Biz Whiz: Guru of the Corporate World

Sunday, July 1, 2012 - 12:25

A former encyclopedia salesman is showing the world how to succeed in business. And it all starts with a dream, says Gerard McManus

Walk down any shopping strip or visit any mall in any major city in the world and you will find businesses trying to adopt a way of operating and growing based on concepts devised by entrepreneurial guru Michael E. Gerber.

Some do it well, many others do it badly. Some are copying a concept they don't fully understand, but the Gerber theory of the turnkey business is revolutionising the way capitalism operates in many places and making many people very wealthy in the process.

The best example of the concept of the turnkey business is McDonald's, where nothing is left to chance and where every action and effort of every person in the business is part of a much bigger goal of achieving a multi-continent fast-food chain. It is a "system of systems" anchored in a dream of being a world-class business.

But Gerber's ideas are not restricted to the retail and restaurant sectors. His "entrepreneurial myth" philosophy, or E-myth, is now being applied to dozens of other fields from landscape gardening to legal practices. He has also applied his ideas to the field of management.

Mt spoke with Michael Gerber from his home in Carlsbad, California, where he explained how he wants to ignite the entrepreneurial spirit he discovered in every corner of the globe.

"I love, love, love to create, and I believe that's true of every entrepreneur," Gerber says.

"I'm driven by my passion to create because you never truly finish the process. You're always finding there's a better way, there's a better way, there's a better way, and I'm just driven by that desire to create."

Gerber's book E-Myth Revisited is an international sensation, published in 29 languages and taught in 118 universities. There are now 145 countries where you can obtain a copy under the title E-Myth Mastery. In Australia, Gerber's title is publisher HarperCollins's most successful business book.

At latest count, Michael Gerber had sold eight million books and his entrepreneurial incubator business, The Dreaming Room, is taking off in many countries. That's not bad for someone who started out in 1975 as an encyclopedia salesman, saxophone player and dreamer.

"I was a poet, I was a hippie, I was a beatnik," is how Gerber describes himself then.

"I was simply somebody who was impassioned with life and looking for a truth; that's simply the fact of it. So there was no rigour to that, there was just the passion in that and that stimulated my interest in so many different things."

Gerber's beginning as a small business guru happened by accident when a friend asked him to visit a client who owned a small advertising agency in Silicon Valley. The agency was having trouble converting leads into sales and Gerber agreed to visit and see what the problem was.

"It was intriguing, but when I said to my friend, 'I don't know anything about this,' he said, 'Don't worry, Michael, you know more than you think you do. Anybody who can successfully sell encyclopedias can figure out what's missing in this picture'."

Gerber said his visit to the advertising agency was based on two primary assumptions: he knew nothing about business but his friend must do because he owned one.

"As I began that process, in that hour, I suddenly realised that I had just created a completely new life because I did know something about business; I knew that selling is a system, he didn't," he says. "That was my first contract - to help him create a selling system for his business. I said, 'I could enable you to produce better results with literal novices rather than what you're trying to do with sales engineers'- and it worked."

It was the start of a life-long odyssey discovering why some businesses succeed and others fail.

Gerber went on to develop a system, principally for small businesses, that would enable millions of budding entrepreneurs learn how to create their own enterprises and avoid making many of the classic mistakes most start-ups make.

The Wall Street Journal recently named Gerber's E-Myth one of the top five personal help books of all time, while another journal, Our Magazine, named it in the top 10 management books of all time.

"The idea has got a lot of reach; it's got a lot of advocates," Gerber says. "But it's a point of view that applies to Google as much as it applies to McDonald's and as much as it applies to an independent small business."

Even people working inside someone else's business can potentially become an entrepreneur, according to Gerber.

But what can a manager in someone else's business learn about entrepreneurship?

"Everything," Gerber says. "They understand that their division, their operating unit, in E-Myth terms, is a business all its own. So a manager who is driven by an entrepreneurial vision goes through the very same process that I describe in the E-Myth Revisited in order to design, build and perfect their division, their group, their organisation, as though it were a business all its own.

"It is extremely applicable in fastgrowth companies, high-tech companies, but really in any kind of company at all, because it's really a paradigm; it's a systems thinker's paradigm.

"So the manager must first transcend his organisation in order to truly transform it by thinking of it exactly in the same way the entrepreneur does of the entire company.

