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
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