The E-Myth Revisited - Deepstash
The E-Myth Revisited

Katherine L.'s Key Ideas from The E-Myth Revisited
by Michael E. Gerber

Ideas, facts & insights covering these topics:

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The Entrepreneurial Myth

The Entrepreneurial Myth

Fatal Assumption: If you understand the technical work of a business, then you understand a business that does technical work. This is simply NOT true.

A technician who tries to start a business will take the work he loves to do and turn it into a job.

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The Entrepreneur, The Manager, and The Technician

We are all three people at the same time:

  • The Entrepreneur is the visionary. The dreamer. The catalyst for change. To the Entrepreneur, most people are problems that get in the way of the dream.
  • The Manager is pragmatic. He plans, organizes, and compulsively clings to the status quo. It is the tension between the Entrepreneur’s vision and the Manager’s pragmatism that creates the synthesis from which all great works are born.
  • The Technician is the doer. He is happiest working in the current moment. He believes that thinking isn’t work; it gets in the way of work.

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Infancy: The Technician’s Phase

The owner and the business are one and the same thing. Without you, the business would not exist.

Infancy ends when the owner realizes that the business cannot continue to operate if you do it all yourself. At this point, you either close the doors or move on to adolescence.

Remember: The purpose of going into business is to get free of a job so you can create jobs for other people.

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Adolescence: Getting Some Help

Many small business owners get another technician to help.

But then they manage by abdication, rather than by delegation. The owner gets some of their time back as they give a new help more responsibility. But over time, the quality of the work begins to slip. Suddenly you realize that nobody really cares about your business the way that you do, or is willing to work as hard.

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Reaching The Boundary

Every adolescent business reaches a point where it pushes beyond its owner’s Comfort Zone – the boundary within which he feels secure in his ability to control his environment, and outside of which he begins to lose that control.

When this happens, many technician-turned-business-owners “get small” again. They get rid of what they could not control. They go back to infancy.

You eventually find that you don’t own a business – you own a job.

Other adolescent businesses will continue to grow faster and faster until they self-destruct from their own momentum.

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Building A Mature Company

You have to prepare yourself and your business for growth. To educate yourself sufficiently so that, as your business grows, the businesses foundation and structure can carry the additional weight.

The key is to plan, envision, and articulate what you see in the future both for yourself and for your employees. Because if you don’t articulate it – write it down clearly – you don’t own it.

A Mature company is different from an Adolescent company in that it starts differently. It is founded on a broader perspective of building something that works not because of you, but without you.

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Entrepreneurial Perspective

  • Entrepreneur asks “How must the business work?”
  • The entrepreneur sees the business as a system for producing outside results – for the customer – resulting in a profit.
  • He starts with a picture of a well-defined future, and then comes back to the present with the intention of changing it to match the vision.
  • He envisions the business in its entirety, from which is derived its parts.
  • The present-day world is modelled after his vision.

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The Entrepreneurial Model

Has less to do with what’s done in ta business and more to do with how it’s done. The commodity isn’t what’s important – the way it’s delivered is.

It understands that without a clear picture of that customer, no business can succeed.

The business is the product.

The customer is always an opportunity.

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The McD Revolution

  • McDonald’s calls itself the “most successful small business in the world” because that’s exactly what it is.
  • The Business Format Franchise proves the franchisee with an entire system of doing business.
  • The true product of a business is the business itself.
  • Ray Kroc, the founder of the fast-food chain, understood that at McDonald’s, the hamburger wasn’t the product. McDonald’s was.
  • You need a systems-dependent business, not a people-dependent business.

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The Franchise Prototype

The Franchise Prototype is the place where all assumptions are put to the test to see how well they work before becoming operational in the business.

It is the answer to the perpetual questions, “How do I give my customer what he wants while maintaining control of the business that’s giving it to him?”

A Business Format Franchise is a proprietary way of doing business that successfully and preferentially differentiates every extraordinary business from every one of its competitors. In this light, every great business in the world is a franchise.

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Working On Your Business, Not In It

Your business is not your life. They are separate things.

Pretend that the business you own – or want to own – is the prototype, or will be the prototype, for 5,000 more just like it. Perfect replicas.

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.

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Rules to Follow

  • Must provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
  • It will be operated by people with the lowest possible level of skill.
  • It will stand out as a place of impeccable order.
  • All work will be documented in Operations Manuals.
  • It will provide a uniformly predictable service to the customer.
  • It will utilize a uniform color, dress and facilities code.

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The Business Development Process

Building the prototype of your business is a continuous process:

  • Innovation
  • Quantification
  • Orchestration

The franchisor aims his innovative energies at the way in which his business does business.

The entire process by which the business does business is a marketing tool, a mechanism for finding and keeping customers.

The business is the product, and how the business interacts with the consumer is more important than what it sells.

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Innovation

Innovation continually poses the question: What is standing in the way of my customers getting what he wants from my business?

