Book Review-The E-Myth Revisited

There aren’t many books that I read under protest. I don’t mean protest in the sense that someone else is forcing me to read a book, as much as I mean that I’m forcing myself to read it. The E-Myth Revisited is one of those books that I didn’t want to read. I had been exposed to The E-Myth years ago. I knew the fundamental premise behind the book: Make a system for everything. Once you’ve made a system, any lemming can run the system and you can franchise it. Yea, that’s a massive over-simplification but it’s mostly on target. It’s an old book. Published in 1995, it’s definitely long in the tooth. However, as it happens, someone recommended it to me.

Strangely, it was someone who I really didn’t trust, respect, or even like. I believe that she so massively misread and mishandled a situation so badly that I didn’t want to speak with her again. Her parting shot at me – a final attack – included a note that I should read The E-Myth Revisited. I suppose most people would have just written it off however I knew there had to be something there that I had missed in the past. I was right. While the fundamental premise didn’t really fit my situation, it was something that I could learn from – and I think you might be able to learn something too.

Franchise This!

Perhaps my greatest struggle with the book is that it doesn’t really fit my line of work. I deliver professional services and develop intellectual property. In truth, neither of these activities are good candidates for systemization. So the idea that my business could really be systematized and licensed as a franchise was just not compatible with my worldview. It still isn’t.

I don’t believe that you can systematize a professional services company. There are large consulting companies that are built on an army of well-meaning, bright but under-experienced folks executing poorly documented frameworks that are supposed to allow anyone to execute a large project well. In practice, I see numerous failures, cost overruns, and problems that are quietly swept under the rug as the large consulting company marches on to the next deal. (I have to say not all of the larger consulting companies are like this but more than a few are.)

Intellectual property systemization is actually pretty interesting because I’ve spent much of my life in organizations that do intellectual property work. Book publishers are in this line of work and I’ve been close enough to see how trying to systematize book publishing has destroyed quality. Speaking with one of my publishing friends, we were discussing the failure rate of book projects. We were talking about schedule failures (late to market), writing failures (never finished), and sales failures (not enough sales to cover expenses.) The scary thing was we were talking about a net failure rate of 50% or more. Half the books that some publishers were producing would never cover their own production costs.

I mentioned that you shouldn’t expect more than an advance when I talked about the math in Self-Publishing with Lulu back in 2009. (If you’re interested in a more detailed background on publishing and how it works, you can still get an eBook I wrote in 2001 – A Beginner’s Guide to Successful Technical Publishing.) Book publishers make money before your royalty is earned out – but you can pretty quickly see that it takes more than a few thousand books sold for a publisher to really make money.

If professional services and intellectual property aren’t businesses to franchise, then what kinds of businesses are? In short, business-to-consumer companies. If you’re trying to interact with consumers, you’ll find that having a standard plan to deal with the regularly transitioning workforce is a good idea. Having a system allows you to create a copy of your business in another area (that can be relatively close by) which accesses a completely different set of people – because most consumer businesses are inherently driven by location and proximity.

Some business-to-business companies can benefit as well because they’re doing relatively mechanical, algorithmic, repeatable work as well. Even if you don’t franchise your business-to-business company you’ll want to pick up the operational efficiencies that come with having a well-defined and well understood process.

Discover the Truth

Three Faces

One of Gerber’s fundamental beliefs is that there are three key personalities in each person and that these three are needed for an organization:

  • The Technician – The technical expert with the skills at the core of the thing that the organization sells.
  • The Manager – The orchestrator of work. The “Negative Nellie” which views all challenges as problems to be solved.
  • The Entrepreneur – The visionary with the ability to see the needs of people and design solutions for those needs.

Gerber further believes that most small businesses are created by folks who are good technicians – they’re passionate about what they do and are frustrated with the way that other companies are run. They experience increasing annoyance at the way others are running the business that they are incited to believe that they can do it better. The person who is naturally comfortable being a technician takes on the roles of entrepreneur and manager.

I’ve certainly seen many organizations like this, and to some extent, my organization fits this. I started a consulting company to do it better. To focus on quality and customer satisfaction, to avoid being a body shop and to make a real difference – of course, I may not have achieved my goals.

Aim, Objective, Fire

“If you don’t know where you’re going then any path will take you there.” – Scarecrow, The Wizard of Oz.

In The Seven Habits of Highly Effective People, Covey said “Begin with the end in mind.” It’s no surprise that figuring out where you are trying to get to is an important part of feeling successful in your business and in your life. Yes, most people don’t have a vision for what they want, much less how to get there. Knowing where you want to go, in Gerber’s language, is your primary aim. It’s the answer to questions like:

  • 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?

The last question harkens back to Who Am I? , but in general the questions are to help you evaluate your organization and what you need to do – slowly but deliberately – to get where you want to go. If you value your time at home with your family in the evenings, creating a restaurant isn’t likely to be the best fit.

