The E-myth revisited
'why most small businesses don't work and
what to do about it' - Michael E. Gerber.
ISBN 0-88730-728-0
Everyone becoming an 'entrepreneur' experiences
the same thing: 1st exhilaration; 2nd terror; 3rd
exhaustion and, finally, despair.
Everybody who goes into business is 3-people-in-
one: Entrepreneur, Manager and Technician. Each
wants to be boss, none to have a boss.
The Manager runs after the Entrepreneur to clean
up the mess. Without the Entrepreneur there
would be no mess to clean up.
The Entrepreneur personality lives in the future.
The Manager in the past. The Technician in the
present. We have them all inside us.
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The entrepreneurial worldview: a world made up of
both an overabundance of opportunities and
dragging feet.
People who are exceptionally good in business
aren't so because of what they know but because of
their insatiable need to know more.
The work of a business and a business that does
that work are two totally different things!
It's easy to spot a business in the Infancy phase -
the owner and the business are one and the same
thing. Your business is the boss.
If your business depends on you, you don't own a
business-you have a job. And it's the worst job
because you're working for a lunatic!
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If all you want from a business is to do what you
did before, get paid more and more freedom, your
greed will eventually consume you.
The moment you chose to start a small business
you unwittingly chose to play a significantly larger
game than any game you ever played.
The Adolescence phase begins at the point of life
in your business when you decide to get some
help.
When you hire your 1st employee your newfound
freedom takes a common form. It's management
by abdication rather than by delegation.
In a Adolescent phase business, with personnel,
you will find the owner of the business still 'doing
it'.
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Every Adolescent business reaches a point where it
pushes beyond it's owner's Comfort Zone - the
boundary of control.
One of the most consistent and predictable
reactions to Adolescent phase chaos is to "get
small" again. Return to Infancy phase.
Back to Infancy phase, the customer becomes a
problem rather than opportunity. Your standards
begin to deteriorate. And you don't care.
2nd respons is "going for broke": just keep
growing faster until you self-destruct. A sign of our
time, a high-tech phenomenon.
... justified as an inevitable consequence of doing
business on a "fast track" where "luck and speed
and brilliant tech are necessary."
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... or you are incredibly strong-willed and continue
Adolescence, being there every day, until your
business doesn't explode - you do!
The question is not how small or large your
business should be. The question is: how big can
your business naturally become.
...To ask this question requires entrepreneurial
intention at the outset of the business and a
willingness for personal transformation.
Businesses that 'get small again' die. They literally
implode upon themselves. Not right away but over
time. Atrophy: unnatural limits.
Simply put, you have to prepare yourself and your
business for growth. So that the foundation and
structure can carry the weight.
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Even while you are guessing, the key is to plan,
envision and articulate what you see in the future,
both for you and your employees.
A Mature company is started different from the
rest. The sign of a Mature company: founded on a
broader, entrepreneurial perspective.
Building a Mature company is about building a
business, from the start, that works not because of
you but without you.
The person launching a Mature company must also
go through Infancy and Adolescence, but with an
entirely different perspective.
“I realized that for IBM to become a great
company, it would have to act like a great company
long before it ever became one” - Tom Watson
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The Entrepreneurial Perspective asks the question:
"How must the business work?", not "What work
has to be done?"
The Entrepreneurial Perspective sees a business as
system for producing outside results for profits, not
a place to work for 'income'.
The Entrepreneurial Perspective starts with a
picture of a well-defined future, changing the
present to match the vision.
The true product of a business is not what it sells
but how it sells it. The true product of a business is
the business itself.
Create a systems-dependent business, not a
people-dependent business. As entrepreneur you
need to work on your business, not in it.
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You can be critical of the example of MacDonald's:
You might say that people shouldn't eat meat. You
might dislike their products...
... but what you could never say is that McDonald's
doesn't keep its promise. Because it does. Better
than about any business anywhere.
