Books I've read

The E-Myth Revisited by Michael E. Gerber

Date read: 2024-04-29. How strongly I recommend it: 10/10

Go to the Amazon page for details and reviews.

The book spoke directly to me! A must-read for any technician turns entrepreneur. Highly recommended for those who are tired of bootstrapping a business or have lost the initial joy and purpose that motivated them in the first place.

My Notes

#business #marketing #hiring

Chapter 1: The Entrepreneurial Myth

An Entrepreneurial Seizure: You're doing a technical works. But you were doing it for someone else. “What am I doing this for? Why am I working for this guy? Hell, I know as much about this business as he does.” Now it became obsessively irresistible. You had to start your own business.

The Fatal Assumption: “If you understand the technical work of a business, you understand a business that does that technical work.”

The business that was supposed to free him actually enslaves him. 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.

First, exhilaration; second, terror; third, exhaustion; and, finally, despair. A terrible sense of loss—not only the loss of what was closest to them, their special relationship with their work, but the loss of purpose, the loss of self.

Chapter 2: The Entrepreneur, The Manager, And The Technician

The Technician isn't the only problem. 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 our creative personality. He lives in the future. He's happiest when left free to construct images of ‘what-if’ and ‘if-when.’ The work of an Entrepreneur is to wonder.

The Managerial personality is pragmatic. Without The Manager there would be no planning, no, order, no predicability. He creates near, orderly rows of things, a system.

The Technician is the doer. He loves to tinker. He gets one thing done at a time.

Chapter 3: Infancy: The Technician's Phase

Three phases of a business's growth: Infancy, Adolescence, and Maturity.

In Infancy, YOU are the business. If you removed the owner from an Infancy business, there would be no business left. It would disappear!

In a business that depends on you. What your customers are buying is not your business's ability but your ability to give them what they want. 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!

Chapter 4: Adolescence: Getting Some Help

Adolescence begins at the point in the life of your business when you decide to get some help. Every business that lasts must grow into the Adolescent phase.

What kind of help do you go out to get? Someone who knows how to do the work that isn't getting done—usually the work you don't like to do. You says “I don't have to do that anymore!” You're free for a while and then the balls continue to fall. You begin to realize that no one cares about your business the way you do. So you run back into your business to do everything by your own. It's called Management by Abdication rather than by Delegation.

Chapter 5: Beyond The Comfort Zone

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.

One of the most consistent and predictable reactions is the decision to ‘get small’ again. Doing everything that needs to be done, all alone, but comfortable with the feeling of regained control. Then you come face to face with the unavoidable truth: You don't own a business—you own a job!

Businesses that ‘get small again’ die. They literally implode upon themselves. Getting small again is an inclination from natural growth.

True trust comes from knowing, not from blind faith. You need to define the relationship, the role, the rules of the game, the expected standard outcome, etc. You need to have ‘the system.’

The job of the owner is to prepare yourself and your business for growth. To educate yourself sufficiently so that, as your business grows, the business's foundation and structure can carry the additional weight.

Chapter 6: Maturity And The Entrepreneurial Perspective

A Mature business knows how it got to be where it is, and what it must do to get where it wants to go. Therefore, Maturity is not an inevitable result of the first two phases. They started out that way! The people who started them had a totally different perspective about what a business is and why it works.

How it looks when it was finally done, How it acts, How it does what it is intended to do. (See: The IBM's Success)

The Entrepreneur 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). The commodity isn't what's important—the way it's delivered is.

“How will my business look to the customer?”, “How will my business stand out from all the rest?” Without a clear picture of that customer, no business can succeed.

Chapter 7: The Turn-Key Revolution

The Business Format Franchise (See: Ray Kroc, McDonald) not only lends its name to the smaller enterprise but it also provides the franchisee with an entire system of doing business. It is built on the belief that 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.

Business-as-a-product: A systems-dependent business, not a people-dependent business.

Chapter 8: The Franchise Prototype

The Prototype acts as a buffer between hypothesis and action. Putting ideas to the test in the real world rather than the world of competing ideas. The only criterion of value becomes the answer to the question: “Does it work?”

