I first read The E-Myth Revisited by Michael E. Gerber about a decade ago and since then re-read it often as a seminal book on entrepreneurship. Its basic premise is that an entrepreneur needs to be able to work on, rather than in, her business. As long as she is a "technician" (for example, a bakery owner who bakes the cookies in her bakery) she will never become a CEO able to spend time on opportunities like expanding the number of bakeries she owns.
I bought into this common-sense philosophy for years because I could see it at play in my own small business where, at times, I did or was involved in every aspect of the business. E-Myth was my guide to avoiding that trap.
Until a few weeks ago when I finished Seth Godin's new book, Linchpin: Are You Indispensable.
In it, Godin lays out a blueprint for a new definition of work in the 21st century that's based on the ability of individuals to solve problems without clear guidelines from their management and innovate to survive in their jobs. Business is moving too quickly to rely on instruction-followers to make companies competitive in any long-term way.
Godin quotes from an E-Myth chapter on working on (not in) your business. Gerber tells the reader to consider his business as being "something apart from you," its own organism "that will live or die according to how well it performs its sole function: to find and keep customers." Here's Gerber's quote:
"The Model Will Be Operated by People with the Lowest Possible Level of Skill. Yes, I said lowest possible level of skill. Because if your model depends on highly skilled people, it's going to be impossible to replicate. Such people are at a premium in the marketplace. They're also expensive, thus raising the price you will have to charge for your product or service. By lowest level of skill I mean the lowest possible level necessary to fulfill the functions for which each is intended. Obviously, if yours is a legal firm, you must have attorneys. If yours is a medical firm, you must have physicians. But you don't need to hire brilliant attorneys or brilliant physicians. You need to create the very best system through which good attorneys and good physicians can be leveraged to product exquisite results."
Godin's take on the above:
"Here's the problem...If you make your business possible to replicate, you're not going to be the one to replicate it. Others will. If you build a business filled with rules and procedures that are designed to allow you to hire cheap labor, you will have to produce a product without humanity or personalization or connection. Which means that you'll have to lower your prices to compete. Which leads to a race to the bottom. Indispensable businesses race to the top instead."
I went back and re-read a lot of Gerber's book and discovered there is something about it that always got under my skin. In Gerber's world, unless and until you create systems for every aspect of your business that can be followed by the lowest-skilled workers possible, you don't have a business, you have only bought yourself a job. Once I've created the systems and have workers who will do what they are told and follow my instructions, I can think about the future of the business. That's unsatisfying. It assumes I have all the answers, and that puts a lot of pressure on me. While I'm off looking for the next big thing, my workers are following instructions but not necessarily learning to adapt to what's constantly changing in my marketplace.
So who's right, Michael Gerber or Seth Godin?
Do you look for people who may be "artists" (a word Godin uses frequently), people who want to create differentiation for your brand and for themselves? Or people who can color within the lines? What does your experience tell you? Please leave a reply.
Godin’s quite clearly wrong on this one. McDonald’s is the epitomy of a systemised business. See Ritzer’s excellent book The McDonaldization of Society for more on that.
Now McDonalds has plenty of imitators, yet none have replaced them or replicated their business to such an extent that McDonalds is under threat.
On the other hand Godin is quite right that as an employee you damn sure don’t want to be working for such a business.
I have to say that I was a bit taken aback by Godin blatantly attacking Gerber’s E-myth when I read Linchpin. I understand Godin’s point, but it felt really uncomfortable to read.
Regardless, there are several ways to look at both sides. As the previous commenter mentions, McDonalds is the ultimate systematic business. And that is a great model for any company offering a commodity product or service. With that in mind, then Gerber’s advice remains relevant: put systems in place and train workers who don’t need a lot of skill.
But for those of us who want to scale our businesses, yet avoid selling commodities, then talented workers are essential.
I own a custom publishing company and our mission is to provide professional, distinctive service by an experienced staff. I refer to our big competitors as author factories, because they treat their authors as commodities. They use call centers and inexpensive labor to churn out product.
This is the opposite of the vision I have for my business, and we are experiencing steady growth without the commodity model. We continue to hire talented workers, pay them generously for their work, and deliver a fantastic customer experience.
