Tag Archives: business
The E-Myth Revisited by Michael E. Gerber – Here are my Six Lessons and Takeaways
What is the E-Myth? It is the myth that if you are good at doing “something,” you can turn that “something” into a profitable business. But, being good at that something is.not.enough.
All such “going-for-broke” companies were started with an Entrepreneurial Seizure by a Technician who focused on the wrong end of the business, the commodity the business made, rather than the business itself.
I am good at __________. I think I will start a business doing __________. It would make a good business. WRONG: Being good at __________ does not mean that it will make a good business. Being good at business makes a good business — being good at business systems; business operations.
(By recognizing that it is not the commodity that demands Innovation but the process by which it is sold, the franchisor aims his innovative energies at the way in which his business does business).
At the February First Friday Book Synopsis, I presented my synopsis of the modern business classic, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber — first edition published in 1988. Yes, it was published a full decade before we began our First Friday Book Synopsis in Dallas. It is a book I should have read long, long ago!
Read carefully the paragraphs at the top of this post to understand what the E-Myth is.
In the book, Mr. Gerber describes Sarah, and her sort-of-wonderful wonderful pie shop, All About Pies. Oh, she makes great pies. Delicious pies. But she knows nothing about running a business. And therein lies her problem.
After reading the book, it was easy to see why this has sold, and sold, and sold, for decades. It is immensely practical and practicable, honest about the struggles, and gives the reader actual steps to follow. It is indeed a good and useful book.
With all of my synopses, I ask What is the point?. Here it is for this book: That “skill” you have, that you think would make a great business, probably won’t. A great business makes a great business.
And I ask Why is this book worth our time? Here are my three reason for this book:
#1 – This book reminds us that we need a plan to succeed; a workable, replicable plan. A plan with systems to follow.
#2 – This book provides a do this, and then do that, plan for building a successful business.
#3 – This book is also a call to a deeper place; a partial guidebook to discover your primary aim – YOUR primary aim. It hearkens back to the deeper issues of life.
My synopsis handouts always include 75-100 Quotes and Excerpts from the book – the “best of” Randy’s highlighted Passages. Here are a few of the ones I included in my synopsis handout:
• If your thinking is sloppy, your business will be sloppy. If you are disorganized, your business will be disorganized.
• It’s up to you to dictate your business’s rate of growth as best you can by understanding the key processes that need to be performed, the key objectives that need to be achieved, the key position you are aiming your business to hold in the marketplace.
• And to me, that’s what integrity is all about. It’s about doing what you say you will do, and, if you can’t, learning how.
• It’s been said, and I believe it to be true, that great businesses are not built by extraordinary people but by ordinary people doing extraordinary things. But for ordinary people to do extraordinary things, a system—“a way of doing things”—is absolutely essential in order to compensate for the disparity between the skills your people have and the skills your business needs if it is to produce consistent results. …and to recommend improvements based on their experience with them. pg. 101
• It is literally impossible to produce a consistent result in a business that depends on extraordinary people.
• It should make things easier for you and your people in the operation of your business; otherwise it’s not Innovation but complication.
• Because unless your customer gets everything he wants every single time, he’ll go someplace else to get it!
• Orchestration is as simple as doing what you do, saying what you say, looking like you look—being how and who you are—for as long as it works. And when it doesn’t work any longer, change it!
The challenge of our age is to learn our customer’s language. And then to speak that language clearly and well so that your voice can be heard above the din. Because if your customer doesn’t hear you, he’ll pass you by.
• I think we need a shock, a self-administered shock, so jolting, so outrageous, so unsympathetic to our little wants, that we’ll either be blown off the planet we’ve each shaped for ourselves—our personal little spaces—when we least expect it, or we will burn to a crisp right there on the spot…
Here are some of the key points and lessons I got from reading this book. (Note: I list a few more than usual in these posts):
- The problem: New businesses are started by people doing “technical work.”
- That Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work. And the reason it’s fatal is that it just isn’t true.
- The technical work of a business and a business that does that technical work are two totally different things! But the technician who starts a business fails to see this.
- The four ideas:
- IDEA #1 There is a myth in this country—I call it the E-Myth—which says that small businesses are started by entrepreneurs risking capital to make a profit. — The real reasons people start businesses have little to do with entrepreneurship.
- IDEA #2 There’s a revolution going on today in American small business. I call it the Turn-Key Revolution.
- IDEA #3 At the heart of the Turn-Key Revolution is a dynamic process we at E-Myth Worldwide call the Business Development Process. …When a small business ignores this process—as most unfortunately do—it commits itself to Management by Luck, stagnation, and, ultimately, failure.
- IDEA #4 The Business Development Process can be systematically applied by any small business owner in a step-by-step method that incorporates the lessons of the Turn-Key Revolution into the operation of that business.
