Michael E. Gerber
The E-Myth and American Small Business
It is a belief that says small businesses in the United States simply do not work; the people who own them do.
And what makes people work is an idea worth working for, along with a clear understanding of what needs to be done.
A few pages into the book and I can already feel this book is for me. I can relate to each and every single sentence marked on its pages. My biggest realization? I am not an entrepreneur. I am self-employed. Let’s keep reading…
The fatal assumption is : if you understand the technical work of a business, you understand the business that does the technical work.
The real tragedy is that when the technician falls prey to the Fatal Assumption, the business that was supposed to free him from the limitations of working for somebody else actually enslaves him. Suddenly the job he knew how to do so well becomes one job he knows how to do plus a dozen others he doesn’t know how to do at all. Because although the Entrepreneurial seizure started the business, it’s the technician who goes to work. And suddenly, an entrepreneurial dream turns into a technician’s nightmare.
The technician suffering from an Entrepreneurial Seizure takes the work he loves to do and turns it into a job.
The Entrepreneur, The Manager, and The Technician
The problem is that everybody who goes into business is actually three people in one, the entrepreneur, the manager, and the technician. And the problem is compounded by the fact that while each of these personalities wants to be the boss, none of them wants to have a boss. So they start a business together in order to get rid of the boss, and the conflict begins.
The entrepreneurial personality turns the most trivial condition into an exceptional opportunity. The entrepreneur is the missionary in us. The dreamer, the energy behind every human activity.
To the entrepreneur, most people are problems they get in the way of the dream.
The managerial personality is pragmatic. Without the manager, there will be no planning, no order, no predictability.
If the entrepreneur lives in the future, the manager lives in the past. Where the entrepreneur craves control, the manager craves order. Where the entrepreneur thrives and change, the manager compulsively clings to the status quote. Where the entrepreneur invariably sees the opportunity in events, the manager invariably sees the problems, the manager build a house, and then he lives in it forever. The Entrepreneur builds a house and the instant it’s done, begins planning the next one. The manager creates neat, orderly roles of things. The entrepreneur creates the things the manager puts in rows. The manager is the one who runs after the entrepreneur to clean up the mess. Without entrepreneur, there will be no mess to clean up. Without the manager, that could be no business no society. Without entrepreneur, there will be no innovation. It is the tension between the entrepreneurs visions and a manager’s pragmatism that creates a synthesis from which all grade works are born.
The technician is the doer.
The fact of the matter is that we all have an entrepreneur, manager, and technician inside us. And if they were equally balance, would be describing an incredibly competent individual. The entrepreneur will be free to force ahead into new areas of interest; the manager will be solidifying the base of operation; and the technician will be doing the technical work.
Infancy: the technician’s phase
It is easy to spot a business in infancy – the owner in the business are one and the same thing. If you remove the owner from an infancy business, there will be no business left.
It’s even named after you – “Joe’s Place” “Tommy’s Joint” , “Mary’s Fine foods” – so the customer won’t forget you’re the boss
The quote right above this one made me laugh out loud. My business name is KCL real estate team; K for Katherine, C for Cabrera and Christopher, and L for Lopez. It is funny to think that my business name had to have mine and my brother’s initials. It’s been one year and my business is it still in infancy.
In a flash, you realize that your business has become the ball you thought you left behind. There’s no getting rid of the boss!
If you want to work in a business, get a job in somebody else’s business! But Don don’t go to work in your own.
If your business depends on you, you don’t own a business – you have a job and it’s the worst job in the world because you’re working for a lunatic!
Adolescence: getting some help
Our adolescence begins at the point in the life of your business when you decide to get some help.
Here, Gerber, introduces the concept of Management by abdication , rather than delegation.
In the adolescent phase of our business, we are all too excited about hiring someone to help. We think that our business will become much more productive just if we didn’t have to do everything ourselves. It is a time of happiness, relief, and optimism. At first, things look great. Eventually, you find yourself doing your job and the job of the person that you hired.
And you can’t blame the person that you’re hired or the customer that complained, you cannot even blame yourself because in this phase, you just don’t know any better.
You got to learn to take out the personality of the entrepreneur and the manager, not just a technician.
