Wednesday, April 15, 2009

Another Book Review: The E-Myth Revisited

Book Information
Gerber, Michael E. (1995). The E-Myth Revisited: Why most small businesses don’t work and what to do about it. New York, NY: HarperCollins.

Although many believe that small business are started by entrepreneurs, Gerber contends that they are started by technicians—those who have abilities to create a product or service—and they are not able to cause their business to thrive and grow beyond the infancy stages. What is necessary are the dreams of a true entrepreneur and the systems of a manager to be allowed to surface in the company’s leader, and through these combined efforts, the small business owner performs the work of working on the business, not working in business.

Part I: The E-Myth and American Small Business
Most dreamers who start their own businesses share two characteristics: they want the freedom of not working for a boss, and they are technicians, meaning they cut hair, practice law, know an industry well enough to coach others, etc. They are the doers, and they do it all: chief cook and bottle washer.” If their efforts are initially successful, they grow to the point where they can’t do it all themselves, and the first employee joins the team. The technician now abdicates the tasks he or she doesn’t want to do, and continues doing the business of doing. What the technician needs, however, is not a worker-bee. He needs to tap into his own entrepreneurial spirit and systems manager to develop a plan for success—and succession. Gerber summarizes the limits of a company’s growth based on these three roles:
The Technician’s boundary is determined by how much he can do himself. The Manager is defined by how many technicians he can supervise effectively or how many subordinate managers he can organize into a productive effort. The Entrepreneur’s boundary is a function of how many managers he can engage in pursuit of his vision (51).
If a technician is not able to handle all the tasks that pile on during the adolescent phase, he becomes frustrated because those he hired do not share his skill or passion. In short, they are not taught and do not know how to play the game of his business. The owner, with disappointment, will try to shrink business back to a manageable size. This almost always results in the company’s demise. The Small Business Administration reports that 400,000 such business in the United States fold each year (54).
In order for a small business to grow from infancy through adolescence and into maturity, it needs to have an entrepreneurial perspective. Says Tom Watson, founder of IBM, “I had a clear picture of what the company would look like when it was finally done” (69). Then he acted that way from the beginning. This perspective is interested not so much in what work has to be done but how it is done; a place to produce results, not just income; it is interested in what the future looks like and adjusts the present to match it—not looks forward uncertainly toward the future. Successful small business leaders who hold the entrepreneurial perspective are able to grow past the tasks of today into the promise of a bright future.
Part II: The Turn-Key Revolution: A New View of Business
In the early 1900’s, the Industrial Revolution was born. In the mid 1900’s, 1952 to be exact, the Franchise Phenomenon surfaced. McDonalds was and is the model of a systematic way to do business. The hamburgers are always prepared the same way. The friendly staff is always able to deliver your order in a short amount of time. The restaurant is clean and bright. You know what to expect when you walk into McDonalds because systems are in place to train, deliver, and measure success. Every company would do well to mimic McDonalds in this important respect: their delivery methods are consistent and their customers’ expectations are met every time. How? By developing a system that is replicable. Each employee knows what is expected of him or her, and he or she is held to that standard. From the uniform they wear to the uniformity of their burgers, all members of the Mc-Team understand the roles they are to play. This is more than just the conveyor belt of the Industrial Revolution. This is the franchise revolution that made expanding small businesses possible.
An important aspect of this approach is the owner’s need to work on the business, not in the business. What does this mean? He or she must step back from being a technician and step into the role of the entrepreneur long enough to see what his or her primary aim in life and how the company will serve that purpose. He or she also needs to become the manager and see what processes need to happen in order for the business to grow and be replicable. “[the] Proprietary Operating System [is] at the heart of every extraordinary business around you, franchised or not” (95). Note that the idea is not for the business owner to become a franchisor, but to create a product or service that is predictable to his or her ideal customer. This system or model of doing business is to be documented in Operations Manuals so that the work has standards that are understood by even the employee with the lowest possible skills. By working in the business, the owner’s vision and abilities are limited. By working on the business, he or she is able to guide the company to its preferred future that he or she has envisioned from the start.
Finally, the Turn-Key approach allows the business to grow in a way that the owner has the freedom to do what he or she loves doing, whether visioning, managing, or being the technician—or sipping Mai Tais in Mexico! Once processes are in place and the business has grown to support an eager and energized staff, the owner is free to enjoy work inside or outside the business.

