The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It

by Michael E. Gerber

The greatest businesspeople I’ve met are determined to get it right no matter what the cost. And by getting it right, I’m not just talking about the business. I mean that there is something uplifting, some vision, some higher end in sight that “getting it right” would serve. An ethical certainty, a moral principle, a universal truth.

“To live through an impossible situation, you don’t need the reflexes of a Grand Prix driver, the muscles of a Hercules, the mind of an Einstein. You simply need to know what to do.”

That Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work.

The Entrepreneur is our creative personality—always at its best dealing with the unknown, prodding the future, creating probabilities out of possibilities, engineering chaos into harmony.

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!

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

“Simply put, your job is to prepare yourself and your business for growth.

A Mature company is founded on a broader perspective, an entrepreneurial perspective, a more intelligent point of view. About building a business that works not because of you but without you.

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.

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.

What you do in your model is not nearly as important as doing what you do the same way, each and every time.

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

Orchestration is the elimination of discretion, or choice, at the operating level of your business.

The chief characteristic of the volitional act is the existence of a purpose to be achieved; the clear vision of an aim. Robert Assagioli The Act of Will

What do I value most? What kind of life do I want? What do I want my life to look like, to feel like? Who do I wish to be? Your Primary Aim is the answer to all these questions.

All you need to do is begin living your life as if it were important. All you need to do is take your life seriously. To create it intentionally. To actively make your life into the life you wish it to be. Simple? Yes. Easy? No. But absolutely essential if your business is to have any meaning beyond work.

With no clear picture of how you wish your life to be, how on earth can you begin to live it? How would you know what first step to take? How would you measure your progress? How would you know where you were? How would you know how far you had gone? How would you know how much farther you had yet to go? Without your Primary Aim, you wouldn’t. Indeed, you couldn’t. It would be virtually impossible.

Great people have a vision of their lives that they practice emulating each and every day. They go to work on their lives, not just in their lives.

So before you start your business, or before you return to it tomorrow, ask yourself the following questions: • 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 my life comes to a close? • What specifically would I like to learn during my life—spiritually, physically, financially, technically, intellectually? About relationships? • How much money will I need to do the things I wish to do? By when will I need it? These are just a few of the questions you might ask yourself in the creation of your Primary Aim.

‘Your arrows do not carry,’ observed the Master, ‘because they do not reach far enough spiritually.’ Eugen Herrigel Zen and the Art of Archery

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.

How much money do I need to live the way I wish? Not in income but in assets. In other words, how much money do you need in order to be independent of work, to be free?

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 of your business.

Standards Three Through? There is no specific number of standards in your Strategic Objective. There are only specific questions that need to be answered. • 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, training, and so forth?

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 Management for Business Growth

Most companies organize around personalities rather than around functions. That is, around people rather than accountabilities or responsibilities. The result is almost always chaos.

Position Contract (as we call it at E-Myth Worldwide) is a summary of the results to be achieved by each position in the company, the work the occupant of that position is accountable for, a list of standards by which the results are to be evaluated, and a line for the signature of the person who agrees to fulfill those accountabilities.

As Murray goes to work in the position of Salesperson as a Salesperson, he also goes to work on the position of Salesperson by implementing the Business Development Process of Innovation, Quantification, and Orchestration.

Each of them asks, “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? And at the same time, how could I give the person responsible for that work the best possible experience?”

Before long, the Sales Operations Manual contains the exact scripts for handling incoming calls, outgoing calls, meeting the customer at the door. The exact responses to customer inquiries, complaints, concerns. The system by which an order is entered, returns are transacted, new product requests are acted upon, inventory is secured. Only when the Sales Operations Manual is complete does Murray run an ad for a salesperson. But not for someone with sales experience.

And when he finds the right person, Murray hires him, hands him the Sales Operations Manual, has him memorize the words in it, dress to code, learn the systems, and finally, go to work. Using the Sales System, Murray innovated, quantified, and orchestrated.

At that moment, at that exact instant, Murray moves up to the position of Sales Manager and begins the process of Business Development all over again.

That your Organization Chart flows down from your Strategic Objective, which in turn flows down from your Primary Aim.

The System is the Solution. AT&T

“He said, ‘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. The most menial work can be a piece of art when done by an artist. So the job here is not outside of ourselves, but inside of ourselves. How we do our work becomes a mirror of how we are inside.’”

“In the process, the work you do becomes you. And you become the force that breathes life into the idea behind the work. “You become the creator of the impact on the world of the work you do. “There is no such thing as undesirable work,” he continued. “There are only people who see certain kinds of work as undesirable. People who use every excuse in the world to justify why they have to do work they hate to do. 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.

