The Other E-Myths

What to do v.3
Michael Gerber’s best-seller The e-Myth starts with some profound insights into why entrepreneurs fail, but then he prescribes a one-size-fits-all cookie cutter solution based on his unbridled reverence for franchises. In the process of dispelling some important myths about entrepreneurship, he ends up creating some new ones.

His book is based on three propositions (I’m paraphrasing):

  1. People starting their own businesses tend to confuse the work of their business (“technician” role) with the work of running a business (“manager” and “entrepreneur” roles) and often find they are neither competent at nor fond of the latter roles.
  2. The solution is to create a replicable idiot-proof business model for the business that will ‘automate’ the management and entrepreneur roles, so that the business can grow without limit even without manager or entrepreneur skills, and so everyone in the business can concentrate on the “technician” role. This is the process of creating a ‘franchise’. “Replace yourself with a system”, urges Gerber, and have written Standard Operating Procedures for everything.
  3. A standard business development planning process, all of it conventional business wisdom, virtual guarantees business success.

I agree with the first proposition. That’s why I have always believed that it is folly to go into business alone. What’s more, I think there are more than three roles in most successful businesses. There can be at least eight: You need partners to research, to teach, to imagine, to design, to create, to cultivate, to sustain and to connect. A successful business has people with all these competencies, directed at affordably meeting an identified unmet need. A sustainable business has people that not only do these things well, but love doing them, and whose competencies don’t significantly overlap. These are businesses in Area 3 of my graphic above, at the intersection of your people’s collective gift, passion and purpose.

Such a sustainable enterprise, which I have called a ‘Natural Enterprise’, is a true partnership based on trust instead of hierarchy. Why? Because such an organization is self-managing, and hence is more resilient to absences of, judgement errors by and disagreements among one or two key people. Gerber’s ‘franchise model’ may be fine for mass-production businesses like McDonalds whose product line is small and rarely changes, but it will rarely work when every product needs to be customized. You just can’t automate or make such businesses idiot-proof, because there’s too much judgement and individual craftsmanship required by many people involved. And those who have a flair for such custom work are usually not content to work in an inflexible business run by someone else for which they’re paid very little. Researchers, teachers, ‘imagineers’, designers, creators, nurturers, connectors and sustainers tend to get impatient when someone else (or worse, something else, a ‘system’) is making all the decisions for them. For that reason franchises and branches have notoriously high turnover, and most franchisees (except those who are both uncreative and luck into very profitable franchises) tend to be very unhappy people.

So I don’t buy Gerber’s second proposition, except for a very narrow range of businesses that I don’t think appeal to a lot of people. And while business planning is never a bad idea, most business plans are naive and inflexible, so what is needed more than planning is good improvisational skill. And improvisation isn’t fighting fires, it’s being alert to the changes that are affecting your business and industry and adapting to them, and, most important of all, continually innovating.

Gerber argues that there are seven critical skills in entrepreneurship: Leadership, marketing, money, management, client fulfillment, lead conversion and lead generation. My experience has been that, except in the most mundane businesses, six of these are overrated and largely unnecessary:

  • The cult of leadership in the US is foolish and dangerous; as I’ve argued before, leadership is largely irrelevant to organizational success. 
  • Marketing and selling (lead conversion and lead generation) are only necessary if you aren’t filling an unmet need so well that your customers do these things for you — viral marketing beats the regular kind hands-down. 
  • Money skills are only necessary if you’re caught up in the ‘grow or die’ myth ’Äì sustainable enterprises are organically financed. 
  • Self-management trumps the best hierarchical management through the wisdom of crowds. 
  • Client fulfillment is important, but it is inherent and intuitive in Natural Enterprises that are meeting a real human need better than anyone else can, where the line between supplier and client/customer is blurred and you co-develop your products and services with your customers.