"So the VP of marketing must do that with his marketing organisation, the VP of finance must do that with his finance organisation and the VP of operations must do that with his operations organisation. They all must do that in tune with the chief executive officer, who must do that with the entire organisation and drive the vision down to the very bottom layer of the organisation so that the system of the entire organisation finds its roots in each and every function within the organisation so that they're not attempting to manage people but, instead, designing a system through which people will consistently be raised to a higher level than they're capable of performing on their own.

"So, if it could be called anything, it's a management system, a marketing system, a financial management system, a lead generation system, a lead conversion system, an acquired fulfilment system and a leadership system. E-Myth is truly built upon those premises that, first there must be a dream that's the higher reason for that company's existence.

"In the E-Myth, I talk about primary aims, strategic objectives, organisational development, management development, people development, marketing development and systems development. Each and every one of those keys to the organisation is ultimately a turnkey system that enables the company to scale itself like Wal-Mart does."

Gerber describes US retail giant Wal-Mart as "simply a perfect example of a perfect company created by the perfect mind".

And he gets irate when it is suggested the Wal-Marts and McDonald's of the world are putting the little guys out of business.

"That's unadulterated bull," he says. "It's absurd and it's spoken by people who don't understand anything. Anybody who's squeezed out by Wal-Mart deserves to be squeezed out, because he hasn't learned the essence of what a business is really all about.

"But I will guarantee you that Wal-Mart makes more customers for other businesses than it takes away because Wal-Mart does business in a very specific way, the Wal-Mart way, which is absolutely perfect for their centro-demographic model consumer. But it's not perfect for the consumers who don't want to walk down a long and boring trail between products hung in perfect symmetry.

"These customers want something unique, special, remarkable, different, bolder, stupider, smarter or whatever."

Gerber argues businesses that "can't compete" against Wal-Mart have "never, never attempted to compete because there had never been any competition".

"Suddenly, Wal-Mart walks in and the whole community has been changed," he says. "But the reality is that Wal-Mart would not have walked in had not the community been ready for it. So Wal-Mart is smart enough to know that a market is ready for Wal-Mart based upon certain demographic and psychographic realities that exist in that market and are not being satisfied in that market by the local businesses. It's the only reason that there's a place for Wal-Mart there. Naturally, then, everybody else who's in business there and not satisfying the need that Wal-Mart is coming in to satisfy begins to complain about Wal-Mart - complaining, 'Life just changed, that's not fair'."

But aren't these turnkey franchises, many of which are now global, destroying culture? The way a thousand Starbucks are sending quaint cafes next door out of business?

"No, no. Culture is destroying culture," Gerber says. "We don't have to worry about destroying culture. Understand that, if culture can be destroyed, it's because culture is so weak that it hasn't a vitality or life of its own. No, what those companies are simply doing is discovering the most efficient and effective way to deliver a result the consumer they're focusing their attention on wants, otherwise they wouldn't be successful.

"The only reason that they're not going to that café is because it's dirty, it doesn't operate efficiently, you don't get the same cup of coffee that you wanted because they forgot how to make it, their people are unresponsive and they're overpriced and under-satisfying.

"That's the only reason they stop going there. It's nothing to do with the other guys moving in. It's called 'shape up'. Anybody who knows anything about small business or all business knows that most small businesses are supremely dysfunctional.

"It's their dysfunctionality that's costing them, not the extreme functionality of the competition. It's almost like saying, 'It's evil to do business well'. It's almost like saying, 'It's evil to really be really organised' - like a SWAT team.

"You walk into Disneyland, Disney World, Wal-Mart or McDonald's and see the extreme capability of those companies to keep their promise consistently again and again and again and you begin to understand what management is really all about."

How about the future? Gerber says the next step is fixing broken businesses and creating new ones.

"Oh, we're going to the moon," he said. "We're growing and going. We're in the business today of creating new business, which is in the business of fixing broken businesses.

"And we're awakening the entrepreneur within the world by creating dreaming rooms everywhere in the world."

Gerber's "dreaming room" is an entrepreneurial incubator, a 12-week process where a facilitator leads a small group of individuals through to discover the entrepreneur within them.

"They begin to apply this process to creating a dream, a vision, a purpose, a mission to create a new venture," he said.

According to Gerber, the dream is the beginning and the end of all successful businesses.

Gerber's seven rules 

  1. Know what you want
  2. Know you have the power to get it
  3. There can be no other causes other than your own
  4. If you cannot manage yourself you cannot manage anything
  5. There are no simple answers, only complex questions
  6. Before it gets better it is going to get worse
  7. These rules must become the defining principles of your life