Innovation is the mechanism through which your business identifies itself in the mind of your customer and establishes its individuality.

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Orchestration

  • Orchestration is the elimination of discretion, or choice, at the operating level of your business.
  • Orchestration is the pursuit of producing a consistent, predictable result in the world of business.
  • If you haven’t orchestrated it, you don’t own it.
  • A franchise is simply your unique way of doing business. And unless your unique way of doing business can be replicated every single time, you don’t own it.

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Your Business Development Process

Your Business Development Program is the vehicle through which you can create your Franchise Prototype.

7 Step Process:

  • Primary Aim
  • Strategic Objective
  • Organizational Strategy
  • Management Strategy
  • People Strategy
  • Marketing Strategy
  • Systems Strategy

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Your Primary Aim

What would you like to be able to say about your life after it’s too late to do anything about it?

If you were to write a script for the tape to be played for the mourners at your funeral, how would you like it to read?

Create an intentional life.

As with Mature companies, I believe great people to be those who know how they got where they are, and what they need to do to get where they’re going.

Great people have a vision for their lives that they practise emulating each and every day.

They go to work on their lives, not just in their lives.

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Before Starting, Ask Yourself

  • What do I wish my life to look like?
  • How do I wish my life to be on a day-to-day basis?
  • What would I like to be able to say I truly know in my life, about my life?
  • How would I like to be with other people in my life – my family, my friends, my business associates, my customers, my employees, my community?
  • How would I like people to think about me?
  • What would I like to be doing two years from now? Ten years from now? Twenty years from now? When does my life come to a close?

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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.
  • Your business is a means rather than an end, a vehicle to enrich your life rather than one that drains the life you have.
  • When creating standards for your Strategic Objective always ask yourself: What will serve my Primary Aim?
  • The first standard of your Strategic Objective is money, the gross revenues. How big is your vision? How big will your business be when it’s finally done?

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Other Strategic Objectives

When is your Prototype going to be completed? In two years? Three? Ten?

Where are you going to be in business? Locally? Regionally? Nationally? Internationally?

How are you going to be in business? Retail? Wholesale? A combination of the two?

What standards are you going to insist upon regarding reporting, cleanliness, clothing, management, hiring, firing, and so forth?

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Your Organizational Strategy

  • You cannot organize a company around personalities. You must organize around accountabilities and responsibilities.
  • Start with the org chart.
  • Separate shareholders from employees. Remove yourself from the business.
  • Imagine all of the positions that your company will need when it’s complete. All of the accompanying responsibilities.
  • Then fill in each position with the employees that you have – even if that means you must take on more than one job title.

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Your Management Strategy

  • A Management System is designed into your Prototype to produce a marketing result.
  • You want it to be as automatic as possible.
  • It must be effective at finding and keeping customers.
  • An operations manual is a series of checklists.

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Your People Strategy

  • The work we do is a reflection of who we are.
  • There is no such thing as undesirable work. There are only some people who look upon their work as a punishment for who they are and where they stand in the world, rather than as an opportunity to see themselves as they really are.
  • Make sure people understand the idea behind the work that they’re being asked to do.
  • The customer is not always right, but it is our job to make them feel that way.
  • Everyone who works here is expected to work toward being the best she can possibly be at the tasks she’s accountable for.

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Rules of the Game

  • Never figure out what you want your people to do and then try to create a game out of it.
  • Never create a game for the people you’re unwilling to play yourself.
  • Make sure there are specific ways of winning the game without ending it.
  • Change the game from time-to-time – the tactics, not the strategy.
  • Never expect the game to be self-sustaining. People need to be reminded of it constantly.
  • The game has to make sense.
  • The game needs to be fun from time to time.
  • If you can’t think of a good game, steal one.

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The Hierarchy of Systems

  • How we do it here
  • How we recruit, hire and train people to do it here
  • How we manage it here
  • How we change it here

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Your Marketing Strategy

  • What your customer wants is all that matters. And what your customer wants is probably significantly different from what you think he wants.
  • Demographics and psychographics are the two essential pillars supporting a successful marketing program. If you know who your customer is – demographics – you can then determine why he buys – psychographics.
  • You must ask your customers about who they are. Send out surveys and questionnaires. Reward them for completion.
  • You must be sensitive to the science of marketing art. You have to be interested in it.

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Your Systems Strategy

  • You can build systems for hard systems, soft systems, and information systems.
  • Hard systems might be the colors, letterhead, and tools that everyone uses.
  • Soft systems include the way you do things and how you communicate.
  • Information systems are the data that is recorded, organized, and used for decision making.

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IDEAS CURATED BY

katherine_gll

A good night sleep and a helathy morning routine is what I work on constantly.

CURATOR'S NOTE

Entrepreneurship: the mature kind.

Curious about different takes? Check out our The E-Myth Revisited Summary book page to explore multiple unique summaries written by Deepstash users.

Katherine L.'s ideas are part of this journey:

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