Chris: Hey everyone, I'm Chris Ronzio, founder and CEO of Trainual and this is Process Makes Perfect. As always, we're talking with experts in process creation, automation and delegation. And today, in this very special episode we have with us, Michael E. Gerber, Michael is the founder and the author of the E-Myth and creator of E-Myth Worldwide. Now, Michael has been in the game for 30 years or so, and if you've heard any of those clichés about work more on your business than in your business, that originated with this book, one of the most foundational books for me. So I'm thrilled to be talking with Michael and I hope you enjoy this episode.
Chris: When you started doing the research for the E-Myth and you were working with small business owners, what did the landscape of operations manuals look like? Is it something people did?
Michael: Oh, you've got to understand. And when I did in quotes, the research for E-Myth, I didn't do research for E-Myth. I started consulting with a small business and then another one and then another one, and then another one. And the revelation came to me that effectively there was no business there. There was just a guy, a lady doing it, doing it, doing it, busy, busy, busy, busy. The thought of an operations manual in 1977 when I started this thing, if I were to say that to a small business owner, they would've looked at me like I was a lunatic, and they did, because I didn’t think operations manual. That was an evolutionary frame despite the fact that if you are in a large corporation and IBM of course there were operations manuals, but that was so far beyond the experience of being in a small business.
Michael: It was a job. You know, if somebody starts his kitchen and starts making food and doing it, doing it, doing it and busy, busy, busy and people come in their customers and then you needed a waitress and then and on and on and on.
Chris: Okay, so they didn't exist, at least not for the small business. Maybe for the enterprise companies or our franchises at that time. I know you talked about the franchise prototype, but it was totally foreign for a small business except. So this, this idea that you had that an entrepreneur is really three different people is the whole center of the book, right? That we are kind of all a schizophrenic when it comes to our business and we've got these different personalities and profiles. So how do you balance the time that you focus on each of those different personalities to make the company successful?
Michael: Well, you don't think about balancing your time on each of those personalities, and I want to make a correction. I didn't say that the entrepreneur was three different people. I said the small business owner was three different people. The small business owner was an entrepreneur, a manager and a technician. There’s very little time spent as an entrepreneur, a little bit more time spent as a manager, but the bulk of their time spent as a technician, which I call doing it, doing it, doing it, busy, busy, busy, busy, doing the work that needed to be done. And the work comes up and you get up and you do it or you don't. And that's how it is. That's the experience of being a small business owner. You have the work comes up, you can do it. There's no order to it all. So the disorder that I came face to face with was so offensive to me – understand offensive, not because I was in living in some higher plane – but understanding I was called to find a solution to the problems these people were having.
Michael: And the conversation didn't start out the way the e myth conversation started out, the E-Myth conversation was an evolution of the realization that everybody was doing it, doing it, doing it, doing it all wrong. So what's missing in this picture was the question that was raised. Only later did I think in terms of the four distinct personalities that drive an entrepreneur. In short, I kind of come to understand after all the E-Myth work I'd done, who is this person I'm talking about as an entrepreneur? And so the evolution of our work over these past 40 plus years really conspired to enable me to understand those four distinct personalities, the driving personalities underlying the creation of a company of one to a company that I call the thousand. The evolution of an enterprise.
Chris: Do you remember the light bulb moment where you’re driving or you're in the shower or you said, wow, a small business owner is really three different people or four different personalities. Do you remember having that epiphany?
Michael: Well, only vaguely, Chris. Only vaguely because my life has been a constant flurry of epitomes. Yeah, I must say that. No, I'm not saying that to again to for self aggrandisement. I'm just simply saying that's the nature of the beast. My life has been a continuing flux of epiphanies. Moments of seeing, moments of realization, moments of clarity and breakthrough. And coming to grips with this story that I've been sharing with the millions of readers I've shared it with, from the very first book, which Luiz Dahlia gave you a copy of the original E-Myth, why most businesses don't work and what to do about it to the 30th, I think it is now 30, the 30th book that I've just published called Making it On Your Own in America or wherever you happen to live.
Michael: Great realization of miraculous self-employment and what does it look like and how do you approach it and so forth. So I don’t want to wax on about this. You understand? So there's no one moment.
