Emyth_1

I had read this book 6 months back, but I had to reread this, because I felt I had not learnt the essence of it in the first read. Now this by itself says a lot about the book.

E-Myth gives a classic insight in to the working of small companies and what it can possibly do to become a successful company.

What is E-Myth ? It is a fatal assumption of many an individual who start businesses. If you understand the technical work of a business, you understand the business that does the technical work.

 A lot of individuals who start their business are a prey to this E-Myth. They are very adept at doing something and suddenly they have this urge of starting their own business. This phenomenon is called the Entrepreneurial Seizure. A person who is seized by E-Myth cannot differentiate between technical work of a business and the business that does the technical work.

 Any Person who goes in to a business is actually a three-people-in-one. The Entrepreneur, The Manager and the technician. The problem with each of the personalities is that each one wants to be a boss and none of them want to be a boss. So , generally a person starts a business to get rid of the boss and that’s when the conflict begins.

The entrepreneur personality is one who always lives in the future. He fills his time in constructing images of what-if and if-when .The world is full of opportunities to him.

The manager is the pragmatic person , without whom there would be no planning, no order, no predictability. With out manager, there would be no business. With out Entrepreneur, there would be no innovation. The technician is the doer.

 A business generally goes through various phases. Infancy, Adolescence and Maturity. Each of these cycles is important to understand for one to create a successful business.

 Here’s a typical story of a person who has an entrepreneurial seizure:

 An infancy business can be easily identified. It is where the owner and the business are one and the same. When a technician starts out a business, he happily enjoys the pleasure of the infancy business where there is no boss and he can enjoy doing what he wants to do. Things are rosy and keeps working developing / making his product or service. But slowly he realizes that he needs to wear a lot of hats as time progresses. He needs to take care of bills / phone payments / people pays and at the same time work on the activity which he likes. Even though he has a life where there is no real boss, slowly he begins to realize that the business which he has started is the boss now. The very reason why he wanted to get out the corporate world and be his own boss seems totally shattered. His business starts demanding a lot of things from him. He cannot get out of it as his entire dream, livelihood, his commitments depend on him. Thus he finds in a peculiar situation where he cannot handle a lot of things. That’s when he hires people to work for him.

 He hires the best guy available, who needs the job at any cost and who doesn’t want a lot of money. Then he trains the guy in doing a lot of stuff which he used to do earlier. Slowly he gets a feeling that the new guys have taken over his work and he can now relax. Every thing seems fine until the day arrives when things really don’t go as per his thinking. The service is not up to the mark, the coding is not done like he wants, trained people want higher salaries, some want to quit. That’s when he realizes the mistake he has done – Management by Abdication. This is the biggest mistake he has done in taking his firm from Infancy to Adolescence. Typically what happens at this stage is that, he grows small and goes back to a situation where the entire business was run by him and business is the boss / remains in the adolescence stage and dies off.

The above story is felt by many people who have not succeeded in creating and running successful ventures.

 Where is the problem ? What should one do to avoid this problem ?

 First is the clarity that one needs when one starts a business. The purpose of starting a business is to free yourself from a job so that you can create jobs for others. If the business depends on you, you don’t own a business. You have a job and Business is the boss. Realizing this aspect is the first thing that one needs to do. 

Work on the business and Do not work in the business

 Secondly, and the most important aspect is having an Entrepreneurial perspective and knowing the difference between Entrepreneurial and Technician Perspective

 Here are a few differences: 

Entrepreneurial

  • How must the business work?

  • Sees the business as a system for producing outside results

  • Starts with a picture of a well-defined future, and then comes back to the present with the intention of changing it to match with the vision

  • Envisions the business in its entirety

  • Integrated vision of the world

  • Present day is modeled after his vision

Technician

  • What work has to be done?

  • Sees the business as a place in which people work to produce inside results

  • Starts with the present , and then looks forward to an uncertain future with the hope of keeping much like the present

  • Envisions the business in parts, from which

  • Fragmented vision of the world

  • Future is modeled after the present day

 Few aspects of Entrepreneurial Mindset:

  •  It’s a model of a business that fulfills the perceived needs of a specific segment of customers in an innovative way

  •  Less to do with what’s done in a business and more to do with how it’s done

  •  It does not start with the picture of the business to be created but of the customer for whom the business is to be created. With out a clear picture of the customer, no business can ever succeed

  •  One of the successful ways of doing the business is to think of the business as a prototype. If one thinks that the true product of a business is the business itself, then one realizes that one needs to work on the business and not work in the business. 