“And the reason it’s different here is because we give everyone who comes to work at the hotel 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. “I guess that’s what excited me most about taking this job,” said the Manager. “It’s the very first place I’ve ever gone to work where there was an idea behind the work that was more important than the work itself. “The idea the Boss expressed to me was broken down into three parts: “The first says that the customer is not always right, but whether he is or not, it is our job to make him feel that way. “The second says that everyone who works here is expected to work toward being the best he can possibly be at the tasks he’s accountable for. When he can’t do that, he should act like he is until he gets around to it. And if he’s unwilling to act like it, he should leave. “The third says that the business is a place where everything we know how to do is tested by what we don’t know how to do, and that the conflict between the two is what creates growth, what creates meaning. “The idea the Boss has about the business comes down to one essential notion. That a business is like a martial arts practice hall, a dojo, a place you go to practice being the best you can be. But the true combat in a dojo is not between one person and another as most people believe it to be. The true combat in a martial arts practice h...

It starts with your Primary Aim and your Strategic Objective, and continues through your Organizational Strategy (your Organization Chart and the Position Contracts for all of the positions in it) and the Operations Manuals that define the work your people do.

1. Never figure out what you want your people to do and then try to create a game out of it. If it’s to be seen as serious, the game has to come first; what your people do, second. 2. Never create a game for your people you’re unwilling to play yourself. They’ll find you out and never let you forget it. 3. Make sure there are specific ways of winning the game without ending it. The game can never end because the end will take the life right out of your business. But unless there are victories in the process, your people will grow weary. Hence, the value of victories now and then. They keep people in the game and make the game appealing, even when it’s not. 4. Change the game from time to time—the tactics, not the strategy. The strategy is its ethic, the moral underpinning of your game’s logic. This must remain sacrosanct, for it is the foundation of you and your people’s commitment to each other. But change is necessary. For any game can become ordinary, no matter how exhilarating it may be at the beginning.

Never expect the game to be self-sustaining. People need to be reminded of it constantly. At least once a week, create a special meeting about the game. At least once a day, make some kind of issue about an exception to the way the game has been played—and make certain that everyone knows about it. Remember, in and of itself the game doesn’t exist. It is alive to the degree that people make it so. But people have the unerring ability to forget everything they start and to be distracted by trivia. Most great games are lost that way. To make certain yours isn’t, don’t expect your people to be something they’re not. Remind them, time after time, of the game they’re playing with you. You can’t remind them too often. 6. The game has to make sense. An illogical game will abort before it ever gets going. The best games are built on universally verifiable truths. Everyone should be able to see them if they’re to be sufficiently attractive. A game with muddy beginnings will get you nowhere. Know the ground you stand on and then assemble your armament. Sooner or later you’ll need it. For a game that isn’t tested isn’t a game at all. But remember, you can have the best reasons in the world for your game and still end up with a loser if the logic is not supported by a strong emotional commitment. All the logic does is give your people the rational armament to support their emotional commitment. If their commitment wanes, it means that they—and most likely, you—have forgotten the logic...

The Boss communicated his idea through documented systems and through his warm, moving, and positive manner.

1. A scripted presentation communicating the Boss’s idea in a group meeting to all of the applicants at the same time. This presentation described not only the idea but also the business’s history and experience in successfully implementing that idea, and the attributes required of the successful candidate for the position in question. 2. Meeting with each applicant individually to discuss his reactions to and feelings about the idea, as well as his background and experience. At this meeting, each applicant was also asked why he felt he was superbly appropriate for the role the position was to play in implementing the Boss’s idea. 3. Notification of the successful candidate by telephone. Again, a scripted presentation. 4. Notification of the unsuccessful applicants, thanking each for his interest. A standard letter, signed by the interviewer. 5. First day of training to include the following activities for both the Boss and the new employee: • Reviewing the Boss’s idea • Summarizing the system through which the entire business brings the idea to reality • Taking the new employee on a tour of the facilities, highlighting people at work and systems at work to demonstrate the interdependence of the systems on people and the people on systems • Answering clearly and fully all the employee’s questions • Issuing the employee his uniform and his Operations Manual • Reviewing the Operations Manual, including the Strategic Objective, the Organizational Strategy, and the Position Co...

What we have here is a failure to communicate. Anonymous

Your Marketing Strategy starts, ends, lives, and dies with your customer. So in the development of your Marketing Strategy, it is absolutely imperative that you forget about your dreams, forget about your visions, forget about your interests, forget about what you want—forget about everything but your customer!

So when your customer says, “I want to think about it,” don’t you believe him. He’s not going to think about it. He doesn’t know how. He’s already done all the “thinking” he’s going to do—he either wants it or not. What your customer is really saying is one of two things: he is either emotionally incapable of saying no for fear of how you might react if he told you the truth, or you haven’t provided him with the “food” his Unconscious Mind craves. Either way, little or no thought enters into the transaction. Despite what we would like to believe, the decision was made unconsciously and instantaneously.

The purpose of an Appointment Presentation is one thing and one thing only: to make an appointment.

Freedom does not come automatically; it is achieved. And it is not gained in a single bound; it must be achieved each day. Rollo May Man’s Search for Himself