The Turn-Key Operation: The franchisee is licensed the right to use the system, learns how to run it, and then “turn the key.” The business does the rest. And the franchisees love it! Because if the franchisor has designed the business well, every problem has been thought through. All that's left for the franchisees to do is learn how to manage the system.

The question is: How do you build yours? How do you create your Franchise Prototype? How do you build a business that works without you?

Chapter 9: Working On Your Business, Not In It

You business is something apart from you, rather than a part of you, with its own rules and its own purposes. An organism that will live or die according to how well it performs its sole function: to find and keep customers.

Pretend that the business you own is the prototype, or will be the prototype, for 5,000 more just like it. Rules to follow if you are to win:

  1. The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
  2. The model will be operated by people with the lowest possible level of skill: Systems-dependent rather than Expert-dependent.
  3. The model will stand out as a place of impeccable order.
  4. All work in the model will be documented in Operations Manuals. “This is how we do it here.”
  5. The model will provide a uniformly predictable service to the customer: The experience must be consistent and predictable.
  6. The model will utilize a uniform color, dress, and facilities code. Little things that are meaningless from a practical point of view but have great emotional meaning.

Great businesses are not built by extraordinary people but by ordinary people doing extraordinary things.

The typical owner of a small business prefers highly skilled people because he believes they make his job easier (Abdication > Delegation). The inevitable result is that the business grows to depend on the whims and moods of its people. In this kind of business “How do I motivate my people?” becomes the constant question. “How do I keep them in the mood.” It is literally impossible to produce a consistent result.

How must by business-as-a-product work in order for it to successfully attract not only customers but also employees who want to work there?

Chapter 10: The Business Development Process

Business Development Process:

  • Innovation - New ideas
  • Quantification - Measure everything
  • Orchestration - Make it a system

“Creativity thinks up new things, Innovation does new things.”

What is standing in the way of my customer getting what he wants from my business? Take the customer's point of view.

Without Quantification, how would you know whether the Innovation worked?

Orchestration is the elimination of discretion, or choice, at the operating level of your business. If everyone in your company is doing it by their own discretion, their own choice, rather than creating order, you're creating chaos. Build the system that always give customers what they want.

“Discretion is the enemy of order, standardization, and quality.” — Theodore Levitt.

Chapter 11: Your Business Development Program

Your Business Development Program is the step-by-step process through which you convert your existing business into a perfectly organized model for thousands more just like it.

The Program is composed of seven distinct steps:

  1. Your Primary Aim
  2. Your Strategic Objective
  3. Your Organizational Strategy
  4. Your Management Strategy
  5. Your People Strategy
  6. Your Marketing Strategy
  7. Your Systems Strategy

Chapter 12: 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?

What do I wish my life to look like? What do I wish my life to be on a day-to-day basis? How would I like people to think about me? How much money will I need to do the things I wish to do?

Chapter 13: 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 first standard is Money. Gross revenues. How big is your vision? How big will your company be when it's finally done?

The second standard, An Opportunity Worth Pursuing is a business that can fulfill the financial standards you've created for your Primary Aim: Does the business I have in mind alleviate a frustration experienced by a large enough group of consumers to make it worth my while?

An Opportunity Worth Pursuing fulfills two primary requirements: It tells you what you need to sell and to whom.

The commodity is the thing your customer actually walks out with in his hand. The product is what your customer feels as he walks out. What he feels about your business, not what he feels about the commodity. Example: “In the factory Revlon manufactures cosmetics, but in the store Revlon sells hope”, “Buy Chanel and this fantasy can be yours.”

The truth is, nobody's interested in the commodity. People buy feelings.

There is no specific number of standards in your Strategic Objective. Write down as many as you want.

Everything in business must be a reflection of Your Strategic Objective.

Chapter 14: Your Organizational Strategy

“All organizations are hierarchical. At each level people serve under those above them. An organization is therefore a structured institution. If it is not structured, it is a mob. Mobs do not get things done, they destroy things.” — Theodore Levitt.