Part III: Building a Small Business That Works!
The remaining one-half of the book gives strategies for implementing this approach and stories to reinforce the “whys” and “hows.” Innovation is the foundation: Is your business doing new things? “For the Innovation to be meaningful, it must always take the customer’s point of view” (121). What is the best way to serve your customer? How do they access your information, products and services? How can you serve or create a product that is the best for their needs? These questions can be answered with the next pointer: Quantification. How many calls do you receive a day? What time? What do you say to your customer when you greet them? Try different phrases and quantify which ones are most likely to produce sales. Once you have improved your processes as a result of making adjustments to your practice based on the data, you can begin to orchestrate the process. “Orchestration is the elimination of discretion, or choice, at the operating level of your business” (124). The purpose of being this methodical is that you give your customer what he wants every single time. Although these three steps may appear to result in automatons rather than energized employees, nothing can be further from the truth, provided the owner and managers are able to instill purpose and vision into their activities. Just like a child wants to understand his or her boundaries, so a valued employee wants to know how and where he or she can make the greatest contribution, provided they believe in the owner and his or her vision.
One of the best examples of this process played out is the story Gerber tells of his hotel experience. He calls it, “A Match, a Mint, a Cup of Coffee, and a Newspaper.” A weary traveler in his quest for lodging for the night, finds himself at the front desk of a hotel. After a friendly and efficient clerk processes his admittance, he takes her recommendation to dine at the nearby restaurant. When he returns to the room, the fireplace is lit, a mint rests on his pillow, and a drink is poured for him with a note from his room attendant, Kathi: “Welcome to your first night at Venetia…” The next morning, his brand of coffee is brewing in his in-room coffee maker, and next to it is another note from Kathi, informing him that this is his brand of coffee. How did they know? AH, they asked him last night at the restaurant. When he opened his door, there was The New York Times, his edition of the newspaper. This information was casually obtained when he checked in the night before. The message he received: “We care about you and are showing our care in the little things we do.” The result: He returned time and again, and received the same careful treatment each time. The magic was explained by the checklists found in Operations Manuals and the work the employees perform willingly at the behest of the owner.
The book comes to a close with a definition of a system: “A system is a set of things, actions, ideas, and information that interact with each other, and in so doing, alter other systems” (234). Some systems we can understand (how our business works), some we can’t (the Universe!). The task, then, is to understand the smaller systems and how they work with other systems and create a Systems Strategy. It, along with your Primary Aim, your Strategic Objective, your Organizational Strategy, Management Strategy, People Strategy, and Marketing Strategy create an interpedently prototype of how your business is to operate. Once these systems are identified and processes developed, the company is ready to be franchised or sold – or just allowed to grow. This Business Development Program is what E-Myth Worldwide is all about.