A Business Format Franchise provides the
franchisee with an entire system of doing business.
This is much more than a trade-name.
Business Format Franchises reported a success rate
of 95% in contrast to 50%+ failure rate of new
independently owned businesses.
The Franchise Prototype is the working model of
the dream: a place where all assumptions are put
to the test to see how well they work.
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At Ray Kroc's McD, every possible detail of the
business was first tested in the Prototype, and then
controlled to a very high degree.
Unlike a trade name franchise, Ray Kroc's system
left the franchisee with as little operating
discretion as possible, e.g. by training.
Franchise Prototype: to the Entrepreneur, the
medium through which his vision takes form in the
real world.
Franchise Prototype: to the Manager, it provides
the order, the predictability, the system so
important to his life.
A Business Format Franchise is a proprietary way of
doing business that successfully differentiates every
extraordinary business.
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The purpose of life is not to serve your business,
but the primary purpose of your business is to
serve your life.
Pretend that your business is prototype for 10,000
more, just like it. Then 6 rules apply for the
Franchise Prototype to win:
Rule #1: The Prototype should provide consistent
value to your customers, employees, suppliers, and
lenders, beyond what they expect.
Rule #2: The Prototype should be operated by
people with the lowest possible level of skill.
Rule #3: The Prototype should stand out as a place
of impeccable order.
Rule #4: The Prototype should have all work
documented in an operations manual.
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Rule #5: The Prototype should provide a uniformly
predictable service to the customer.
Rule #6: The Prototype should utilize a uniform
color, dress and facilities code.
Great businesses are not build by extraordinary
people, but by ordinary people doing
extraordinary things.
It is literally impossible to produce a consistent
result in a business that depends on extraordinary
people.
Hire ordinary people and you will be forced to
build a business that works and to do the work of
Business Development.
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A business that looks orderly says to your customer
that he can trust in the result delivered.
Think of your business as anything but a job! Go to
work on your business rather than in it. Separate
yourself from it.
Business Development is a continuous cycle of
innovation, quantification and orchestration.
It is not the commodity that demands innovation
but the process by which it is sold.
The entire process by which the business does
business is a marketing tool, a mechanism for
finding and keeping customers.
Since the business is the product, how the business
interacts with the customer is more important than
what it sells.
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Quantification is measuring all the numbers related
to the impact each innovation makes. Not doing
this costs a fortune.
Few small business owners do quantify because few
believe that apparently insignificant innovations
are really that important.
Ex.1 Instead of asking 'Hi, may I help you?' try 'Hi,
have you been here before?', and have a program
for both a yes and a no answer.
Ex. 2 Blue suits outsell brown suits. And it doesn't
matter who is in them. The results are dramatic:
more than 10%.
You should be able to read your business's health
chart by the flow of numbers.
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Orchestration, after innovation and quantification,
is the elimination of discretion, or choice at the
operating level.
If you haven't orchestrated your business, you
don't own it! Orchestration brings consistency,
absent from every other human experience.
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Personal growth
Unlike the apprentice stage, the craftperson's stage
is long and relatively serene until the day when the
jewel does appear.
For the master there is only one way and that is to
teach another. The master is connected to the
apprentice as though to her past.
In the face of the apprentice, the master sees
herself anew. In the face of the craftsperson, the
master renews the pilgrimage.
In the face of the work, the master discovers anew
why she is so enraptured and, in so doing, brings
her rapture to the apprentice.
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Business development becomes a desultory process
if it doesn't address the hearts and minds and souls
of people.
Quality is just a word, and an empty word at that, if
it doesn't include harmony, balance, passion,
intention and attention.
A business is like a martial arts practice hall, a dojo,
a place you go to practice being the best you can
be.
The true combat is not between people but
between the people in ourselves.
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Organization structure
"An organization is a structured institution. If it is
not structured it is a mob” - Theodore Levitt
Most companies organize around personalities
rather than around functions. The result is almost
always chaos.