Chris: Yeah, it's been the fabric of your entire career. So I imagine it's hard to pull out. So when you think about those personalities, documenting what you do or you know, as we've said in some of our marketing, get your business out of your brain, what is the first step to realizing, “I've got something here. I've got a sequence of steps, or I've got a way of doing things that I need to put down on paper.” When do you get to the place that you should start to do that?
Michael: Hopefully right now. Meaning whomever we're speaking to right now, no matter what they're doing right now, even if they're just thinking about starting a small business before they ever even start, that idea has to be deeply embedded in your consciousness. Because without documentation, without the system being orchestrated, as we call it, without your being able to say, this is how you do step one, this is how you do step two, this is how you do, et Cetera, et cetera. No matter what it is, whether it's building a wall, painting a house cooking a chicken dinner, doesn't matter what it is. Until you understand that there will be no growth until and unless you're capable of showing someone how to do what it is that needs to be done to produce any result whatsoever, no matter how important or how trivial that result might be.
Michael: You absolutely have to understand that the documentation of that process is absolutely fundamental to growth. There can be no consistency without it. There can be no effectiveness without it. There couldn't be no authenticity without it. There can be no control over it without documentation. The documentation of what we do, how are we doing, why we do it, and what it produces is absolutely critical to operating anything on this planet, whether it's online or onsite, it makes absolutely no difference. You're going to have to do it. So you have to start out understanding that before you do job one, that every single task, every single human being does on the planet is in fact a process. And that process, is really a process over time, is a system. So everything we do right now, we're doing something. This is a process. We start with how do we do it? How do we do it? How do we do it? Why do we do it? And what in fact is a result we intend to produce here?
Chris: I love that. It's such a simple example, but just us sending you the link to log into and getting the lights just right and through the conversation, and what questions. All of that is a process that if someone was to do a lot of interviews, they'd want to document, right?
Michael: Absolutely. Because we're going to have to deal with a light again and again and again and again. We're going to have to deal with the how you click on again and again. We're going to have to repeat this again and again and again and again, and then somebody else is going to have to repeat this again and again and again and again. So I don't have to be there to repeat this again and again and again. You might say the video that's being shot at this very moment is indeed evocative of an absolutely clear turnkey and replicable system.
Chris: Yes, absolutely. So let me ask you this then. Today, you've got fast moving startups like online companies and companies, like Facebook, that say move fast and break things and let's just create chaos and let's plow forward. How do you see that contrast with the idea that you want to plan everything out perfectly from the beginning and document things perfectly from the beginning?
Michael: Well, I hear that and it's the provocative bullshit that everybody speaks about what in fact everybody's doing. So they're essentially saying, you're going to create chaos cause you don't know any better. Let's just start and let's just create the chaos and everything will work out fine.. Bullshit. Everything won't work out fine. In short, chaos produces nothing other than chaos. So if we begin this process with some semblance of order to understand the four critical roles of an entrepreneur, the entrepreneur is a dreamer, a thinker, a storyteller, a leader. The dreamer has a dream. The thinker has a vision. The storyteller has a purpose. The leader has a mission. This is how you discover your dream. This is how you discover your vision. This is how you do discover your purpose. This is how you discover your mission. If we simply just start without any logic to everything we're about to do, we’re just stupid. Effectively everything we've learned over all these 40 plus years of organizing the world around us in such a way that it works in an incredibly effective way. All of that must be internalized. The beauty of it is because it's a system, for example, at Radical U, it's a system you can begin to engage with it in a way that produces more predictable outcomes and more of a transformation internally as you awaken the new entrepreneur within.
Chris: So let me share this. Customers that sign up for our product for Trainual, it's funny, I can always tell who the second time business owners are because those are the ones starting with the person of one or two signing up for the system and documenting and they're not already at a hundred and the wheels are spinning off and it's total chaos. And they say, “How do I even get started? I can't even fathom how to write down everything that's going on in this place.” So as somebody who's going through that growth path, what is your recommendation? Is it that they spend time every day documenting? Is that they document while they're doing something? Is it that they have a project every month or every quarter to catch up on the new things they've learned how to do? Practically speaking, how can someone get this type of work done?
