The 7 Levels of Scale: Dialing In Your Operating System

Over the next few podcast episodes, we’ll walk through the 7 Levels of Scale—everything you need to know to grow and scale your business.

 

Everyone always asks Roland Frasier and Ryan Deiss “Where do I start?” when it comes to scaling their business. Their new framework they call The 7 Levels of Scale answers that question.

 

In the previous episode, they covered Levels 1 and 2. In today’s episode, they unpack Level 3, but here are all seven:

 

  • Level #1: Sell and serve 10 customers.
  • Level #2: Build a growth flywheel.

 

  • Level #3: Build an upgraded scalable operating system.

 

  • Level #4: Double your take-home pay.
  • Level #5: Build your board.
  • Level #6: Complete an acquisition for expansion.
  • Level #7: Hit your number.

 

If you haven’t listened to Part 1, go do that now. This framework doesn’t work out of order. Sequence matters in a big way. Then listen in for everything you need to know about Level #3: Build an upgraded scalable operating system.

 

Two Big Errors Entrepreneurs Make

 

The first error entrepreneurs make is setting up an operating system without going through the first two levels. You don’t need an operating system if nothing is happening in your business.

 

The second error they make is just go go going without putting an operating system in place. If you build your growth flywheel, then fail to build and implement an operating system, you’ll grow your business into non-existence. It will implode from system overload. You can’t serve the people coming in, because it’s all happening too fast, and you don’t have a system in place to handle it. This will wreck you, wreck your family, and wreck your business.

 

This happened to Ryan. He almost lost his marriage over it. To build something that’s actually working—but have it almost destroy you—is one of the worst things that can happen.

 

What Is an Operating System Exactly?

 

No one can actually agree on a definition, but Google says this: “An operating system is a set of algorithms and a common language that enables different components to communicate with one another in the support of the desired outputs of a machine.” It’s like a computer where the mouse, the CPU, the printer, and everything else has to communicate with each other in order for it to work.

 

What do we mean by a set of algorithms? Standard operating procedures. What is a common language? Communications and meeting rhythms. What are desired outputs? Your goals and objectives.That forms the foundational framework of what it means to have an operating system.

 

The business owner generally knows what the desired outputs are, but they haven’t really been fully flushed out. You need goals and objectives and a way to communicate them throughout the company. You need standard operating procedures (SOPs) where one person knows how to do something, and documents it so others can learn and repeat it.

 

Roland and Ryan built a tool for their company internally and now it’s available to people in their 

Scalable OS Accelerator. 

 

Document Your Set of Algorithms 

 

Visualize how your company creates value. What is your growth engine? Once you’ve acquired a customer, how do you serve them? That’s the fulfillment engine. In the entire process, you might have half a dozen value engines. There might be 3-4 stages that are really important. These are the ones that need to be documented. 

 

Start with the customer and work backward. Go all the way back to Level 1: sell and serve 10. How do you do this well? 

 

  1. Document the entire process value flow
  2. Identify the power stages and build step-by-step checklists/playbooks around those
  3. Assign accountability.

 

Then use that to build company scorecards and establish the meeting rhythm. When will you meet as teams, leadership, all hands? Figure out your meeting schedule once you know about the scorecards. The meeting and scorecards are your common language. 

 

Map Out Your Weeks, Months, and Quarters

 

Roland and Ryan do 90-day quarterly sprint plans. They look at their scorecards and ask: how are we progressing toward our goals? What’s working and what isn’t? What do we need to optimize? That determines the activities you need to do in the next 90 days.

 

If you don’t have all these systems in place, then what do you do? Everybody just has their own ideas, their own pet projects, then no one can agree on what to do next. You have to have the OS in place. 

 

One you’ve got your growth flywheel spinning, you’ll need to spend 8-12 weeks building your operating system. While you build, you’re also tracking and measuring. That’s all through the scorecards. Then, the way you install the OS is to host your first quarterly sprint plan. Day 1 is a clarity day. Day 2 is your first quarterly sprint plan. You’re looking forward but also back. 

 

  • Every three years: clarity day
  • Quarterly: sprint plan
  • Monthly: business review
  • Weekly: team meeting reviewing scorecards

 

Roland and Ryan aren’t big believers in annual planning. They plan in 3-year cycles and execute in 90-day sprints. 

 

The 6 Primary Tools that Go Into a Scalable Operating System

 

  1. Value engine (visual representation like a whiteboard with post-it notes)
  2. Playbooks (step-by-step checklists that drill down into power stages)
  3. HOT canvas (High Output Team, assigning responsibilities)
  4. Scorecards (metrics and tracking weekly, reviewed monthly)
  5. Meeting rhythm (how often each team is getting together)
  6. Clarity compass (visually demonstrating desired outputs)

 

Roland and Ryan want to create more Level 7 entrepreneurs. They want to help more entrepreneurs scale themselves so they can scale their companies. They’re sick and tired of entrepreneurs burning out and quitting on themselves. They want them to stay at the helm of their companies for as long as they want to. It’s better for the world.

 

When you pass Level 3, you pass the scalable line. That’s when your company is officially scalable. Next up: making more money. Stay tuned for Part 3!

 

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