There is some really good content buried in this book… But to find it, you’ll have to wade through some sappy, cheesy, self-congratulatory dialogs with an imaginary owner of a new bakery business, plus a number of pseudo-philosophical nonsense rants on the beauty of life and business. Also, as you get deeper into the book, each chapter contains less and less valuable content, but more and more sloppy pitches for the author’s consulting company; by the time you get to the marketing chapter, it’s basically a few pages of filler, followed by “At Michael E Gerber Companies, we can help you with marketing…” Bleh.
That said, there really is some good stuff here, so as long as you’re good at skimming past the BS, it’s a worthwhile read for any entrepreneur. Here are some of my favorite insights:
(1) “Everybody who goes into business is actually three-people-in-one: The Entrepreneur, The Manager, and the Technician.” Many people who start businesses are Technicians: they are experts at doing the technical work of a business and they figure they can create a company around those skills. But, as it turns out, the “technical work of a business and a business that does technical work are two totally different things!” To succeed as a business owner, you’ll need not only the skills of a Technician, but also the skills of an Entrepreneur and a Manager.
(2) One of the key differences between the Technician and the Entrepreneur is what they build as a product. To the Technician, the product is whatever the company delivers and sells to a customer (i.e., the widgets). But to the Entrepreneur, the business itself is the product. Whereas the Technician works in the business, the Entrepreneur works on the business. And if you don’t have the latter, you can’t succeed, no matter how good you are at the former.
(3) “The true product of a business is the business itself.” I think this is the most important insight in this entire book: to think of the business itself as a product, as a machine that can consistently and repeatedly produce a certain result. And that machine should work without you, or any specific individual involved. The book pitches this as a “franchise” concept—where you create a reusable blueprint for your business, so you can stamp out franchises all over the place—but even if you don’t plan on actually franchising anything, to be successful, you still need to build your business in exactly this way.
“What Ray Kroc understood at McDonald’s was that the hamburger wasn’t his product. McDonald’s was.”
(4) The key insight of this book is more or less the same insight as in the book Built to Sell: you should build your business as if you were going to sell it to someone, even if you have no plans to sell it whatsoever. And a business that’s optimized for selling is just like a business that’s optimized for franchising: it’s a machine, a repeatable process, one that can be executed by anyone, and not just you (since you won’t be involved after selling!).
“Forced to create a business that worked in order to sell it, he also created a business that would work once it’s sold, no matter who bought it. Armed with that realization, he set about the task of creating a foolproof, predictable business. A systems-dependent business, not a people-dependent business. A business that could work without him. Unlike most small business owners before him—and since—Ray Kroc went to work on his business, not in it. He began to think about his business like an engineer working on a pre-production prototype of a mass-produceable product.”
(5) One of the keys to building a “franchise” (even if you don’t plan on franchising) is to find a way to build a business that is systems-dependent rather than people-dependent. That is, your business should be able to deliver results to the customer, not based on hiring employees who are world’s greatest experts and can therefore do extraordinary things to get those results—experts are rare and expensive, and their performance fluctuates (e.g., depending on mood or motivation), so it’s hard to scale a business around them—but based on having the right system in place that allows regular employees to consistently get those same results.
“It is literally impossible to produce a consistent result in a business that depends on extraordinary people. No business can do it for long. And no extraordinary business tries to! Because every extraordinary business knows that when you intentionally build your business around the skills of ordinary people, you will be forced to ask the difficult questions about how to produce a result without the extraordinary ones. You will be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over again.”
(6) The book defines a Business Development Program, which is a step by step guide for how to systematize every aspect of your business. It consists of 7 steps:
- Your Primary Aim
- Your Strategic Objective
- Your Organizational Strategy
- Your Management Strategy
- Your People Strategy
- Your Marketing Strategy
- Your Systems Strategy
As the book gets further along, the content gets thinner and thinner, so I’ll only touch on a few of these below.
(7) Primary Aim: imagine you’re dead. Now, imagine people are attending your funeral, and someone is saying a eulogy for you. What would you want them to say about your life? What’s the story they would tell? That’s the Primary Aim. I found this a very powerful way to think of what I want to do with my life (and not just business)!
(8) Strategic Objective: What product you create and what you sell might are not the same thing! That is, what your customer walks out of the store with, and what the customer feels they’ve bought are typically very different:
“Charles Revson, the founder of Revlon and an extraordinarily successful entrepreneur, once said about his company: ‘In the factory Revlon manufactures cosmetics, but in the store Revlon sells hope.’”
The reality is that most companies aren’t selling products, but emotions and other intangibles: they are selling hope, time, peace of mind, power, love, etc. Knowing what you’re really selling is critical to building a successful business.
(9) Organizational Strategy: “Most companies organize around personalities rather than around functions. That is, around people rather than accountabilities and responsibilities. The result is almost always chaos.” One of the really powerful ideas in this book is that, right when you start your company, before there are any employees, you create an org chart for what the company will look like in the future. Within this org chart, you define every role, every title, and every responsibility. In the early days, the co-founders fulfill all these roles. Your goal is to try these roles out, figure out how to make each one work, record and systematize the process, and then hire other people to fill these roles, following your system, while you move up to managing them. Rinse and repeat until the whole org chart is filled out by others, and they are following the system you’ve created for them.
(10) People strategy. Once you have a system in place, the idea is to present it to new hires, on day one, a bit like introducing them to the rules of a game.
“There is nothing more exciting than a well-conceived game. That is what the very best businesses represent to the people who create them: a game to be played in which the rules symbolize the idea you, the owner, have about the world. If your idea is a positive one, your business will reflect that optimism. If your idea is a negative one, your business will reflect that as well. In this context, the degree to which your people ‘do what you want’ is the degree to which they buy into your game.”
Rating: 4 stars
Yevgeniy Brikman
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