The author took me through Franchise prototype, the business format which many successful biz have adopted on. It is a prototype which can be experimented in a place and can be experimented at various places. The most successful franchise prototype suggested in the book is the McDonalds prototype where Ray Kroc took over the biz from MacDonald’s brothers and then replicated all across the world. The success of this enterprise teaches great many lessons. There are 6 key attributes of the franchise business 

  1. The model will provide consistent value to your customers, employees, suppliers and lenders

  2. The model will be operated by people with the lowest possible level of skill (Make it more system dependent rather than people dependent)

  3. The model will stand out as a place of impeccable order

  4. All work in the model will be documented in Operations Manuals (Documentation      gives order to the work done, a crucial element which is necessary for the      psychological survival of many an employee)

  5. The model will provide a uniformly predictable service to the customer (It does not mean that the service will be dull. It only means that the customer should not feel that the service is inconsistent. If you deliver exceptional service, strive to do it all the time)

  6. The model will utilize a uniform color, dress and facilities code

Franchise is simply your unique way of doing business and that which acts a great differentiator in the market. Building the prototype of your business is a Business Development Process. Its foundation is three distinct ye thoroughly integrated activities through which your business can pursue its natural evolution. They are Innovation, Quantification and Orchestration.

Innovation does new things, while creativity thinks up new things

Quantification is the about the numbers related to the impact an Innovation makes.

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

Business Development Program is a step-by-step process through which you convert your existing business – or the one you are about to create – in to a perfectly organized model for thousands more just like it.

The program is composed of 7 distinct steps:

  1. Your Primary Aim: The difference between great people and everyone else is that great people create their lives actively, while everyone else’s life is created passively waiting to see where life takes them next. It is like the difference between a warrior and an ordinary man. Warrior sees everything as a challenge, while an ordinary man sees everything as either a blessing or a curse.

To decide or know about the primary aim of life, it is important to ask the foll 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 business associates, my customers, my employees, my community ?

  • How would I like people to think about me ?

  • What would I like to be doing 2 years from now ?Ten years from now ? 20 years from now ? When my life comes to a close ?

  • What specifically would I like to learn during my life – spiritually, physically, technically, intellectually? About relationships?

  • How much money will I need to do the things I wish to do ? By when will I need it ?

Since business is going to form a significant part of an entrepreneur’s life, the journey in the life will be more meaningful if the primary aim in life gels with the business aim.

  1. **Your Strategic Objective :**It is a clear statement of what your business has to ultimately do for you to achieve your Primary Aim. There are a few standards that need to be included in the Strategic objective.

    • Money;What is the financial number that you are shooting for your company ?

    • Opportunity worth pursuing:

      • Does the business I have in mind alleviate a frustration experienced by a large enough group of consumers to make it worth my while ?

      • What Kind of Business I am in ?

      • Who is my Customer ?

    • Standards

      • When is your prototype going to be completed ? In 2 years ? 3 / 10 ?

      • 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 ?

  2. Organizational Strategy: It’s the process through which you think through your business as best as you’re able and then structure the way it is to work.

    • Organizing your company

    • Prototyping your position with a system, so that you can move out of the role and       work on your business.

  3. Management Strategy:  It’s a system designed in to your prototype to produce a      marketing result. An effective prototype is the one that finds and keeps customers.

  4. People Strategy:  It’s a game, where you need to create it and play

    • Never figure out what you want your people to do and then try to create a game out of it

    • Never create a fame for your people you are unwilling to play yourself

    • Make sure there are specific ways to winning the game with out ending it

    • Change the fame from time to time – the tactics, not the strategy

    • Never expect the game to be self-sustaining. People need to be reminded of it       constantly.

    • The game has to make sense

    • The game needs to be fun from time to time, need not be fun all the time

    • If  you can’t think of a good game, steal one

  5. Marketing Strategy :Demographics and Psychographics are 2 pillars of a successful      marketing strategy. Who is your customer and Why he buys ?

  6. Systems Strategy : There are three kinds of systems.The hard systems which are      inanimate things such as computers, colors in the reception area, logo      etc.Soft Systems are either animate or living – ideas. The third type of      systems called the information systems actually connects the 2 systems.

    • Selling is a soft system

  • Identification of the specific benchmarks – or customer decision points in your selling process

  • The literal scripting of the words that will get you to each one successfully

  • The creation of the various materials to be used with each script

  • The memorization of each Benchmark’s script

  • The delivery of each script by your salespeople in an identical fashion

  • Leaving your people to communicate more effectively, by articulating , watching , listening , hearing, acknowledging, understanding, and engaging each and every prospect as fully as he needs to be  

The book ends with a great old Chinese proverb

                                       When you hear something, you will forget it

                                When you see something, you will remember it

                                     But not until you do something, will you understand it