Admittedly, this model probably isn’t scalable to mammoth proportions. But it has proven scalable to highly profitable and successful proportions. It’s distinctive and it’s clear. It sides with Godin.
The reality is that both authors are right depending on what kind of business model you want to have.
(And perhaps they co-conspired to launch this conversation out into the world. I’d like to think that they did…)
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On the other hand Godin is quite right that as an employee you damn sure don’t want to be working for such a business.
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As the sole employee of my own services business, *that* is all that matters to me! I’d rather work someplace where innovation, geniune interest, and personal investment are highly prized and rewarded – especially in my own business!
I’m quite sure others will come in and imitate me. What is going to set me apart? What will I give potential clients to help them choose me? My processes and instructions? Or a person who cares about the service delivered and the person receiving that service?
It really shows when your service fails to deliver. A system is a behemoth and a process is impersonal. How many of us have been told by the BigBox customer service person “If it was up to me, I’d do that for you. But company policy says …”
But when then “system” is a person and the “process” is making a person-to-person connection, then a failure is not fatal – it’s an opportunity to grow a new connection of understanding.
I’m glad to see the diversity of viewpoints. I’ve been considering all this as I reviewed a new book about selling your business, called Built To Sell, by John Warrillow. Search his name on the home page of entrepreneurs.about.com and you’ll find it. Warrillow’s book is about how to create systems and predictability from any business, even service firms, and have as much consistency as a bottle of Tide detergent. So does regimentation, which can be good when it comes time to sell, hurt the ability of companies to have indispensable people who have unique capabilities? I don’t think so. I think you can have it all.
Micheal Gerber is right. You don’t fix rules. You orchestrate, crystallize and innovate from there. When you have the best lawyers at your time, leverage on his skills to further enhance the business format.
You do not always get good lawyers but your system is always scaled up to the best standard practices.
I think both philosophies are indispensable only if you learn to integrate them to your business’ advantage.
Zappos is a perfect example on how you can integrate both systems with people of the lowest possible skill and people who are “artists” within the company.
I believe you need both, and to say that one is better than the other is not a good assumption. If you speak to five CEO’s, they will not give you a similar “instruction manual” to follow on how to they run their company’s. Instead, they all find what works (or doesn’t) to fit their particular needs.
We all need competent people around us to help us grow our business, but you also need the “lowest skilled” people to take care of some of the daily operations that take time away from productive work.
Gerber makes an assumption that underlies his entire book, and that assumption colors his solution. He assumes that a small business is just a big business that has not grown up yet. Nothing could be farther than the truth.
It’s no different than saying when a gazelle grows up it will finally be a giraffe. Nonsense. The McDonald’s systemization works for a giant corporation but nothing could be more unrealistic than creating the kind of systems detail McDonalds has, at a small business level. I have yet to find a single business with under 20 employees who has done what Gerber said to do. That should tell you something.
Also, McDonalds is an extremely simply commodity model (the whole thing is complex, but each individual component – i.e. making french fries is extremely simple, etc.). Gerber assumes that his commodity model works in all businesses. Highly complex service-oriented models require a great deal of human intuition, on-the-spot decision-making, etc, that cannot be systemized.
But Gerber’s biggest problem is the assumption that we are still in the Industrial Age where people are supposed to be extensions of machines – as the army colonel says “A system designed by geniuses to be run by idiots.” That worked when we had everyone convinced that their “job” was to leave themselves at home and just bring the part to work that ran machines. But it won’t work in the new world.
it’s understandable that Gerber’s book has this underlying flawed assumption because when he wrote it we were still coming out of the Industrial Age and couldn’t yet see that it gave us great toys and a completely bankrupt work culture. People as robotic extensions of machines was one of the worst things that came out of the Industrial Age, and our job going forward is to figure out how to do it differently.
I think it depends on the business. If your a retail bake shop looking to expand to multiple stores, an operational plan is vital to your success unless you want every location wildly different from each other. Once you have the operational foundation laid, then, and only then can you start implementing creativity and artistic flair.
I love both writers but I hate when people turn everything into a zero sum game when both of these points are perfectly valid. Writers like to create controversy to create buzz for their works, Seth knows it’s not a zero sum gain, but if he didn’t make a somewhat controversial statement, you wouldn’t be writing about it now wouldn’t you?