Without an Organization Chart, everything hinges on luck and good feelings, on the personalities of the people and the goodwill they share. They are the recipe for chaos and disaster.

Tactical Work is the work all technicians do. Strategic Work is the work their managers do. If the business is going to thrive, you have to find other people to do the Tactical Work so as yo free you to do the Strategic Work.

Organizational Strategy:

  • Write an Organization Chart, derived from your Primary Aim and Strategic Objective.
  • As you goes on each position, you work as technician and manager at the same time, for example, work in Salesperson and on Salesperson as VP Marketing (by Implementing the Business Development Process).
  • Ask: “What would best serve our customer here? How could I most easily give the customer what he wants while also maximizing profits for the company? How could I give the person responsible for that work the best possible experience?”
  • As you do the Business Development Process, writes them down in the Operations Manual.
  • Once the Operations Manual is completed, you hire someone, a novice who eager to learn, to execute the Manual.
  • You moves up to the position of Manager and begins the process of Business Development all over again.

Work (Technician) and Do the Business Development (Manager), Iteratively build the System, Hire, and Free yourself by moving up the ladder.

The purpose of the system: To free you to do the things you want to do.

Chapter 15: Your Management Strategy

You don't need competent managers—people with finely honed “people skills.” What you need, instead, is a Management System.

Management System is a System designed into your Prototype to produce a marketing result: finds and keeps customers profitably—makes them feel what you aimed to make them to feel.

“You'd be amazed at how many people come up to me after staying here just to thank for how well they were treated. But it's not the big things they talk about; it's always the little things.” (See: The hotel example)

Chapter 16: Your People Strategy [*]

“I mean, it wasn't just that he took it seriously, it was a kind of seriousness he had. It was a though the hotel was more than just a hotel to him. It was like the hotel was an expression of who he was, a symbol of what he believed in. So if I hadn't taken the hotel seriously, it would have looked like I wasn't taking him seriously, as a man whose values I respected.”

“..., it's becoming clear to me why I have so much respect for this place. It's because I have so much respect for the Boss. To me, the place is him. If I didn't respect him, I don't think I would be as good at what I do here as I am.”

“The work we do is a reflection of who we are. If we're sloppy at it, it's because we're sloppy inside. If we're late at it, it's because we're late inside. If we're bored by it, it's because we're bored inside, with ourselves, not with the work. How we do our work becomes a mirror of how we are inside.”

“There is no such thing as undesirable work. There are only people who see certain kinds of work as undesirable. People like that don't bring life to the idea of the work they do; they bring death to it.”

“And the reason it's different here is because we give everyone who comes to work an opportunity to make a choice. Not after they've done the work, but before. And we do that by making sure they understand the idea behind the work they're being asked to do.”

The words will become hollow if the game is a contrived one. The game can't be created as a device to enroll your people. The game has to be real. You have to mean it. The game is a measure of you. How you act in the game establishes how you will be regarded by the other players.

Never create a game for your people you're unwilling to play yourself. They'll find you out and never let you forget it.

The medium of communication became as important as the idea it was designed to communicate. How are you going to communicate these ideas?

“My picture of the business also goes back to what my aunt taught me about caring. And so I can see my business as a school, a school about caring that teaches all the little things to my employees that my aunt tried so hard to teach me: What it means to pay attention.”

“What's wrong with hiring experienced managers? Everything's wrong with it! Because, if you don't know how to manage, how are you going to choose them, and how are you going to manage them (Delegation > Abdication)? You can't! Because they will manage by the standards they have been taught to manage by in someone else's business. Not by your standards.”

Chapter 17: Your Marketing Strategy

When it comes to marketing, what you want is unimportant. It's what your customer wants is probably significant.

What your customer wants is probably different that what he thinks he wants.

The Irrational Decision Maker: The decision was made unconsciously and instantaneously.

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.

The famous dictum that says, “Find a need and fill it,” is inaccurate. It should say, “Find a perceived need and fill it.”

The challenge of our (information) 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. What they want to hear?

Deliver the promise no one else in your industry dares to make.