The Entrepreneurial-Myth

„The E-Myth“

Bestseller Book from Michael E. Gerber

Book Review

Lean Startup Hamburg

MeetUp

July 2013

Presenter: © Dipl-Ing H. J. Vetter

Agenda

Entrepreneurial Seizure

10 Useful Terms

Balanced Entrepreneurship

Business Failure

Entrepreneurial SeizureUnternehmerischer Anfall ...

Just Because You Know How To Do The Work,

You believe You Know

How To Run It As A Business …

THAT's THE MYTH!

10

Useful Terms

Josef Schumpeter1912 - „Theorie der wirtschaftlichen Entwicklung“

Creative Destruction ...(Kreative Zerstörung)

„Continuously

Replacing Good Through Better …“

Always Re-Inventing Themself ...

FundingProf. Günter Faltin – Labor Für Entrepreneurship FU Berlin

Richard Branson – Founder Of The Virgin Label:

„We had No Money,

So We Had To Become Creative!“

Guy Kawasaki – Apple Evangelist:

Taking Outside Money Means

Loosing The Control Of Your Startup ...

Creativity Counts!Sir Ken Robinson (See Wikipedia)

„More Important Than Knowledge Is

Imagination!“(Albert Einstein)

So What Counts Most For Businesses:

Phantasy & Creativity

Do We Have Enough Problems?Motto Of The Sales KickOff 2001 In San Francisco Of Mentor Graphics Corporation

ProblemsAnd Pain

Are

Driving Innovation (!)

Value ChainGeoffrey A. Moore - „Crossing The Chasm“

Only Whole Solutions

Augmenting Unique Value Chain(s)!

Customers Will Only Pay For „Their“ Solution (!)

Solving Their Problem (!)

Specifically If Their Pain Is Unbearable ...

Whole SolutionGeoffrey A. Moore – The Chasm Group

A Solution Always Solves (!) a Problem

Does THEIR Problem Hurts THEM?

… How Much?

Is Your Solution Really Relevant?

Does It Solve Their Problem?

Well Than That Is Your Differentiator!

Do „Risk-Taker“ Take Risk?Prof. Günter Faltin – Buch: „Kopf schlägt Kapital“

Sucessful Entrepreneurs Hate Risk!

„Risk“ Is ALL About Preparation!

Components Reduce Risks ...(„Kopf schlägt Kapital“ - Gründen Mit Komponenten)

Effectiveness vs. EfficiencyEffectiveness:

Doing The Right Thing! … Entrepreneur's responsibility

Efficiency:

Doing Things Right! … Managers Responsibility

Most Damaging:

Doing Things Right,But They Are Not The Right Things!

Buying HierarchyProf. Clayton M. Christensen - Harvard Business School - „The Innovator's Dilemma“

Throughout The Whole Product Life Cycle

➢ First => Capability

➢ Second => Quality

➢ Third => Ease-Of-Use

➢ Finally => Price

BUT … Their Is Always A But … See The Next Slide ...

(Un)Consciousness

Buying Decisions Are Always:

Irrational & Emotional & Instantaneously (!)

Your Unconsciousness Decides …

Only Its Post-Decision Reasoning

Sounds Rational ...

Balanced Entrepreneurship

Michael E. Gerber

Startup Phases

Infancy: Doing All The Work ...

Adolescence: Getting Some Help ...

Final Maturity:

Starting With The

Entrepreneurial Perspective

Entrepreneurial Perspective

Asking: „How Must The Business Work?“Seeing A „System“ Producing Outside Results ...

Starting With A Well Defined PictureOf The Future ...

Envision The Business In Its Entirety!

Market SegmentationGeoffrey A. Moore - „Inside The Tornado“

Define Your First Market Segment(A Group Of People Sharing The Same Interest(s)

Specify Your First Segment Small Enough (!)Be Specific (!), Because You Must Be Able To Serve Your Customers ...

Because You Are Small Enough You Will Not Be

On Your Competitor's Radar Screen ...

Organising People

Classical Divisional Structure(s):

Sales & Marketing

Development & Production

Supply-Management

Finance & Accounting

Balancing Your 3 RolesMichael E. Gerber - „The E-Myth“

➢ Entrepreneur - Working ON Your Businessjust 10 % Visioneer ... to the Outside of your Company …

… Searching … Innovations … Wondering… Are We Doing The RIGHT Thing(s) ...

➢ Manager - Working ON Your Businessjust 20 % Enabler ... to the Inside of your Company …

Improving Processes …… Are We Doing Our Thing(s) RIGHT? ...

➢ Expert - Working IN Your Company70 % Producer Doing The Work …

… How To Do The Work ...

EntrepreneurYour First Role ...

Focus:

The Visionary Is Living For The Future …Always Wondering What If ...

… Searching For Innovation(s)

Conflict Potential:His Need for Change …Always In Conflict With Manager(s) ...

