Former EOS implementer, author, and manufacturing CEO Michael Erath joins me to explore what happens when business frameworks turn from liberators into cages—and how elite organizations escape the trap.
Rigid systems like EOS can bring chaos under control, but stop short of greatness. Michael and I dig into why prescriptive “20 tools forever” models break down at scale, how to design for outcomes instead of checklists, and why A-player imposters cost more than missed A-players. We unpack the dangers of short-term cost cutting (Intel, GE), the overlooked genius of Eli Goldratt’s Theory of Constraints, and why profit-per-X clarity beats generic “best practices.”
The theme running through it: systems should serve people and outcomes, not the other way around. Elite organizations don’t settle for “not that bad”—they build adaptive frameworks, measure the right constraint, and pursue excellence with discipline.
TL;DR
Systems ≠ salvation: EOS and similar tools help kill chaos but cap out at mediocrity.
Mechanical vs. organic: Treat processes like machines when possible, but don’t ignore the living, adaptive side of organizations.
The A-player trap: The costliest errors are (1) losing true A-players, and (2) mistaking B-players for A-players.Constraint clarity: TOC says find the one constraint—fixing it yields immediate profit, unlike slow checklist efficiency.
Profit per X: Identify the metric tied to your real constraint (throughput, calendar days, etc.) and align decisions around it.
Outcomes over inputs: Define every role by its most critical outcome, not by tasks or titles.
Memorable lines
“Most systems are built for chaos-to-decent. Elite requires more.”
“Don’t pay A-player salaries for B-player conformity.”
“World-class accounts payable never made anyone strategic.”
“Profit per X isn’t a spreadsheet trick—it’s a spotlight on your real constraint.”
Guest
Michael Erath — Former manufacturing CEO, EOS implementer turned founder of his own operating framework, and author of Five Obsessions of Elite Organizations.
https://www.linkedin.com/in/michaelerath1/
Why This Matters
Businesses chasing short-term fixes or worshipping rigid frameworks stay stuck at “good enough.” The path to excellence is clarity: knowing your real constraint, aligning outcomes at every level, and designing systems that bend with your people instead of breaking them. If you want organizations that outlast hype cycles and downturns, trade dogma for discipline.
Call to Action
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