Concepts for managing successful small businesses
If you browse the store or online shelves of any bookstore these days, you’ll see more books on business management than nearly anything else. Everyone, it seems, has a philosophy of management — ranging from emulating Genghis Khan to following a more faith-based approach. Each managerial mindset has its proponents and detractors, and no doubt each has something to offer those seeking to improve their company or organization.
In our center, we typically work with companies that are not large enough yet to have a huge managerial team. In fact, high-technology and life science firms usually consist of the inventor, the manager and the idea guy who can take the technology to market. Most often, all of those roles are played by one person.
Enter the “E-Myth” – a concept pioneered by Michael Gerber in his groundbreaking book of 1986, which he revisited in 1995 and has now adapted to the medical profession and many others in a series of books published in the last seven years.
Whether we’re working with engineering professors, students of veterinary medicine, restaurateurs, owners of retail stores, life science researchers or leaders of non-profit organizations, we heartily recommend every entrepreneur read Michael Gerber’s work. Many revolutionary business management books have hit the shelves since 1986, but the entrepreneurial problems defined by Gerber and his recommendations for overcoming those problems are as on-target today as ever.
If you haven’t read The E-Myth or The E-Myth Revisited, you should. For now, here are some of the major concepts to keep in mind as you provide leadership each day for your organization.
Balancing roles
Each of us is several people. And depending on what demands are staring at us at any given moment, we can switch roles accordingly. Each demand, each problem, each challenge must be met, and you’re the only one available to do it. And as you meet each demand, the other parts of your life suffer, because only one of you can be present at any one moment.
Putting this in a business perspective, Gerber tells us that in every company there is a technician – the doer. The technician is the expert at what ever the business offers as a product or service. The technician is the individual who was doing what he’s good at for someone else when he decided he would start his own company doing what he’s good at for himself. If the technician didn’t do what he does in the business, it would not get done.
In every company, there is also a manager. The manager frets because she’s charged with being sure that everything gets done. The manager brings planning, order and predictability to the operation. The manager is charged with being realistic, pragmatic and systematic. And the manager is always in conflict with the third personality within every business owner – the entrepreneur.
The entrepreneur is the visionary. He sees the opportunities and can’t be bothered with the details. He is the dreamer. He is the change agent. He lives in the future and loves to speculate about the “what-if” or “suppose that…” The entrepreneur can also create a great deal of disruption in the organization – particularly for the manager. The entrepreneur creates messes; the manager cleans them up. And the entrepreneur cannot understand why both the manager and the technician don’t just “get it” and make what he envisions happen. Now.
These three personalities, which co-exist in nearly every small business owner – also reflect the life change in most businesses.
Growing from infancy to maturity
When companies are in their infancy, the technician rules. The business has been formed, after all, so the technician can do what he’s good at on his own terms. And he can survive, and the business can take root while he does that. But while he’s being left alone to do what he loves often late into the night and early into the morning, he often overlooks the fact that he’s growing, gaining customers and acquiring management issues he must address. According to Gerber, it’s fairly easy to spot companies in their infancy, because the company and the owner are one in the same.
Then one day, something shifts. Suddenly, he’s running late on orders. He can’t keep up. Customers are waiting longer. He’s running late paying bills and starts making mistakes. The natural answer is to work harder and longer than before. Until he hits the wall and realizes some of the work that has to get done, won’t.
And this is when most businesses fail.
But if they don’t, they go on to what Gerber calls adolescence – the point in the business life cycle when the technician decides to cry for help. Help usually arrives in the form of someone to answer the phone, take the orders, pay the bills, sweep the floors, make sure the copier gets fixed and then hire any additional workers to help the technician. Great! If you’re the technician, you turn over all the annoying business details to the cavalry that has arrived to save you. Until you realize that they aren’t doing things the way you did – and the way you’d like them to be done. Before long, you’re back doing all of those things again, and if anyone is there to help you, he is more in the way than anything. So, now you’re the manager, and the technician is getting more and more frustrated by not being in the kitchen, in the lab, in the garage, in the classroom or with the patients.
You have two choices. You can retreat to infancy and become a one-person, work-all-night technician forced into management, or you can try to evolve into a mature company, which is when the entrepreneur in your personality can thrive.
When your company reaches maturity, you begin to view it with an entrepreneurial perspective. You question how the business should work rather than what kind of work needs to be done. You look at the company’s future instead of its past or present. You look at it from a holistic perspective instead of at its parts. You have an integrated view of the company rather than a fragmented view of its various functions.
Where the problems start
The problem is that all of these personalities – the technician, the manager and the entrepreneur – are continually battling for prominence in the day-to-day life of a company. Just when you want to be the entrepreneur and work “on the business,” the technician or manager in you cries for help, and you end up working “in the business.” You devote your time to what is urgent rather than what is important. You live in the present instead of the future.
According to Gerber, the best companies are built from an entrepreneurial perspective, rather than from the perspective of the technician. That is why, particularly when we encounter a high-technology or life science business idea, we encourage the technician to find the entrepreneur in another person so that neither becomes frustrated while trying to reach competing goals. For many technicians, the joy is in creating the product, developing the technology or directly providing the service. The joy is not in filing taxes, supervising employees or handling promotion.
How do you take your company to maturity? How do you develop a business that works whether you are working in it or not? How do you find time to have a life of your own and ensure that your company has a life of its own – separate from yours?
The key, says Gerber, is to think of your business as though you intended to build 5,000 more just like it. Whether or not you ever do is irrelevant. Just imagine that you might. Imagine that you are showing someone else “how it all works.”
The creation of processes
Start with “your primary aim” – not for the business, but for your life. The definition of your primary aim is the criteria against which you assess your progress.
Next you define your strategic objective, which is your clarification of how your business will help you achieve your primary aim. In this way, your business becomes the means to an end – not the end in itself.
The third step is the creation of an organizational chart organized around functions – not people. When you or perhaps you and one or two additional employees are expected to fill all of those functions, the chart helps you clarify roles. Because people can’t do all of those things well without some kind of systematization, you develop processes to help you get the work done.
Those processes form your management system. They are the systems that are outlined in operations manuals and that tell others how things should be done according to your vision for the company. With the institutionalization of processes, things happen automatically without thought. And they are done with consistency and quality.
Sounds like a recipe for boredom? Not so, says Gerber. The key is in your “people strategy” and in putting the focus on the process – not the people. The people test their work product against the process standard. And that standard should always be reflective of your primary aim for the company.
Your marketing strategy takes the focus off of you and the business, and focuses all of your energy on the customer. You need a solid understanding of your customers’ demographics and psychographics. Once those are understood, your customers come alive for you, and your process for reaching them becomes systematic, freeing up time for you to work on the business not in it.
As you can see, the foundation of the E-myth principles is processes and systems. Gerber maintains that if you envision the business of your dreams and compare it to the business of your reality, the gap you are trying to close is full of processes. That’s how the technician, the manager and the entrepreneur find time to get everything done. Processes and systems ensure the entrepreneur has time to work on the business – not in it. And they ensure that the work of the manager and technician is done with consistent quality and accuracy.
The subtitle of The E-Myth Revisited is “Why Most Small Business Don’t Work and What to Do About It.” And while the recipe looks simple, the implementation of it is challenging for most small business owners who live in reactionary mode and take no time to be proactive.