About a year ago I read Seth Godin's book, Linchpin, about the present and future of work. It changed my thinking about the nature of small business (all business, really) and especially about the bible of entrepreneurship, The E-Myth, by Michael Gerber. Gerber argues that most entrepreneurs doom their companies to staying small as long as the owner continues to do most of the work. I blogged about Godin's book and Gerber's ideas last year, and yesterday there was a new comment posted, from Chuck Blakeman, author of Making Money is Killing Your Business. Blakeman is head of the Crankset Group, a consulting firm in Colorado. I thought his comment was so interesting that I'm re-publishing it here.
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 simple commodity model. (The whole thing is complex, but each individual component -- i.e. , making french fries is extremely simple.) 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, 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.
The E-Myth is about identifying and documenting your unique methods to improve everything about your business (constantly). Create the “this is how we do it” and then set out to get the right people and resources, in the right seats, on the bus. Without systematizing your business…you can not go from “Good to Great” or even be “Built to Last”. Gerber’s biggest problem is that most small businesses still do not understand and commit to actually building a business for the long haul, that’s why the ones that do survive long enough to get to 20 employees eventually hire someone to take that work on or they’d fail too.
Greg,
We are all forever indebted to Gerber for identifying so clearly that we are all on a treadmill. And it’s not that systems are wrong – I advocate them strongly. But they are not of FIRST IMPORTANCE.
Ray Kroc came along 17 years after the McDonalds opened their restaurant and 6-7 yrs AFTER they invented the Speedee Service System franchise model. Within a few months he had franchised the model and within a 4-5 years had dozens of restaurants while the McDonalds brothers were still restaurant plodding along, hostages to their one restaurant. They both had the “Turn-Key” “Franchise model” – what was the difference? Ray Kroc had all five indicators of success:
1) Vision – the McDonalds brothers never had one for getting off the treadmill. So they didn’t. The very first day Kroc saw the Speedee Service System he said something to the effect: “I lay in my bed that night staring at the ceiling and I saw a McDonalds restaurant in every town in America.”
2) Speed of Execution – they sat on the franchise model for seven years before Kroc took it nationally in months. No surprise – he had a great vision and he moved on it quickly. The McDonald brothers dragged their feet through the whole process.
3) Commitment – Kroc was completely sold out to getting off the treadmill and did whatever he had to in order to get it done. He is famous for saying “If you don’t want to take a risk, get the hell out of business.”‘ The McDonalds’ had no commitment to build their business beyond the one treadmill restaurant.
4) A strategic plan – Kroc was very strategic about getting his business into every town in America.
5) Systems – without them Kroc couldn’t have done #1-4 above, but systems are only one part of the key to success, and not central to it. Vision, commitment and speed of execution are of FIRST IMPORTANCE. The first three keys are inside the person’s head. #4 and #5 depend completely on those three.
It’s never the process. It’s always the person.