Michael: Well, tactically, and practically speaking, we addressed that in Radical U as the eightfold path. Okay? The eightfold path simply describes a process and it's the process we believe must be applied to the launch of a company of one, which is just that guy you just talked about, doing it, doing it, doing it, doing it. Here's a guy that he's painting fences, he's painting fences, he's self employed, he's painting fences, he's got a company of one he's making chicken dinners. He's making tacos. Whatever he or she is doing and they go to work, donate, donate, donate, donate. And obviously he's got a job. So now we can paint a fence. He's got a job. But now he's gonna paint a fence. Well, what's involved in painting the fence and why is he painting fences in the first place? So we’re saying the very first thing that you must do while you're doing the stupid stuff, you're telling me, painting a fence, fixing a fence, whatever, whatever, whatever, building a fence, whatever in quotes the product of your company is, we're saying the first four steps of the eightfold path are to discover your dream, your vision, your purpose, and your mission.
Michael: So at Radical U, we devote a year to doing that. While you're doing everything else, doesn't matter what you do, just keep on doing everything else, doing it, doing it, doing it, doing it, get it better, let it worse, do whatever it's gonna do, doesn't make any difference. What we absolutely know makes a difference however is creating a foundation for everything you're going to do. Without that foundation, you're lost. And I'm saying the foundation is what we did in 1977 when I started my first company, it's called the Michael Thomas Corporation. I was Michael, he was Thomas. And we started out working together to discover what our dream was, our vision was, our purpose was, and our mission was, and we didn't begin doing anything until we figured that out. So our dream at the Michael Thomas Corporation, way back then in 1977, our dream was to transform the state of small business worldwide.
Michael: I can remember us coming to agreement about that. Tom and I, our dream was to transform the state of small business worldwide. We wrote that down. That was the key. That was the dream. That was the endgame, that was the outcome of everything we were going to do.
Chris: And for anyone listening, that is the inspiration for everyone that will follow your business and engage with your business and work for your business and purchase from your business. And without that dream, there's nothing to inspire and motivate and so many businesses are lacking that.
Michael: It's the energy. All you and I do, every single person on the face of the planet does, requires energy. So the very first thing we need to do is to discover that energy, that higher energy that takes us out of just doing it, doing it, doing it, doing it for the sake of making a living.
Michael: So we're saying we didn't start the Michael Thomas Corporation to make a living. We started the Michael Thomas Corporation to make a difference. I understand everybody says those words, but we practiced those words. This was an argument we walked into Tom and I. So why are we here? So why are we here? So why are we here? To sell our consolidated services, bullshit. We're not here to do that. We're here to do something significantly larger. What's the large thing we're here to do? So the dream is critical. The next step was the vision. So understand we had to the vision and to us the vision was the form our company was going to take in order to realize the dream, understand the dream, drove everything. But now we're going to create this practical reality called a company. And so our vision was to invent the McDonald's of small business consulting.
Michael: How are we going to realize the dream? How are we going to transform the state of small business worldwide by becoming the McDonald's of small business consulting – an outrageous statement. But you understand if we went deeper into the dream, we could talk more and more and more and more and more and more and more about it. And that's what all my books are about. If we talk about the vision, we can talk more and more and more. What do you mean by the McDonald's of small business? Consolidate. Why McDonald's? The third step was effectively our purpose. And in short, our purpose was that every single small business owner on the planet who was called by our story, by our paradigm, by our dream, by our vision, could become a successful as a McDonald's franchisee. Why did we say McDonald's franchisee?
Michael: Because to us, McDonald's was the most successful small business in the world. And I would say McDonald's is still the most successful small business in the world.
Chris: Have you seen the movie movie, The Founder?
Michael: Yeah, we can talk a lot about that movie, but let's not do that here. And finally the mission. So if this then that, if this, then that, if this, then that. And finally the mission and the mission was to invent the business development system that would be core to everything we did there at what we called the Michael Thomas Corporation, the very first business coaching company on the planet. Hear me, the very first. Nobody had ever conceived of creating the McDonald's of small business consulting. It's outrageous you talking about it's lunatic. But when we walked into McDonald's, we immediately said, we can do that. We can do what red crowd did. We can do that for consulting small businesses by creating a turnkey consulting system that we can then hand off to novice consultants who we would then call business development specialists who would then use our business development system with every single small business client we ever worked with. That's the heart of it. That's the heart of the coaching industry today.
