Instead of accountability to a broad outcome you can't influence, it's accountability to a weekly commitment that you yourself made and that is within your power to keep. And, one-by-one, you report your results not only to the boss, but to each other." (Source: The 4 Disciplines of Execution)

4DX Tools I Like

3HAG Way At A Glance

The core of 3HAG is ditching the five-year-plan, which, to Shannon Susko, is usually nothing more than a "wild ass guess." The 3HAG Way is about committing to a realistic 12-quarter plan that moves you toward your BHAG.

Shannon Susko's model is a bit of a "best of" of the above models, combined with years of experience in actually implementing and growing software companies using the tools. Her book is highly actionable, and a great supplement to EOS and Scaling Up, but I wouldn't read it without understanding the basics of EOS and Scaling Up.

3HAG Tools I Like

Adopt & Adapt Tools From Operating Systems

If developing accountability is the goal of setting up an operating rhythm: Start with a simple but holistic Operating System like EOS or 4DX to develop discipline and accountability in the organization. You don't have to use all of the tools - just the ones that address your needs today.

By using a well-known and used set of tools, you can get outside help with implementation. There's lots of crossover between EOS and Scaling Up, so you can always transition to Scaling Up as you grow.

If you're pursuing hyper-growth, I'd recommend assigning an accountable person (i.e. Chief of Staff or COO), or the Leadership Team (as part of the Team Purpose) with creating a rhythm and improving it as you grow.

I’ve mixed and matched tools from 2-3 of the above rhythms. The most important part of assembling a rhythm is developing a comprehensive vocabulary among the Leadership Team, and then with the rest of the organization.

Needed Components for Operating Rhythms

A Balanced Approach

A good operating rhythm addresses the organization holistically. A good rhythm doesn't let you swing wildly between priorities in different areas, causing your team to play whack-a-mole with issues and lose sight of the big picture. When you reach 50 employees, you can't avoid HR, or a process for revisiting strategy, while you're focused on marketing or product improvements, for example.

"Balance" means that it tracks across each category of the business, from employees to customers, to shareholders, to processes, sales, etc. This makes a system like 4DX incomplete for a complete operating rhythm. While it will allow you to accomplish great things, it won't give you a holistic view of the operation you're running.

A Leadership Accountability Tool

Without a guiding tool like an OPSP or a roll-up reporting package, you're reliant on a strong set of meetings and their associated documents. There's nothing wrong with meetings, but scheduling an entire year of meetings so that you can keep a dozen documents handy, is inefficient at the least.

An accountability tool that puts "the big stuff" - Core Values, Purpose, Strategy, OKRs/Rocks - in front of the team consistently, ensures focus on what's most important.

"The bigger your company, and the faster it's growing, the harder it is to keep everyone on the same page. The problem, of course, is that there isn't a single page around which to align. Instead, there are likely more than a dozen actual and imaginary ones, along with memos and emails, each purporting to describe your company's vision, values, strategies, goals, and priorities." - Verne Harnish (Source: Scaling Up)

A Goal-Setting Process

Whether you use "Rocks" from EOS/Scaling Up or OKRs, you need a goal-setting process that works at every level of the organization. Goals are how you establish and communicate priorities.

"Once vision is clear, Rocks become simple to set. Once you set the company Rocks and then the leadership team's Rocks, you can then communicate these Rocks to the entire organization so they can set theirs. This process creates alignment." - Geno Wickman (Source: Traction)

Lag & Lead Metrics

Lag measures and lead measures help you understand performance and the key inputs that lead to that performance. You need both. Only tracking lag measures doesn’t help you improve performance. Only knowing your lead measures doesn't tell you what the score is.

A transparent scoreboard or scorecard puts both your Lag and Lead measures out in the open, for everyone to see. When they're designed well, they help people to know what winning looks like and motivate them to want to win.

For more, see Metrics.

Timely Communication

Meetings and communication impact all team members, all of the time. While your tools, agendas, and documentation can evolve and change quickly, communication must to be consistent. You wouldn't hold an annual Off-Site one year and then skip it the next. You can't send out a weekly CEO email every week and then stop for a few weeks.

Communication has to be addressed both top-down (i.e. Weekly CEO Email) and bottom-up (i.e. updating Scorecards). It needs to include various mediums for different types of messages, and key messages need repetition. For more on communication, see Internal Communication.

Meetings must be consistent and must deliver value. People must know what is coming, and when. EOS uses Weekly, Quarterly and Annual Meetings, with clear agendas for what must be covered. Scaling Up uses Daily Huddles, Weekly Meetings, Monthly Management Meetings, Quarterly Meetings and Annual Off-Sites. For more on Meetings, see Meetings.

Get meetings on the calendar 12 months in advance (or for the rest of the year at least). It's helpful to create a graphic to visualize the meetings that take place throughout the year. Share a visual with everyone in the organization.

Patience to Adopt

A good rhythm isn't just the work you do within a given month or quarter. A good rhythm extends into your annual planning and strategic decision-making processes. To fully adopt an operating rhythm, you need multiple quarters to implement, fine-tune, and get comfortable with the routine.

Choose effectiveness over efficiency early on, but don't become a victim of an over-prescribed rhythm, especially when you're small and capable of being nimble (i.e. 50 team members). As we grow, we tend to add instead of subtract. The process becomes the thing, instead of a proxy for the thing. We lose sight of why we added that meeting, or that ritual. We have to assess the overall system and be persistent and patient in implementing a new rhythm.

Operating Rhythm Company Examples

The best way to build an operating rhythm is to borrow from others. I've summarized several organizations' operating rhythms below. My summaries lack color and context, so please click through to the full writeups I've linked.

Small Organizations

Growing Organizations

Larger Organizations

Foundation

PurposeMissionVisionCore ValuesStrategy

Designing The Organization

Understanding CultureCultivating CultureOrganizational DesignOrganizational StructureOperating PrinciplesLeadership TeamsDesigning ManagementEffective Teams

Operating Effectively

Operating RhythmGoalsPlanningInternal CommunicationMeetingsMetricsBusiness ProcessResolving IssuesDeciding & Delegating