Don Johnson Auto adapts Gino Wickman Entrepreneurial Operating System

The change that set Don Johnson Auto Group on a five-year growth path began after CEO Joshua Johnson found the group was having trouble keeping up with a fast-moving and increasingly complex industry.

The three-dealership group in northwestern Wisconsin found itself bogged down in internal processes and unable to react to the changing market quickly enough, Johnson said.

"We weren't all necessarily rowing in the same direction. And a lot of times, our difficulty and frustration came from our inability to do that," he said. "As much as we'd talk about our desire to have clear communication throughout the organization and everyone on the same page, 95 percent of our issues were the result of communication challenges."

To address those challenges, Johnson looked for ideas in business books and came across Traction by Gino Wickman and its concept of an Entrepreneurial Operating System, or EOS.

The concept is based on six key elements of a company — people, vision, data, process, issues and traction. For Don Johnson Auto Group, that means making sure employees are placed in the right roles, meeting regularly with executives and coworkers, and identifying the barriers or opportunities that could prevent or unlock success, Johnson said.

Its long-term vision includes goals set in one-year, three-year and five-year increments, with weekly and quarterly check-ins. The group uses data to measure its results, with an emphasis on forward-looking metrics that can help spot trends early, such as Internet leads as a predictor of future showroom visits and sales, Johnson said. All of the efforts are designed to create traction, or forward momentum, toward the group's goals.

Johnson said he had read about the EOS concept years ago and tried to implement pieces on his own, but this time he hired a consultant who could help the dealership group deploy it in full. The process changes began in January 2022.

What has resulted in the 20 months since is a clear focus, a simpler and streamlined operation, better transparency and accountability, and the ability to more easily expand the business, Johnson said.

Don Johnson Auto Group set a broad, five-year target to achieve $169 million in revenue from a total of five dealerships and three collision centers — an addition of two dealerships and one collision center from 2022 — and to be a group to which automakers look when awarding open points, Johnson said.

Its three-year goals get more granular: $105 million in revenue and sales of 820 new vehicles and 1,230 used vehicles, he said. To work toward those targets, it acquired a Chevrolet dealership this summer and is exploring options to add a fifth store, Johnson said.

The group's one-year goal, to be completed by the end of 2023, is $90 million in revenue and sales of 700 new vehicles and 1,050 used vehicles, Johnson said.

The sales targets compare with 554 new vehicles and 885 used vehicles in 2022, while revenue last year was close to $78 million. The group is on track for a record year in its parts, service and collision businesses, as well as "substantial growth" year over year in sales, Johnson said. It also is on pace to achieve its five-year target early.

"I was always of the belief that this industry changes so rapidly and so significantly that you couldn't clearly articulate targets like that," he said. "What EOS helped me realize is if you pick the proper targets and you identify the appropriate leading indicators, you can do that. And not only can you do it, it's crucial that you do it so that your team understands who you are, what you represent and where you're going."

Regular meetings aim to keep the group moving toward those goals. A weekly 90-minute meeting is held at the executive, department or dealership level, and its structure allows participants to track progress on to-do items and identify obstacles or opportunities to examine in more depth, Johnson said. These meetings have elevated issues affecting one department to a broader group, breaking down silos and allowing good ideas to be shared between departments and stores.

Managers have shorter meetings every week with individual employees to discuss their role in the organization and their own performance and career goals. All employees know the company's growth targets, Johnson said.

Employee turnover has decreased, he said, and the EOS process has streamlined dealership operations to give employees more flexibility and work-life balance.

"We deal with a lot of systems in this business. This is a people operating system," he said. "It really brings everything back to people."