How does one know whether or not her reaction is overall negative or positive? I will start of by answering simply, “both.” First of all, allow me to share my positive reactions: I resonated with this book and the message, perhaps because I am almost an equal mixture of technician, manager, and entrepreneur. I am a visionary: I am a big picture person, and can I see possibilities, often coming up with new, fresh ideas. I am a manager: I can see all the steps in the big picture and enjoying breaking them down into manageable pieces, coming up with processes and working with those who will implement them. And yes, I am also a technician in the sense that I will take back a project and just do it myself. Some may call this “controlling,” while I call it “being responsible.” Where do I find myself most often? Currently, I am in the midst of management projects. I am happy. I also find myself dreaming with the boss in the role of entrepreneur. I am energized. At times, I am also the worker-bee, since I enjoy the rhythm of some of the so-called mundane tasks, like sorting through names on a database. I am fulfilled. Recognizing these three roles and the importance of each of these is essential. It also helps to know that the many I work with are strictly one or the other. Or at least they have preferences. But since I share all three, I can see the necessity of having a strategic aim. I can see the importance of working on the business so that it will grow. And I know all the technical “stuff,” though I must admit I am most happy to let some of this fall to capable others.
I had other positive reactions as well. I enjoyed the stories. Following Sarah and her pie shop personalized the principles. I especially enjoyed the story of the hotel, and having heard it at other times, I have shared it many times myself. I appreciated the systematic approach to the book. Every business owner, whether widget maker or in a service industry, can find the story of Jack and Murray and their organizational chart powerful and practical. The stories brought life to the principles.
Were all stories helpful? For that matter, was the entire book applicable? No, not all stories were meaningful. Michael Gerber’s own personal story of his failures and successes, while helpful, become tedious. 5 pages! He certainly didn’t—and apparently still doesn’t—live a virtuous, Christ-like life. Some of the ideas shared can only be described as “New Agey.” Awaken your spirit and find your comfort zone? Sounds like something from a Hindu guru, not a business book.
The other thing I found occasionally disturbing was that the E-Myth business pitch reared its ugly head through out the pages. I could have lived without that. The principles and recommendations were applicable. If one wanted more, he or she could look to the back flap, which is the correct place for pesky sales pitches.
As far as developing the thesis, I would suggest that Mr. Gerber did accomplish what he set out to do: reveal “Why Most Small Business Don’t Work and What to Do About It.” They don’t work because technicians are trying to run a business while working in it. What they should do is to better know their aims and then come up with a way of doing business that is systems oriented, replicable, allowing them to work on the business.
Did I appreciate the message and find it helpful? Yes, as evidenced by the fact that I have bought books for two of my cohorts and an MP3 audio file for my busy boss’s iPod. I look forward to strategizing with these three, mostly individually, and coming up with a plan to implement some of these relevant principles. The most powerful take-aways from this book are on page 74: “…the Entrepreneurial Model dos not start with a picture of the business to be created but of the customer for whom the business will be created.” And “The product is what your customer feels as he walks out of your business. What he feels about your business, not what he feels about the commodity.” What are we at IEW selling? A voice. We are training teachers to give their students a voice, teaching them how to say what they want or need to say so that can be heard and understood. This is powerful. This is life changing. This is world changing. Who can we next tell??

When I was first read the book, I thought that it might have been helpful to have this information available last term, when we were coming up with our entrepreneurial idea. However, after further thought, I think keeping this book during the 2nd term is more applicable. The pages I reference above may be helpful to copy and pass out for the 1st term, when ideas are first being tossed around. But the rest of the work of implementing the steps to make a dream a reality really won’t happen until the second term, and most of the work the book requires one to implement would be now, after an idea is thought through. Having said that, I would put the book on the syllabus for first term, refer to it occasionally in class, and give the students the option of pre-reading it for the second term.

Wednesday, April 1, 2009

Book Review: Made to Stick

Since I'm in an amazing MBA Program at Biola University, and our reading consists mostly of "real books," not text books, I thought I might fill this space with a book review assignment.

Book Information
Heath, Chip and Dan Heath (2007). Made to Stick: Why some ideas survive and others die. New York, NY: Random House.

Ideas abound. Teachers, marketing gurus, CEOs, copy editors, preachers, and parents want their messages conveyed with maximum impact and “stickiness” so that the hearer will absorb and take action based on the message. With urban legends woven throughout, this book uses the acronym SUCCES—Simplicity, Unexpectedness, Concreteness, Credibility, Emotion, Stories—to demonstrate why we remember the Kidney Theft Ring story and do not recall the capital of Kansas.

Major Sections
For an idea to stick, it must be simple. Find the core idea and say it in a way that is compact. Proverbs do this well: A bird in a hand is worth two in a bush. How often do mission statements wind up communicating very little in their attempt to say something important? The prompt, “The single most important thing we must do is…,” (27) can be a springboard to solidifying your efforts into a single thought. This is another principle discussed in this chapter: “If you say three things, you don’t say anything” (33). Stripping your message to its core element helps your hearers understand the ideas and efforts so that all actions are focused on the same goal. For Southwest Airlines, it’s “We are THE low fare airline.” Serving meals does not lend itself to that core idea. For Bill Clinton’s campaign it was, “It’s the economy, stupid.” This struck at the core of what voters wanted in their new President.
The greatest hindrance in communicating effectively is the Curse of Knowledge. The more we know about something, the less likely we are able to know what it is like to NOT know that something. “Becoming an expert in something means that we become more and more fascinated by nuance and complexity…when the Curse of Knowledge kicks in…making something simple can seem like ‘dumbing down.’ Simplifying, we fear, can de-evolve into oversimplifying” (46). Recognizing that the Curse of Knowledge inflicts blindness to the one attempting to convey the message is important. Overcoming this blindness starts with making sure the message conveyed is clear, concise, and simple.