Without an organization chart, everything hinges
on luck and good feelings, on the personalities of
people and the goodwill they share.
By creating a picture of the business as it will look
when it is finally done you start the growth process
and the prototyping process.
Do not be interested in working in your business.
Focus on developing a business that works.
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Only when you have an operations manual for a
function you can run an ad for that function.
Choose a novice, a beginner, an apprentice!
Your organization chart flows down from your
strategic objective, which in turn flows down from
your primary (life) aim.
You think you need competent managers, with
degrees from management schools. You don't. In
fact, they will bone your existence.
You need a management system, that will become
your solution to the problems that beset you
because of the unpredictability of people.
A management system is one of the systems of your
business prototype, to produce a marketing result,
It's a marketing tool!
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An effective business prototype is a business that
finds and keeps customers - profitably - better than
any other.
Rule 1: the customer is not always right, but
whether he is or not, it is our job to make him feel
that way.
Rule 2: Everyone is expected to work forward being
the best he can possibly be at the task he's
accountable for.
Rule 3: Business is a place where everything we
know how to do is tested by what we don't know
how to do. The conflict creates meaning.
Do not look for employees, but for players in your
game. For people who want something more than
a job.
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The very best businesses represent to the founders
a game to be played, in which the rules symbolize
the idea you have for the world.
The degree to which people "do what you want" is
the degree to which they buy into your game. And
your idea.
The (business) game is a measure of you. How you
act in the game establishes how you will be
regarded by the other players (employees).
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Marketing System
Marketing answers the question: what must our
business be in the mind of our customer in order
for them to choose us over someone else?
Small business is far more fragile than a big
business. So if anything, you must take marketing
more seriously than a big business does.
Reality only exists in someone's perceptions,
attitudes, beliefs, conclusions - whatever position
of the mind - and nowhere else.
The famous dictum that says, "find a need and fill
it" is inaccurate. It should say "find a perceived
need and fill it.”
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You have to understand that your customer is far
less rational in his convictions and expectations
than you had ever imagined.
Most small business owners suffering as they do
from willful disinformation, simply decide without
any information at all.
Demographics defines know who your customer is.
Psychographics defines why (s)he buys.
Marketing is the key process of any business. It
starts with the promise you make and ends with
the delivery of that promise.
It's one hell of a lot less expensive to sell to
customers you've got than to the customer you
don't have yet.
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Your business should make a promise that your
customer wants to hear, and deliver on that
promise better than anyone else in the block.
The marketing system should be committed to
deliver the promise no competitor in your industry
would dare to make.
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Closing
The entrepreneurial myth, the e-myth, is that most
people who start small businesses are
entrepreneurs.
Unfortunately most small businesses fail. The
"dream" was never realized. And the reasons are
obvious. We bring our own chaos with us.
A small business is a place that is practical, not
idealistic. But a place where idealism must be
present for the practical to serve.
Meaning in a business is the product of caring, not
vice versa. What we care about, and for, we value.
The entrepreneurial path winds around corners
that amaze and shock you. It's anything but
certain, but that's why it is so exciting.
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Freedom is the capacity, to use Nietzsche's phrase,
'to become who we truly are’.
As entrepreneur you should always 'keep the
curtain up'. This is your comfort zone; the tight
little planet on which you have lived.
Be aware of your comfort zone because you know
how much you want to be comfortable. The
ultimate price you will pay is your life.
We can't change the world "out there". And
fortunately we don't have to. We begin much
closer to home. If fact we must begin "in here”.
The world is not the problem; you and I are. The
world is not in chaos; we are. It's a reflection of our
own inner turmoil.
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We want to fix the world so that we can remain the
same. And for an "out there" society, coming
"inside" is very hard.
Your small business can become a bridge between
you and the world. And it can draw them together
to make both more human.
When you hear something you will forget it. See
something and you will remember it. But until you
do something, will you understand it.
Your business is nothing more than a distinct
reflection of who you are.
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