pies on box

Book Notes: The E-Myth Revisited

A fundraising group to which I belong took up ‘The E-Myth Revisited‘ by Michael Gerber as reading material. Here’s what I took away:
  1. The Three Personalities: We each have three different mindsets warring within us with three distinctly different views: the entrepreneur (The optimist/visionary/dreamer), the manager (The planner/organizer/risk-avoider), and the Technician (The doer, tinkerer, perfecter). Usually one of these is dominant. Focusing on one without balancing the other two leads to failed businesses.

    Most people lead solely with the technician; they start a business because they’re good at something in particular, can make money from it, and so start a business so they can do it all the time.

    To avoid failing, we balance out the process by doing the following the book’s plan. The book draws heavily on the franchise model as the repeatable version of success that one should follow, with the following characteristics:
    1. We are selling the business to the customer, not the product: One must think of the entire customer journey and experience as what is being sold not the product alone.
    2. Everything should have a system and process: Everything should be documented down to the level necessary to create a consistent experience that matches the goals for our product.
  2. Go Through the Business Development Process: Start with the Entrepreneurial Perspective and set a goal for the business. This is called a business development program:
    1. First, set your primary Aim: what will the business look like in 2, 10, and 20 years? How will that also meet your personal desires? This is formalized into a strategic objective.
    2. Next set your organizational strategy: Create what your organizational chart will need to look like to make the strategic objective possible. While you (or you and your cofounders) may fill in all the slots right now, it clarifies for what positions you need to define and create processes. If you have other cofounders, filling in who does what also clarifies responsibilities up-front.
    3. Next create your management strategy, this is your operations manual for each process required by each person within the company.
    4. Then create your people strategy: First determine what is the overarching goal you need to communicate to new people so they understand why they are on the mission of your organization. With that as a starting point, build out the process for hiring, onboarding, and managing that position. (this is more my reinterpretation that the terminology used in the book)
    5. Next, create your marketing strategy: understand the demographic profile of your customer and creating a process for lead generation and fulfillment.
    6. Finally, document and implement the systems (hardware, IT) needed. this is also where you document out your sales system process.
That’s a lot, and frankly the book skims over a lot of the details of how to build the strategies, especially the latter three (people, marketing, and systems).

My Takeaways

  • I have a one year planning doc and a mission statement; it would be good to put into writing the longer-term vision.
  • I love the idea of pre-creating your org chart so you can figure out for what processes each positiong is responsible, which also leads to a list of processes you need to create
  • I like the emphasis on figuring out how you communicate of the overarching goal of the organization (the author calls it ‘the game’) before onboarding the first employee.

My Divergences

  • It could be because I’ve already ‘traveled the path’ a few times from technician to manager to entrepreneur, but the idea of those being in conflict didn’t really resonate with me. Given that I agree with the books implication that most small businesses come from the technician perspective, this is probably useful for most readers, just not me. I much more relate to Seth Godin’s analogies of ‘The Dip‘ and ‘The Lizard Brain
  • The book implies that many ‘immature’ businesses try to prematurely hire their way out of the roles they don’t like, so they end up over-relying on a ‘senior employee’ that just leaves them suddenly. This is why very job must be built as a process by the owner and only then hired.

    I think this is flawed on a couple of points. First, the idea that every small business should come up with their own bespoke processed for everything seems both inefficient and somewhat dangerous when it comes to things like accounting and payroll. Second, I see a lot of small technology companies that do exactly this very successfully: hire experts into positions where the founder is weak. As a result, they end up making huge productivity gains in those areas. I’m not sure if this is a tech-only possibility, where the margins allow for the hiring and retention of top-level talent, but it’s certainly a very different model where I’ve seen success.

Final Thoughts

I’m glad I read it and I’ve already recommended it to my security consulting cofounder to read it. I think if you’re entering the business world the first time, it’s a pretty good starting point. I’m concerned it could lead a number of small businesses floundering as they tried to parse through the steps in the people marketing, and systems strategies; it’s in these final sections where either the author got bored of trying to write prescriptively, or the editor convinced them to leave some off the table as a way to get people to circle back for their consulting gigs.
To remind my future self, I’d recommend ‘Building a Story Brand‘ by Donald Miller as a great primer to help fill in the holes in the marketing strategy.