And just about everybody tries to find someone to do the books! Because if there’s anything most small business owners hate to do - and therefore ignore - it’s the books.
So you run back into your business to become the master juggler again. Is the same old story. Walk into any adolescent business anywhere in the world, and you will find the owner of the business doing it, doing it, doing it, busy, busy, busy – doing everything that has to get done in his business – despite the fact that he now has people who are supposed to be doing it for him. People he’s paying to do it!
Beyond the comfort zone
As a business grows, it invariably exceeds its owner’s ability to control it – to touch, feel, and see the word that needs to be done, and to inspect his progress personally as every technician needs to do. Out of desperation, he does what he knows how to do rather than what he doesn’t, thereby abdicating his role as a manager and passing his accountability down to someone else, a “Harry”.
But Harry has needs of his own. Harry is also a technician. He is more direction than the technician can give him. He needs to know what he’s doing what he’s doing. He needs to know the result he’s accountable for and the standards against which his work is being evaluated. He also needs to know Where the business is going, and where his accountability fit into its overall strategies.
And as the business grows beyond the owners comfort zone – as the tail spin accelerates – they’re only three courses of action to be taken, only three ways of Business concern. He can return to infancy. He can go for broke. Or he can hang on for dear life.
INFANCY
Going back to when things “were easier” and fully under the Technician’s control…
Little do we know that this reinforces the idea of owning a job , not a business.
GOING FOR BROKE
Rather than getting small, the Technician attempts to grow faster and faster until it self destructs its own momentum.
ADOLESCENT SURVIVAL
In this stage, the business keeps going but at a high cost, and that is the Sacrifice of the technician.
Maturity and the entrepreneurial perspective
Maturity, the third phase of a company, growth growth, is exemplified by the best businesses in the world. Business is such as McDonald’s, Federal Express, and Disney. A mature Business knows how he got to be where it is, and what must do to get where he wants to go. Therefore maturity is not an inevitable result of the first two phases. It is not the end product of a serial process, beginning with infancy and moving through adolescence.
The person who launches his business is a mature company was also go through infancy and adolescence. He simply goes through them in an entirely different way. It’s his perspective that makes the difference. His entrepreneurial perspective.
THE ENTREPRENEURIAL MODEL
The Entrepreneurial Model looks at a business as if it were a product, sitting on a shelf and competing for the customer’s attention against a whole shelf of competing products (or businesses). Said another 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.
The Turn-Key Revolution: A New View of Business
Ray Kroc started the Franchise Phenomenon with what is known today as the most successful small business in the world : McDonald’s.
Most business founders believe that the success of a business resides in the success of the product that it sell. To the trade name franchisor, the value of the franchise lies in the value of the brand name that it is licensing: Cadillac, Mercedes, Coca-Cola.
The true product of a business is the business itself.
Forced to crate a business that worked in order to sell it, he also created a business that would work once it was sold, no matter who bought it. Armed with that realization, he set about the task of creating a foolproof, predictable business. A systems-dependent business, not a people-dependent business. A business that could work without him. Unlike most small business owners before him-and since- Ray Kroc went to work on his business, not in it.
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.
The Franchise Prototype
In the Franchise prototype, the system becomes the solution… The system integrates all the elements required to make a business work. It transforms a business into a machine, or more accurately, because it is so alive, into an organism, driven by the integrity of its parts, all working concert toward a realized objective. And with its prototype as its progenitor, it works like nothing else before it.
Ray Kroc was determined that the customer would not equate inexpensive with inattentive or cheap.
And just as it was then, it is now. Once the franchisee learns the system, he is given the key to his own business. Thus, the name: Turn-Key Operation. The franchisee is licensed the right to use the system, learns how to run it, and then “turns the key.” The business does the rest.
To the Entreprenueur, the Franchise Prototype is the medium through which his vision takes form in the real world. To the Manager, the Franchies Prototype provides the order, the predictability, the system so important to his life. To the Technician, the Prototype is a place in which he is free to do the things he loves to do - technical work.
BUSINESS FORMAT FRANCHISE: A proprietary way of doing business that successfully and preferentially differentiates every extraordinary business from every one of its competitors.
Working On Your Business, Not in It
