Book report on The E-Myth Revisited by Michael E. Gerber

E-Myth Revisited

This book takes on the ambitious task of defining from a perceptual standpoint why the vast majority of businesses fail in the U.S. today. The author contends that the greatest error in judgment is attributable to the mistaken belief that understanding the technical aspects of a business guarantees that a person will also understand a business that does technical work. These two areas are diametrically opposed, a point the author invests pages of the book illustrating through practical, pragmatic examples. The three roles of any business owner include entrepreneur, manager and technician. It is the misaligning to time in each of these three roles that further makes the daunting tasks associated with launching and running a business even more difficult to overcome. Throughout the book, the provide ample examples and insights into how entrepreneurs can more effectively balance these roles and increase their odds of having a successful business.

Analysis of the Book

The book resonates strongly with the issue of relative balance across roles and perception of market opportunity, constrained by resource and risk requirements. The typical profile of a person starting up a new business includes 10% of their time spent as an entrepreneur, 20% of their time as a manager and all the rest, or nearly 70%, as a technician. This is a critical point the author makes in the book, that the allocation of time has an immediate, lasting effect on the potential of the business surviving or not. It also over time completely changes the perception of the founder and makes them even more myopic on the technical aspects of the business, less on scaling the business model so it can grow more effectively and profitably over time.

The technician as entrepreneur needs to eventually transition to being more of a manager, handling the inherent uncertainty in the rapidly changing markets they compete in over time. This shift is very difficult for a technician to make, as they have a strong association at a professional level with technology, and most likely get much of their identity or self-worth from their technical skills as well. Yet the book shows brilliantly that no matter how effective someone is at a technician level, they will never be able to scale to their full potential as an entrepreneur and manager. The combining of goal setting and the ability to get the discipline together both at the individual and company level is what differentiates the technicians who fail to scale their businesses vs. The entrepreneurs who focus on a process- and system-centric scalability.

This aspect of process and system scalability is one of the most important aspects of the entire book because it successfully melds the innate strengths of technicians with the visionary skills of an entrepreneur. It's as if the author has found a way to tie together the inherent strengths of each of these two diverse skill sets in a company founder using a system- and process-centric view of the company. It also is highly effective as a means to better track and evaluate the performance of the business over time as well.

Clearly the author has a high level of expertise in franchising, as the chapters on this topic resonate with lessons learned in the area of balancing the three roles company founders often have (entrepreneur, manager, technician). These chapters on franchising also successfully show how the process and system definitions of franchise businesses actually help entrepreneurs to overcome their tendency to spend the majority of their time in the technician role. The book does an excellent job of setting the stage for getting company founders to think of how they can create their own franchise framework too. Finally this section transitions into the next with the point made that it is best to be working on a business, not in it to enable faster and more profitable growth.