I want to be able to make it easier for folks to learn – to demystify technology and increasingly enable people to bring forth change in organizations. I greatly value being at home so that I can interact with my son, Alex. Thor Projects, my consulting business, isn’t the best solution to being home since many of my clients are remote and want me to travel. As a result, I’ve shaped my rate structure to favor me working remotely for the client (from my home office.) I not only want to be able to work from my home office, but I also want to see and enjoy nature as I’m working. As a result, I’ve put a large number of windows in my office. In fact, I rarely have the lights on in the office during the day – I enjoy the sunlight through all the windows.

Ultimately, I recognize that the structure of a consulting company doesn’t have the flexibility I want, and so I started AvailTek to hold the SharePoint Shepherd’s Guide and other intellectual property. In the end, this will allow me to educate more people and will allow me the flexibility to spend time with Alex. I’ve still not transitioned to full-time work with AvailTek – even though we’ve been selling the Shepherd’s Guide for 5 years now.

The path to the primary aim is the strategic objective. Creating a product company that is capable of sustaining my financial needs is my strategic objective. In my case, getting AvailTek started and creating the content for the SharePoint Shepherd’s brand is all a part of my strategic objective.

Gerber doesn’t spend any time on this topic, but it is a significant part of my experience in the challenges of organizations. That is, converting the strategic objectives into tactical goals and activities. One of the most common occurrences I see in the organizations that I work with is that strategic objectives never get converted into goals and executable tactics. For me, it’s the day-to-day activities driven by the goals that move an organization forward. It’s great to know where you’re going, but eventually you have to figure out how to get there.

Uncommon Standard

There’s a fair amount of appropriate criticism for technical certification programs. At any gathering of technicians, especially in conversation over a couple beers, you are likely to hear their complaints about how their hands-on expertise cannot be captured by a multiple choice test. They are – of course – correct. However, they fail to realize that the goal of a certification exam isn’t to measure the skills of an expert. Instead it’s designed to be a winnowing tool that employers and hiring managers can use to sort out the unqualified from the qualified.

At the heart of any certification exam is a passing score. That is, a standard. It’s a standard that says below this you do not pass and above this you have met the minimum requirements – the standard. In that way, every certification is a standard. Knowing this allows you to focus on the right question, which isn’t whether the certification is good or bad. Rather, the right question is “Was the certification standard set correctly?” That’s the true measure of the value of a certification.

In the context of creating your business, it is the standards that you set which make the business. What is your standard for responsiveness? Cleanliness? Technical skill? When you put all of these standards together you get the organizational standards – and the promise that you make to your clients.

Having a standard is uncommon. Setting high standards is even less common. Being able to articulate what your standards are is less common than it should be.

Start Playing Games with Me

In the context of business, when we say that the management is playing games with us, we almost always think of this in a negative context. We feel manipulated and we don’t like it. However, playing a board game at home with your family doesn’t feel manipulative.

Mihaly Csikzentmihalyi (of Flow fame) interviewed hundreds of creative leaders and summarized a key point from those interviews, thusly, “You could say that I worked every minute of my life, or you could say with equal justice that I never worked a day.” That is to say that those who are in flow – those who are enjoying their work – never feel like it is work.

Gerber shares that people need to want to do work more than they want to do not-work. While a bit oversimplified the core rings true. You want people to be excited to do their work enough that the distractions aren’t consuming. We’ve all seen employees of other organizations checking their cell phone, chatting with other staff members, and generally being distracted from the customers in front of them. If you make the process of being engaged in what you want your employees to do more interesting than the distractions, then they’ll pay better attention to the customers – or so the reasoning goes.

I’m reminded of the suggestions from Drive about how to motivate people. Most workers today are heuristic learners and therefore need to be motivated by mastery, autonomy, and purpose, rather than carrots and sticks. Creating an environment of positive reinforcement for a job well done can be a powerful way to keep employees trying to one-up each other’s level of service to customers – without giving them anything except for good service.

Even in my own work there are times that I just really don’t want to work. It’s amazing to me just how powerful cognitive dissonance can be. That is the desire to do the things that you need to do – and your deeply held desire to do something fun – to reward yourself for a job well done. I find that the better I define small rewards and the clarity around what my end goals are can help me to be more effective at staying on task.

There is No Spoon

Another of Gerber’s assertions is that our work becomes a mirror of how we are inside. That is to say that the more chaotic that we are inside the more chaotic that we make our world outside. While there’s a certain truth to this, I believe that there are times when we will seek the opposite of what we have inside to allow us to focus on changing our world. However, the line from the Matrix, “There is no spoon,” is appropriate here. Much of what we make of our world is how we see it.

I’m reminded of the story from Switch where BP decided they weren’t going to drill any more “dry holes.” In short they decided that the culture was changing from one which accepted “dry holes” (oil wells without oil) to one where “dry holes” weren’t acceptable. They needed to know for sure that there was oil at the bottom when they started drilling – or they needed to not drill.

In the context of your organization, what do you accept as a part of your culture that you shouldn’t? Is it workers who are late to work? Is it a level of distractedness when customers are around? Or maybe it’s just that management isn’t reading books like E-Myth to make the organization better…