- The three “jobs” – The Entrepreneur, the Manager, the Technician
- The problem is that everybody who goes into business is actually three-people-in-one: The Entrepreneur, The Manager, and The Technician.
- The Entrepreneur is the innovator, the grand strategist, the creator of new methods for penetrating or creating new markets, the world-bending giant—like Sears Roebuck, Henry Ford, Tom Watson of IBM, and Ray Kroc of McDonald’s. …The Entrepreneur is our creative personality…
- Without The Manager there would be no planning, no order, no predictability.
- The Technician is the doer.
- The brilliance of the Franchise Turn-Key Operation
- (even if you ever have only one location)
- Hamburgers were produced in a way he’d never seen before—quickly, efficiently, inexpensively, and identically.
- At Ray Kroc’s McDonald’s, every possible detail of the business system was first tested in the Prototype, and then controlled to a degree never before possible in a people-intensive business.
- some of the “rules: – 2. The model will be operated by people with the lowest possible level of skill. 4. All work in the model will be documented in Operations Manuals. 6. The model will utilize a uniform color, dress, and facilities code.
- Documentation says, “This is how we do it here.”
- The Entrepreneurial Model
- What exactly is the Entrepreneurial Model? It’s a model of a business that fulfills the perceived needs of a specific segment of customers in an innovative way. — The Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done. The commodity isn’t what’s important—the way it’s delivered is.
- To The Entrepreneur, the business is the product. To The Technician, the product is what he delivers to the customer.
- Start with the customer
- Thus, the Entrepreneurial Model does not start with a picture of the business to be created but of the customer for whom the business is to be created. It understands that without a clear picture of that customer, no business can succeed.
- “System” matters more than “extraordinary people” — It is literally impossible to produce a consistent result in a business that depends on extraordinary people. You will be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over again.
- Some misc., but important lessons
- colors matter; attire matters; cleanliness matters; looking like you know what you are doing matters; EVERYTHING MATTERS!
- for men, (and women) – wear blue, not brown; with black shoes. Have a splash of red. Neat and clean, always!
- The three activities:
- Innovation – always innovating – more on the process/system than on the product — I think of Innovation as the “Best Way” skill.
- Quantification – measure everything; know what works, and what does not work– You can’t ask too many questions about the numbers.
- Orchestration – operations; systems – everything always the same; predictable; because you know it works! — Orchestration Once you innovate a process and quantify its impact on your business, once you find something that works better than what preceded it, once you discover how to increase the “yeses” from your customers, your employees, your suppliers, and your lenders—at that point, it’s time to orchestrate the whole thing.
- Your Business Development Program — thinking through/working through the process:
- Your Primary Aim – the key word is “YOUR” (not your business; YOU)
- Your Strategic Objective — Your Strategic Objective is a very clear statement of what your business has to ultimately do for you to achieve your Primary Aim; the vision of the finished product that is and will be your business.
- Your Organizational Strategy – you need an Organizational Chart – (who does what; who is responsible for what) and a Position Contract for each person!
- Your Management Strategy — What Is a Management System? It is a System designed into your Prototype to produce a marketing result. – Utilize an Oerations manual; checklists (and, visual depictions)
- Your People Strategy – Really Communicate; get buy-in to your “game”
- Your Marketing Strategy — Your Marketing Strategy starts, ends, lives, and dies with your customer.
- Your Systems Strategy – Note: scripting; for all interactions… (May I help you vs. Have you been here before?)
I think you can see from these points that there is a lot to think about, and act upon, in this book.
And, as I do with all of my synopsis, I shared my lessons and takeaways. Here are my six for this book:
#1 – Vocabulary matters. Word choice matters. This book uses terrific, understandable, words.
#2 – Your “great idea,” your “great skill,” will not make a great business. Being good and attentive at great business practices makes a great business.
#3 – Work as though you are in your “dojo” – a place to learn; a place to develop; a place to compete (against yourself); a place to get better. – (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 in a martial arts practice hall is between the people within ourselves).
#4 – Do the actual work of building a business. (For example: Create, understand, and follow an Organization Chart).
#5 – Everything matters. Pay attention to… everything.
#6 – Create, and follow, systems that work every.single.time.
Though the book sounds like it is intended for new businesses, or small businesses, I can assure you that the lessons are applicable in any size business.
This is a book with ideas worth implementing!
I have presented synopses of quite a few books that deal with “do this, then do that” approaches to business: Traction; Measure What Matters; among others. This is a good onel
My synopsis will be available for purchase soon on this site. Each synopsis comes with the audio recording of my presentation, along with my comprehensive, multi-page synopsis handouts. Click here for our newest additions.
Another Mr Gone!