If your ambition is to create a pyramidal growing organization providing a large volume of identical goods competently, then I’m sure Gerber’s advice will work. But is working as part of a hierarchical machine, even one churning out a lot of profits, really what most entrepreneurs are looking for to replace their exhausting and boring jobs? The prototype for Gerber’s book is a woman who quits her job baking because she wants to start a baking business. Then she finds out she doesn’t want to start a baking business, she just wants out from under a lousy boss. She loves to bake. The problems of managing (all by herself) a baking business almost kill her. Gerber shows her how to be the next Sara Lee: She learns the skills Gerber thinks she needs to be a good manager and entrepreneur.

But is this really what she, and so many others who leave their boring, dead-end jobs (voluntarily or not), and what so many young people who blanch at the thought of starting at the bottom of some mammoth Evil Empire corporation, really want?

I don’t think it is. And I think by perpetuating the myths that entrepreneurship is usually grueling, administrative work, requires lots of money, opportunism (regardless of its social and environmental costs), endless selling and marketing, incessant growth and mindless low-paid drones to do what the ‘franchise machine’ tells them to do, Gerber is doing a bit of a disservice to most prospective entrepreneurs.

There is a better way, one that’s sustainable, joyful, egalitarian, low-stress, responsive to real human needs, recession-proof, virally marketed, organically financed, creatively stimulating and good for society and the environment. It’s Natural Enterprise.

Now if only I could find a publisher to get the word out.

This entry was posted in Working Smarter. Bookmark the permalink.

6 Responses to The Other E-Myths

  1. Brad Hinton says:

    Dave,I agree whole heartedly with your vision of the natural enterprise. I’d work there! However, do you think that people are able to sustain the necessary commitment, interest, and good nature over time as a business expands and old habits begin to take hold?

  2. Congratulations. Your most succinct, readable post on this topic yet, in my opinion. I’ve seen more entrepreneurs, and their hapless employees, chasing their tails following the E-Myth doctrine when they would have been better off nurturing their original resilience, flexibility and creativity which sparked off the whole enterprise in the first place.On the other hand, my experience has been that idiot-proof businesses generally attract idiots because that’s the level the E-Myth dictates the business be run at. Which means that while the business may ‘expand’, it doesn’t really ‘grow’- there’s a difference, I think.

  3. Ashley Cecil says:

    What a balancing act it all is! The visual at the top of the post is confronting as it demands that all the variables come together and “play nicely.” My experience is that the slightest tip of the scales (ie, you’re tweaking your product/service to provide what’s needed, but now you don’t love it as much) can throw everything off.

  4. Have you thought about publishing through’ve got the material, and you know your readers are your best promoters.One of the things I especially like is that it’s easy to provide both pdf downloadable versions and paper versions of the same material, and charge different prices for each.

  5. Love your post on this subject, I wrote about it and tried to track back without results. We really should talk someday soon.

  6. dave davison says:

    Dave – I have been working over the past year with several authors – to develop published artifacts of what is coming to be called the networked book.I have been inspired by your work, that of Umair Haque, Geoff Moore, Ross Mayfield, Don Tapscott, Dan Gillmor, Larry Lessig, John Maloney, Langdon Morris, Robert Scoble, Manuel Lima, the if:book, Critt Jarvis,David Brin,Peter Durand,and others to explore the opportunities for authors that are emerging from the NewMedia disruptions of traditional media platforms and formats.We share in common, the vision of the networked book as a platform for orchestrating CONVERSATIONS that lead to augmenting the value of the author’s memes and in a darwinian fashion helping these memes to survive and prosper – leading the community enaged by the author’s memes to reconstruct and reuse and remix these memes in such a way that they are empowered to take useful action in bringing their enterprises into the world.I would like to reconnect with you to discuss how we might help you introduce Natural Enterprise to a broader world – and to help you envision and execute exciting implementations of your ideas by organizations built on your memetic premises enabling them to be born, nourished and succesful using your thought platform.One of your posts months ago about the potential for establishing a blog hosting platform for conversations has been stuck in mind ever since, showing you that your memes do have Darwinian survival potential – can we talk?

Comments are closed.