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

by Michael E. Gerber

“The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary man takes everything either as a blessing or a curse,”

The greatest businesspeople I’ve met are determined to get it right no matter what the cost.

“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.”

This book is about such an idea—an idea that says your business is nothing more than a distinct reflection of who you are.

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

To The Entrepreneur, most people are problems that get in the way of the dream.

The Manager creates neat, orderly rows 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 The Entrepreneur there would be no mess to clean up. Without The Manager, there could be no business, no society. Without The Entrepreneur, there would be no innovation. 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.

It is self-evident that business, like people, are supposed to grow; and with growth, comes change. Unfortunately, most businesses are not run according to this principle. Instead most businesses are operated according to what the owner wants as opposed to what the business needs.

All of a sudden, you find yourself at the end of an unbelievably hectic week, late on a Saturday night, poring over the books, trying to make some sense out of the mess, thinking about all of the work you didn’t get done this week, and all of the work waiting for you next week. And you suddenly realize it simply isn’t going to get done. There’s simply no way in the world you can do all that work yourself!

You have a tactical view rather than a strategic view. You see the work that has to get done, and because of the way you’re built, you immediately jump in to do it! You believe that a business is nothing more than an aggregate of the various types of work done in it, when in fact it is much more than that.

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.

“So, in this context, a business that ‘gets small again’ is a business reduced to the level of its owner’s personal resistance to change, to its owner’s Comfort Zone, in which the owner waits and works, works and waits, hoping for something positive to happen.

“You could have anticipated that people would love your pies and that the business would therefore have to grow. “You could have anticipated that growth would bring additional responsibilities, additional skills required, additional capital needed to respond to the added demand that growth always places on a business and on people. “In short, while you couldn’t have known everything, you could certainly have known more than you do. “And that’s your job, Sarah! The job of the owner. And if you don’t do it, nobody will.

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

“And that is the sign of a Mature company. A Mature company is started differently than all the rest. 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.

They see the pattern, understand the order, experience the vision. Peter Drucker

I realized that for IBM to become a great company it would have to act like a great company long before it ever became one.

Every day at IBM was a day devoted to business development, not doing business.

We didn’t do business at IBM, we built one

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.

The true product of a business is the business itself. What Ray Kroc understood at McDonald’s was that the hamburger wasn’t his product. McDonald’s was.

The point is: your business is not your life.

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.

“Individuals need life structure. A life lacking in comprehensive structure is an aimless wreck. The absence of structure breeds breakdown. Structure provides the relatively fixed points of reference we need.”

Documentation provides your people with the structure they need and with a written account of how to “get the job done” in the most efficient and effective way. It communicates to the new employees, as well as to the old, that there is a logic to the world in which they have chosen to work, that there is a technology by which results are produced. Documentation is an affirmation of order.

As I left, something in me decided not to go back. It certainly wasn’t the haircut—he did an excellent job. It wasn’t the barber. He was pleasant, affable, seemed to know his business. It was something more essential than that. There was absolutely no consistency to the experience.

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

Go to work on your business rather than in it.

Go to work on your business as if it were the pre-production prototype of a mass-produceable product.

Tolerance for failure is a very specific part of the excellent company culture—and that lesson comes directly from the top. Champions have to make lots of tries and consequently suffer some failures or the organization won’t learn.

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

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

blue suits outsell brown suits! And it doesn’t matter who’s in them.

The next time you want somebody to do something for you, touch him softly on the arm as you ask him to do it. You will be amazed to find that more people will respond positively when you touch them than when you don’t.

For the Innovation to be meaningful it must always take the customer’s point of view. At the same time, Innovation simplifies your business to its critical essentials. It should make things easier for you and your people in the operation of your business; otherwise it’s not Innovation but complication.

In an innovative company everyone grows.

Innovation is the signature of a bold, imaginative hand.

Because without the numbers you can’t possibly know where you are, let alone where you’re going. With the numbers, your business will take on a totally new meaning.

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

Innovation, Quantification, and Orchestration are the backbone of every extraordinary business.

“The craftsperson develops a knowingness about the work she does that bears its own fruit, the fruit of being present, or attentive. The craftsperson learns that within the work she does there is a jewel hiding below the surface. That the thrill of the craft is to discover the jewel. And that there is only one way to discover it: to practice the craft mindlessly. To become one with the work. To polish and polish, as though with one’s heart. That there is no way to know when the jewel will show itself, but to trust with all one’s heart that one day, when it is least expected, the jewel will be there! It will appear.

Charles Revson, the founder of Revlon and an extraordinarily successful entrepreneur, once said about his company: “In the factory Revlon manufactures cosmetics, but in the store Revlon sells hope.”

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

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.

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.

Your Organization Chart is that structure. It is you talking to your people and the world, telling them exactly how you see your business working when it’s done.

“And that was the second thing that surprised me when I came to work here,” the Manager continued. “How seriously the Boss took the operation of this hotel. “I mean, it wasn’t just that he took it seriously—everyone I’ve ever worked for was serious about his business—it was the kind of seriousness he had. “It was as 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.

“I’ll never forget my first day here,” he went on. “It was like I was being initiated into a fraternity or something.