… Trying To Clean Up The Entrepreneur's Latest Mess ...

Integrating New Innovation(s) ...

ManagerYour Second Role ...

Focus:

Improving Business ProcessesPlaning, Order and Predictability … Lives In The Past

Conflict Potential:Always Sees The Problem (For The Process)

Running After The Entrepreneur Cleanup His Mess ...

Tention Between The Entrepreneurial Visionand The Managers Pragmatism ...

ExpertYour Third Role ...

Focus:

Happy If He Is In Control Of Workflow(s) …„How To Do“ The Work … Producing … Living In The Present

Conflict Potential:Entrepreneur Comes Up With New Work ...… Manager Imposes Order On His Work ...

Entrepreneurial DimensionsMichael E. Gerber - „Awakening The Entrepreneur Within“

➢ The Dreamer => Ideas ...

➢ The Thinker => Concept ...

➢ The Storyteller => Feedback ...

➢ The Leader => Lets Do It !

Michael E. Gerber's - Book „Awakening The Entrepreneur Within“

How To StartMichael E. Gerber - „The E-Myth“

➢ Build Your MVP For Market Feedback … MVP := Minimum Viable Product := Prototype ...

➢ Is Your Prototype Scalable? (!)

➢ Then Start Growing … NOT earlier!

➢ Hire (Soon) Your First Expert …

➢ ... Next Hire Your First Manager …

➢ … Finally Be The Entrepreneur ...

Scalability Enables Profits

Scalability Enables Your Business To Grow Organically!

Scalability Transforms Your MVPInto Your Prototype!

Your Prototype Defines Your System,Which Requires Ongoing Continuous Improvements!

Turn-Key RevolutionMichael E. Gerber - „The E-Myth“

Work ON Your Business ... NOT IN it (!)

Your Prototype Becomes Your System

The System Runs The Business,The People Run The System.

All That's Left For The „Franchise“ To Do IsLearn How To Manage The System ...

Working ON Your Business

Your Business Is Not Your Life (!)

Pretent That You Are Going ToAlways Franchise Your Business

Rules To Win:The Model Will Provide Consistent Value …

... To Your Customer

Your Employees Qualification Therefore Can Be Limited …In Order To Replicate Your Business

All Work (Processes) In The Model Will Be Documented …

The Model Will Provide A Uniformly Predictable Service …To The Customer

Business Development ProcessSecond Half Of The Book „The E-Myth“

Innovation (Preparing The Future)

Quantification (Knowing The Numbers)

Orchestration (Standardizing Processes)

Your Business Development Program:Your Primary Aim – Your Strategic Objective – Your Organisational Strategy

Your Management Strategy – Your People StrategyYour Marketing Strategy - Your System Strategy

Leadership

The 7 Entrepreneurial Disiplinces:Enterprise

Marketing

Finance

Management

Lead Generation

Lead Conversion

Order Fullfillment

You Need To Get These Right When You Are Small …… BEFORE You Scale ...

Entrepreneurial Charisma

„Walk Your Talk (!)“

It Is The Entrepreneurhaving The Vision, which Is Bigger Than Life ...

Who Turns Idea(s) & Invention(s)

Into Innovations, deriving from It His Mission ...

This Is The Foudation Of A Successful Businesses!

Business HierachyVision: Your Dream … Bigger Then Life, Very Long Term ...

(My Vision: Helping People To Develope Successful Business Models ...)

Mission: Your Core Competency … for decades ...

(My Mission: Development Of Open-Source Solutions Offering As SaaS Solution Towards Non-Techies …)

Strategy: Combining & Configuring … for years …

Defining The Set Of Components / Partners … Preparing forThe Next Market Segment (Bowling Alley Strategy) ...

Tactics: Improve Offering Quality … every quarters ...

Stabilizing & Improving Business Proccesses ...

Reality Check

After 1 Year ~ 40 %

After 5 Years ~ 80 %

After 10 Years ~ 96 %

… Of Businesses Fail!

(Seems To Be Valid Around The Globe)

German IHK Statistics

„Experts“ Say That The „Typical“

Reasons For Business Failures Are:

Not Enough Experience ...

Not Enough Knowledge about:Finance, Taxes, Marketing, Sales, ...

Andreas von BechtolsheimerFounder of Sun Microsystems Inc. & the very first Google Investor (100k$)

His 5 Reasons Why StartUp Fail:

Too early

Too late

Too complex

Not relevant

Too expensive

Guy KawasakiApple Evengalist … Business Angel … VC

Do NOT scale too early!

A Working Prototype Is Most Important

And Must First Be Scalable!

Focus On Your Market Segment!

Growing Organically …

Improving Scalability Of Your Prototype!

Thank You!

Questions?

Appendix

Book Title:

„The E-Myth Revisited“-

„Why Most Small BusinessesDon't Work and What to Do About It“

ISBN: 978-0-88730-728-7

Author: Michael E. Gerber