Two questions are posed in this chapter: How does one get and keep attention? “Most of the time we cannot demand attention; we must attract it” (64). If we can use the emotions of surprise and interest, ideas can be made stickier. Surprise is triggered when our schema fails, and it prepares us to understand why the failure occurred. Schema is defined in the previous chapter as “a collection of properties of a concept or category... that consists of lots of prerecorded information stored in our memories” (54). To be surprising, an event cannot be predictable, but it should be “post-dicatable,” meaning after the surprise, the recipient of the emotion understands why he felt surprised. Read the word “phraug.” Get it? Surprised and satisfied. Mystery solved.
While surprise is a way to pique interest, curiosity is the way to keep it. “Unexpected ideas, by opening a knowledge gap, tease and flirt. They mark a bit red X on something that needs to be discovered but don’t necessarily tell you how to get there”(93). Sony accomplished this by proposing a “Pocket Radio,” something unheard of in 1953. JFK, in his address to congress in 1961, proposed that the US put a man on the moon. Are these messages surprising? Yes. Do they invoke curiosity? Yes. In addition, these messages are also simple.

Language is abstract, but life is concrete. This is the paradox of clear communication. We want our mission statements to say something profound, yet they often are laced with abstract and often meaningless strategy statements such as: Front-line dynamic knowledge base; Robust user-facing implementation; or Profit-focused foreground hub. (All these were generated from They’ve got a million of them!) “Abstraction makes is harder to understand an idea and to remember it (100). We would do well to make our corporate purpose statements more concrete and meaningful.
The means of making something concrete is to ask the question, “Can I examine this with my senses?” Mathematical concepts, arguably one of the most abstract topics taught in classrooms around the globe, have varying results. While all teachers used rote memorization, it was the Asian teachers who were successful in relaying these concepts through concrete examples. In fact, the Asian teachers used such concrete examples nearly twice as often as their US counterparts. The result? “The math skills of Americans fall behind those of Asians early—the gap is apparent in the first grade, and it widens throughout elementary school (104). The students are able to retain the concepts since memory is more like Velcro than the analogy of a filing cabinet. Memories are not stored in files, waiting for retrieval. They have hooks and, “The more hooks an idea has, the better it will cling to memory” (111). One effective tool a company can use is to create an image of their ideal client. Man? Woman? Age? Income? Interests? Education? Accessibility to technology? Give her a name (Excellent Ellen). When new products are proposed, ask the question: “What does Ellen want?” Now that’s concrete!

They are many instruments for establishing credibility, depending on who you are trying to impress with your message. Letters after your name from a prestigious university; the backing of a reputable organization; endorsements from celebrities - like Oprah - are a few examples. The book also suggests those considered “anti-authorities,” effective spokespersons who had a powerful tale to tell, are living proof of why something does or does not work (135-6).
It is not always necessary, however, to have these types of external authorities. Credence can be given to a message if it has enough vivid detail. Names of persons, places, descriptions of sight and sounds that tie into product or service usage—all these tools are powerful when you want your message to be credible. Steven Covey in his book, The 8th Habit, shares some startling statistics about employees and their organization’s purpose: “Only 37% said they have a clear understanding of what their organization is trying to achieve and why. Only one in five was enthusiastic about their team or organization’s goals. Only 20% fully trusted the organization they work for.” (144) Not only is this example a powerful statement of the ineffectiveness of most company’s mission statements, it is credible because the believable Mr. Covey gives sufficient statistics, another tool to lend authority and concreteness to your statements. You can just envision these employees aimlessly doing their job without knowing what they are really doing there. Scary.
A last credible strategy worth mentioning is the Sinatra Test. “In Frank Sinatra’s classic ‘New Your, New York,’ he sings about starting a new life in New York City, and the chorus declares, ‘If I can make it there, I’ll make it anywhere.’ An example passes the Sinatra Test when one example alone is enough to establish credibility in a given domain” (151). Will LAUSD adopt your curriculum? Does Harvard recognize your course as transferable? Does Phil Keaggy play your guitar? Does Mario Andretti’s wife drive your car? If the answer to this question respective to your industry is “Yes,” you have powerful credibility.

