The 6 Requirements of a Business Operating System
This article covers the traits of a good operating system for running a business. If you’d like to join us and learn a proven OS for enterprise CEOs, consider joining our next CEO Masterclass, May 20–22 at Texas CEO Ranch. Would love to see you there. Email me (joel@ceosys.co) if you’d like a brochure or to register.
There’s a very odd dynamic at the top of organizations.
A lot of people feel it, but few talk about it.
The dynamic is this: Every executive on the team has a methodology and a tool set built for their role. Sales leaders have deep playbooks and Salesforce. CFOs have GAAP and an ERP. Engineering has frameworks refined over decades. Marketing has its own stack, its own metrics, its own canon. But the CEO, the person accountable for the whole thing, has a calendar, an inbox, and hope.
There is almost no formal training for the CEO role, and no dedicated methodology or software built around it.
One of the questions I have tried to answer over the past 15 years of my career is, what would such a methodology look like for a CEO? Is it even possible, given all the moving pieces, many seemingly unrelated, the CEO must deal with?
In short, is there such a thing as an operating system for the overall business?
What is an operating system?
The first computer operating system was built in 1956 at General Motors for an IBM 704 mainframe. Its lead designer, Robert Patrick, later credited industrial engineering pioneer Henry Gantt as an influence on the architecture.
If we think about that for a second, we see something fascinating. The concept of an operating system, at least in part, migrated from how humans organize work into computing. By formalizing an operating system for the business, we’re actually borrowing the concept back.
In the world of computing, the operating system sits between the hardware and everything that wants to use it. It manages scarce resources like processor time, memory, and storage; enforces rules about which programs get what and when; and provides a consistent interface so the applications on top don’t have to solve the same coordination problems over and over.
A company has similar structural issues to deal with: scarce resources, competing demands, work that has to coordinate across functions without constant intervention from the top.
What then, would we need to integrate into a business operating system?
The 6 requirements of a business OS
A real business operating system must answer six fundamental questions.
Where are we going? This is the strategic layer of the OS, consisting of the mission, vision, differentiating values, and mid- to longer-term objectives. It is the reason every other activity exists, and the input everything downstream has to respond to.
How is the work organized? A business OS needs to also account for the structure of the business into its six core functions: product, marketing, sales, employees, customers, and shareholders. This part of the system includes org design, role clarity, and the breakdown of those broader objectives into specific goals for departments and people.
How do we know if we’re winning? A business OS also requires measurement and accountability, including KPIs, quarterly goals, and a rhythm for reviewing them. A computer’s operating system is constantly checking the state of the machine. A company needs the same habit, manifesting in a cadence of check-ins on regular cycles.
How do we make decisions and communicate? That cadence of meetings, reporting, and planning cycles needs communication architecture built around it. Who needs what information when? Who makes which decisions? When are issues escalated? It’s the company’s equivalent of how an OS partitions resources, deciding what runs where and who has permission to do what.
How do we develop and retain talent? This is the people operations system, covering hiring, onboarding, performance management, development, and the full employee lifecycle. Without it, the other five layers have no one to carry them out.
How does it all fit together? A good operating system is much more than a pile of rules or best practices. Instead, all the pieces must be integrated, with their interrelationships made clear. A change in strategy, for example, must move through structure, metrics, rhythm, and talent in a way that holds together.
So is it possible to have such a system?
I think we already do. The Entrepreneurial Operating System is a good example of one that works for entrepreneurs and founders.
CEOs who have scaled past 50 or so employees need a different sort of operating system, which is why I have built out the CEO Operating System. It includes these six components, and recognizes that the person running the company (the CEO) needs the same kind of tooling every other function already takes for granted.
Get on your own operating system
If you want to learn the CEO Operating System directly, consider joining me for the next CEO Masterclass, May 20–22, just outside Austin.
Here’s what a few CEOs from the February class had to say:
“After 20 years of being at the helm, you can get caught in the weeds. Coming here, I see more clarity in what my role and responsibilities should be as CEO.”
—Frank Spencer III, President, Aztec Contractors
“The last three days gave me such a tactical way to take organizational values and trickle them down to strategic initiatives that then trickle down to every single part of the organization. It means every individual feels a sense of ownership, because they’re all a part of something bigger.”
—Amy Gurske, CEO, sayhii
“This class gives you a mental model for thinking about all of your best practices running the business. CEO-S gives you a pattern and a system for thinking through all of those structural decisions.”
—Tim Bushaw, CEO, IQC