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

by Michael E. Gerber

my experience has shown me that the people who are exceptionally good in business aren’t so because of what they know but because of their insatiable need to know more.

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

And so the great ones I have known seem to possess an intuitive understanding that the only way to reach something higher is to focus their attention on the multitude of seemingly insignificant, unimportant, and boring things that make up every business. (And that make up every life, for that matter!)

Yes, the simple truth about the greatest businesspeople I have known is that they have a genuine fascination for the truly astonishing impact little things done exactly right can have on the world.

I believe that our business can provide us with a mirror to see ourselves as we are, to see what we truly know and what we don’t know, to see ourselves honestly, directly, and immediately.

I believe that our business can become an exciting metaphor for “The Way.” A wise person once said, “Know thyself.” To that honorable dictum I can only add for the businessperson on the path of discovery, good traveling and good luck.

I think that maybe inside any business, there is someone slowly going crazy. Joseph Heller Something Happened

So if your business is to change—as it must continuously to thrive—you must change first. If you are unwilling to change, your business will never be capable of giving you what you want.

The technical work of a business and a business that does that technical work are two totally different things!

Baking pies is not about getting done. It’s about baking pies.”

In business, The Entrepreneur is the innovator, the grand strategist, the creator of new methods for penetrating or creating new markets, the world-bending giant—like Sears Roebuck, Henry Ford, Tom Watson of IBM, and Ray Kroc of McDonald’s. 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. Every strong entrepreneurial personality has an extraordinary need for control. Living as he does in the visionary world of the future, he needs control of people and events in the present so that he can concentrate on his dreams.

I call it Future Work. ‘I wonder’ is the true work of the entrepreneurial personality.”

“Don’t you see? 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! “And, besides, that’s not the purpose of going into business. “The purpose of going into business is to get free of a job so you can create jobs for other people.

“Because, whatever that size is, any limitation you place on its growth is unnatural, shaped not by the market or by your lack of capital (even though that may play a part) but by your own personal limitations. Your lack of skill, knowledge, and experience, and, most of all, passion, for growing a healthy, functionally dynamic, extraordinary business.

“But to do that requires intention at the outset of the business, entrepreneurial intention, as well as a willingness—no, a true passion—for the personal transformation such a process will call for: accessing new skills, new understanding, new knowledge, new emotional depth, new wisdom.

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

building a business that works not because of you but without you.

In other words, 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.

It tells us that it is the Entrepreneurial Perspective that says it’s not the commodity or the work itself that is important. What’s important is the business: how it looks, how it acts, how it does what it is intended to do.

• The Entrepreneurial Perspective sees the business as a system for producing outside results—for the customer—resulting in profits. The Technician’s Perspective sees the business as a place in which people work to produce inside results—for The Technician—producing income.

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.

When The Entrepreneur creates the model, he surveys the world and asks: “Where is the opportunity?” Having identified it, he then goes back to the drawing board and constructs a solution to the frustrations he finds among a certain group of customers. A solution in the form of a business that looks and acts in a very specific way, the way the customer needs it to look and act, not The Entrepreneur.

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

Because the Business Format Franchise 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.

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.

integrity is all about. It’s about doing what you say you will do, and, if you can’t, learning how.

To The Entrepreneur, the Franchise Prototype is the medium through which his vision takes form in the real world. To The Manager, the Franchise 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.

It 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.

Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it, with a full understanding of why it is absolutely necessary for you to do so.

If yours is a medical firm, you must have physicians. But you don’t need to hire brilliant attorneys or brilliant physicians. You need to create the very best system through which good attorneys and good physicians can be leveraged to produce exquisite results.

How can I create a business whose results are systems-dependent rather than people-dependent? Systems-dependent rather than expert-dependent.

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

There’s another reason for this rule—what I call the Rule of Ordinary People—that says the blessing of ordinary people is that they make your job more difficult.

It is literally impossible to produce a consistent result in a business that depends on extraordinary people. No business can do it for long. And no extraordinary business tries to! Because every extraordinary business knows that when you intentionally build your business around the skills of ordinary people, you will be forced to ask the difficult questions about how to produce a result without the extraordinary ones. You will be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over again. You will be forced to invent innovative system solutions to the people problems that have plagued small businesses (and big businesses as well!) since the beginning of time. You will be forced to build a business that works.

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.

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

Little things that are meaningless from a practical point of view may have great emotional meaning through their symbolism. Images and colors are often great motivating forces.

The colors you show your customer must be scientifically determined and then used throughout your model—on the walls, the floors, the ceiling, the vehicles, the invoices, your people’s clothes, the displays, the signs.

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. Think of your business as something apart from yourself, as a world of its own, as a product of your efforts, as a machine designed to fulfill a very specific need, as a mechanism for giving you more life, as a system of interconnecting parts,

How can I get my business to work, but without me? • How can I get my people to work, but without my constant interference?

How can I systematize my business in such a way that it could be replicated 5,000 times, so the 5,000th unit would run as smoothly as the first? • How can I own my business, and still be free of it? • How can I spend my time doing the work I love to do rather than the work I have to do?

“What you’re saying is that I’m too identified with my business. That I need to separate myself from it: first in the way I think about it, second in the way I feel about it, and third in the way I work in it.

I need to conceive of my business as a product. Just like my pies are a product, I need to think of my business like that. And if I were to think that way, I would suddenly have to ask the question: How must my business-as-a-product work in order for it to successfully attract not only customers but also employees who want to work there?

the difference between creativity and Innovation is the difference between thinking about getting things done in the world and getting things done.

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

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

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.

Orchestration is the elimination of discretion, or choice, at the operating level of your business. Without Orchestration, nothing could be planned, and nothing anticipated—by you or your customer. If you’re doing everything differently each time you do it, if everyone in your company is doing it by their own discretion, their own choice, rather than creating order, you’re creating chaos.

If, by a franchise, you understand that I’m talking about a proprietary way of doing business that differentiates your business from everyone else’s.

Orchestration is the certainty that is absent from every other human experience. It is the order and the logic behind the human craving for reason. Orchestration is as simple as doing what you do, saying what you say, looking like you look—being how and who you are—for as long as it works. For as long as it produces the results you want. And when it