“Mother Teresa once said, ‘If I look at the masses, I will never act. If I look at the one, I will.’” (165). It’s hard to get compelled to action by large, inconceivable statistics. We are much more likely to respond to one child. This has been the strategy of World Vision for decades. The book shares a story of a letter that was written to solicit contributions and was filled with statistics of children in Africa and their need for water, food, and housing. Another letter told the story of Rokia, a young girl living in Africa with no water, food, or place to live. Those who read the statistics gave an average $1.14. Those who read about Rokia gave $2.38, more than twice as much. When statistics were added to the Rokia story, giving went down to $1.43. “Somehow the statistics actually made people less charitable” (166-167). How do you make people care about your message? Move them to action with emotion.

All these strategies can be rolled into the most powerful tool: Story telling. In fact, after a lecture or seminar, when participants were asked what was the most important take-away, the response was tied to a story the speaker shared. When employees gather for lunch and share shop talk, they are teaching each other in a way that no technical manual can. Stories woo the listener to action. Think of the story of Jared and his Subway Sandwich Diet. Think of the popularity of the Chicken Soup for the Soul series. These and other examples show the power of a story.

To say I appreciated and enjoyed the message of the book is an understatement. I have shared the stories and examples with my cohorts until I think they may either be quite energized or hope to see some of the principles applied in my role as Marketing Director. If only I had read this book years ago! Well, considering it is only a year or two old, that was not even possible. Was there redundancy? Yes, but I believe it was strategic. The principles would have been to my mind like eggs to Teflon had they not been as sticky. I loved the story about the manufacturer of toxic fabrics who changed the chemicals so that the materials were actually cleaning the water rather than polluting it. I was moved by the example of BBs in a bucket to demonstrate the enormity of the nuclear weapon arsenal. And I could feel the pain of the blue-eyed children in Mrs. Elliot’s simulation of prejudice.
Through out the pages of the book, I could not help but reflect on the stickiness of God’s message throughout Scripture. From the stores of the Pentateuch and the poetry of the Psalms and Proverbs to the poignant parables of Christ, the Master Story-Teller and the drama of Revelation, no messages are stickier! Yet, how often does our sinful world attempt to discredit its simple message of hope and redemption, or do we as believers find ways to complicate the Truth? May we be delivered from the Curse of Knowledge—although we are not truly that knowledgeable—and find ways to live out its message in a way that would winsome and compelling.
Of course, the real test this book’s “stickiness” is whether or not the message was so simple, unexpected, concrete, credible, emotional, and story-worthy that I can apply it to my everyday life. (Yes, I was able to list the SUCCES acronym from memory.) Because I am in the business of selling services to teachers of writing—one of the most neglected areas of academic study in the last 20 years—I hope so! I can see how we must craft our company’s purpose statements, which are virtually non-existent, so that our team really does know the message of “What are we really doing here?” We have a leader who excels in communication. In fact, we all have a copy of the audio talk, “What are we really doing here?”! The answer? We are changing the world. How’s that for being simple, unexpected, and all those other things? Now, the challenge becomes how to craft the message so teachers and parents—our “Ellen Excellences” get it? The website, the catalog, the magazine ads, the booth layout at conventions can all be Sticky, Succes-ful, and inspire sales. Ideas may abound, but actions do speak louder than words.

Where should this book fall in the scheme of our MBA Program? There is no question of whether or not it belongs. Perhaps it could be included in the leveling marketing class, but then, not all students would enjoy its juice. The marketing strategies class is already a tough climb. Please don’t add any more! When should it be read? In the Entrepreneur II class is late enough in the coursework to have loops for the Velcro to stick, but early enough that we would not feel robbed of its riches.