Cheryl offers: Have you heard the news that Mr. Goodwrench, the hunky guy in blue, but never dirty overalls who supposedly could fix anything on a GM car is retiring? He’s not that old either since he started his career in 1974. However, if he was about 30 when he started that would make him 66, so maybe it’s about time he got a rest. It seems GM has opted for a more gender neutral brand strategy by using the term “Certified” in front of their 4 major brands: Chevy, Buick, GMC and Cadillac. I think this is a pretty smart marketing move on their part. With women making the decisions on over 65% of the major household expenditures, it would seem that appealing to their wants and needs through language is a good idea. And let’s face it; most of the times I’ve taken my car to a dealership, the result certainly fell into the category of major household expense. Somehow being “certified” sounds more professional, implies more training, deeper expertise, and possibly there’s even a test at the end to ensure some level of proficiency. In the book, Women Want More by Michael J. Silverstein and Kate Sayre, the authors clearly define areas where women’s wants and needs are not being met. I’m celebrating this change not only because GM might be making moves to meet some of those needs, but also because one more male brand association has been traded for a more inclusive gender neutral term. And that’s important for another reason. In today’s world, many of the men working do not look like Mr. Goodwrench. They are Latino, Asian, African American, on and on. This is not just a good move; it’s a great move towards inclusiveness that more accurately reflects our world. Thanks GM!
Work versus Personal Life: It’s Really Just One Life
Cheryl offers: I was reading an article on the front page of the Dallas Morning News today from an author named Christine Wicker inquiring about the seemingly large number of women walking away from marriage these days. This author is seeking answers to what she says seems to be quite a large trend, although one that has been going on for awhile. For quite some time now, women over 50 initiate more divorces than men. Many believe it is based on the fact that women are working now and are so independent that they are rethinking marriage. And with more women than men working in the workplace these days, maybe there’s some truth to it. Frankly I wonder if it’s about trust. Haven’t we all become a bit more suspicious over the past decade? From 9/11, the fall of companies like Enron, to the recent oil spill in the Gulf, then top level executives from IBM and HP betraying trust, there are almost too many examples to count. In their book, Trust and Betrayal in the Workplace by Dennis and Michelle Reina, they state “Words help articulate our expectations, but actions demonstrate our trustworth-iness.” We take those wedding vows and then our actions tell our friends and families what’s really on our minds and in our hearts. I don’t believe you can separate work from our personal life; it’s one life we have and it’s integrated no matter how hard we try to keep them separate. What’s behind this trend? I have no idea but what I do believe I know is this; don’t look at the words from these women, find out what‘s in their hearts. Where the heart goes, the body soon follows.
Investing in Women: State Farm Insurance
Cheryl offers: I met a truly interesting man today at First Friday Book Synopsis; his name is Dean Rubsamen. He works for my insurance company, State Farm. Though he’s not my agent, in a manner of speaking, he is. What I learned was my insurance company is changing their ways in order to give women what we want. If you’ve read either the HBR article “The Female Economy” or the book Women Want More both written by Michael J. Silverstein and Kate Sayre, you’d know there’s a huge emerging opportunity for many businesses to capture the multi-trillion dollar sized female market. Yes, that “t” is correct; it’s not an “m” or a “b”. In the book, the research is clear about what women want and what is missing from today’s offerings in several key areas: food, fitness, beauty, apparel and financial services. We want convenience that saves us time, products that fit our needs, to be treated as intelligent consumers, and we are willing to trade up to get it. State Farm recognizes this opportunity and is doing something about. In the words of Melanne Vermeer, cofounder and chair of Vital Voices Global Partnership, “Without women’s full participation, no country can prosper, but in order to tap their potential, women need the tools for effective leadership. There is no better investment for our world.” I’ve been with State Farm for years based on their service; now I’m with them because they are innovative.
Teenage Bullies Aren’t New or Good News
Cheryl offers: Whether you read about a teenager who has committed suicide in the local paper or in a magazine, see the efforts of state legislatures as they move to put new laws in place, or listen to a friend tell you about a child they know who has experienced the effects of bullying, the topic seems to be everywhere today. I can tell you from personal experience, this isn’t a new phenomena; especially among teenagers because I was a victim of it myself many years ago. It can start over the most trivial topic, like who a student votes for in a class election. That’s how mine started. It took one person’s whisper to another to set off a chain of events that made my senior year in high school a living hell. Here’s the advice I would offer anyone considering addressing this social crime. The persons involved in my situation escalated their violent behaviors to the point of being abusive spouses many years later. Left untreated, teenagers who participate in this hurtful behavior may, and likely will, resort to more violence. It’s not just a matter of punishing someone; both the offended and the offenders need emotional support and therapy. While there is no objective measure of kindness or cruelty, the results of their impact are measurable. This brings me to my favorite topic: leadership. In my case, one of the teenagers who helped escalate and ensure the ongoing bullying was considered a leader. As Daniel Goleman, Richard Boyatzis, and Annie McKee point out in Primal Leadership, “Leaders who spread bad moods are simply bad for business – and those who pass along good moods help drive a business’s success.” Bottom line: Bullies are bad for society and business. We need to address them at all ages.