I recently read the E-myth revisited: why most small businesses don’t work and what to do about it. The gist of this amazing book as I understood is this:
When starting a business you must juggle 3 personalities who equally contribute to the businesses development.
- The Entrepreneur: who gives vision, ideas and deals with the dynamic business environment.
- The Manager: who controls, gives standards and normalises the company.
- The Technician: who builds and creates within the business.
Often when one personality takes over problems occur with growth. The solution to this is to make a franchise prototype, this gives room for each separate personality to function without interference. In a franchise the system runs the business, details (of everything) are important. New ideas and developments are tested within this prototype; discipline, standardisation and order are used to ensure the model follows the prototype created. This leaves managers with a little management discretion as possible, with good design every problem has been thought and written down so the franchisee only has to learn the system.
When operating solo this gives the entrepreneur personality a medium to create his vision, the manager a system of order and predictability and the technician the place and freedom to work.
Rules of your model
- Provide consistent value to all stakeholders
- The model must operate with no extra skill: The system is a tool to increase productivity and teaching people to use this tool leaves no need to hire brilliant employees (In their career choice). Management by abdication uses skilled people to take the problem off managements hands while management by delegation gives unskilled people the tools to solve problems.
- Impeccable order: This indicates knowledge and proves that your business works, builds trust.
- All work documented in operations manual: gives purpose, specifies the steps and summarises the standards to give process and result.
- Uniform predictability to customers: customers do not think logically, like the burned child syndrome if you alternate punishments (bad service) and rewards for the same behaviour (a purchase) customers will not return.
- Utilise uniform colour, dress and facilities: this takes advantage of emotional discrepancies.
The result is the business becomes a product.
Innovation, quantification and orchestration in the system
Creativity is thinking something new, innovation is doing something new. So after you quantify innovative ideas (prove they are better statistically) you orchestrate it, giving no discretion of its use at the operating level.
Once orchestrated the innovation is owned and can be relied on.
Businesses must be predictable, people are not predictable. The system must be the vehicle to facilitate predictability and ‘orchestration’ is this vehicles design. This makes work sound mechanical but a set routine needs to be in place so improvements can be made. As an apprentice, improvement in a set routine gives learning and growth then the thrill of the craft becomes the discovery of ‘jewels’ that are uncovered by mindless repetition. These jewels lead to mastery of a craft.
Business Development Program
This is done at the beginning.
- Primary Aim (How the business story goes)
- Strategic objective (How the aim is achieved): This gives a set of standards such as money, opportunities, time, scope, method, value and anything other long term goals [S.M.A.R.T. Goals]
- Organisational Strategy (Business Hierarchy): Gives accountability, who does what and their title. Make a position contract to give dimension to the operations manual. If the founders are the only employees they start at the bottom and create the operations manual for each position, promoting themselves as they hire more people and then documenting the next level.
- Management Strategy: The check-list that must be completed to satisfy the customer and how the result (product) is produced. [Product includes customer feeling]
- People Strategy (How the management strategy is achieved): [Note ‘it’ is the business stated purpose] 1. how we do it here, 2. how we recruit, hire and train people to do it here, 3. how we manage it here, 4. how we change it here
- Marketing Strategy (your customers): The market is irrational and target demographics/psycho-graphics are needed to scientifically satisfy customer needs through the business model. Reality is created through a persons perceptions (Leads to their expectations) meaning people actually judge books by their cover so the business cover is important.
- Systems Strategy: Includes hard(inanimate), soft (living or ideas) and information systems. How their integration gives innovation, quantification and orchestration.
Strikee 