Chris: And you set off with this dream to just transform the state of small business. And it's funny all the way down there at your, your mission, the way you were gonna do it created a system that 40 years later, so many consulting firms and coaches are able to follow even as companies of one themselves. So by creating this, this dream and this purpose and this mission and this vision on yourself, you've seen it that into so many others that are now carrying it forward and helping other businesses. So you really started the tidal wave.
Michael: And you can't do that without documentation.
Chris: So what we say is, first you've got to learn to do it and once you can do it consistently, you document it. And once you document it, clearly you can delegate it. And it's a simple process of learning to do things, document them and delegating them. And I would say I'd take a step even further back now after this conversation and say, even before that, you have to dream it. You have to come up with the framework that you just mentioned and the inspiration of why you're getting into business, because that's going to inform it and filter every decision that you make as you grow the business. And every documentation piece you write and every person you hire and every process you hand off. So I thank you for giving me my fourth d.
Michael: It lives and breathes at the heart of everything you do every day. Why we're here, why are we, why are we working so hard? Why is this important? Why is this meaningful? Why is this better than anybody else? Who's painting fences anywhere on the planet? You understand? It gives the, brings the heart to everything we do, the passion to everything we do. And I'm just saying every human being on the planet can learn how to do that. Absolutely can learn how to do that.
Chris: Agreed. So let's talk about getting, you know, working on the business. Now my story, I had my video production company and I actually had a pretty pivotal moment where I was very entrenched in the business as the camera guy and my, my girlfriend at the time, now my wife, called me out on it and she said, you're working all the time. You're staying up late. You don't never go to sleep. On the weekends you're traveling, you're this, you're that. So she called me out on it and we actually moved across the country. I left my office and my employees and moved across the country to work on the systems of my business and probably read your book again five times. And so if someone can't actually move away from the business to get themselves out of the day to day, how do they start to think about little by little getting themselves out of the day to day?
Michael: Well, let me give you a great story and a great example of that. How you do that. And I'm speaking now about Brian Scudamore
Michael: 1-800-GOT-JUNK. Yeah. And Brian and told the story in an interview we did and a webinar that we did that you might want to access and you can access that. We recorded it and he told the story about how he came to the point in his small business, his junk business picking up junk there. They were producing about a half a million in revenue. He had 11 employees and he came face to face with the fact that he wasn't enjoying himself. There was something wrong with what he was doing and he realized he didn't know how to lead anyone. He realized he didn't know how to do what he had actually set out to do, he didn't know anything about business and so he decided to shut it down. Literally he met with his 11 people and he fired them all. Think about the courage that took. He fired everyone, and he quit and went away, he said for three days to a cabin overlooking the ocean and in that cabin he wrote a one page vision. Now, Brian tells his story in WTF, and that's the name of the book, which describes the story of what I've just shared with you. Willing to fail.
Michael: Everybody should get that book because the question you're asking is answered by that book. Brian realized he didn't know what he was doing, didn't know how to do what he was doing, and knew that he wouldn't be happy doing what he was doing, no matter how successful it seemed to be. So we decided to start all over again.
Chris: Which takes courage. I think to burn down your business like that is something very few people will do.
Michael: Of course, but I'm just trying to demonstrate to you the answer to your question is really making a break with the past. Making a break with the past and then what he did during those three days. He said he read the E-Myth Revisited two times. So he read The E-Myth Revisited two times and the E-Myth Revisited told him exactly what he needed to do. He needed to determine what his primary aim was.
Michael: He needed to determine what his strategic objective was. He needed to determine what his organizational strategy was. He needed to determine what his management strategy was, and he needed to determine what his people development strategy was. And he needed to determine what his systems strategy was. And the minute he could see that he had a path. So understand that every single person who's listening to us has to understand you need a path and the path has to define the strategic outcomes you absolutely critically need to possess in order to go beyond not knowing. In order to go beyond the ordinary in order to go, as Brian Scudamore calls it, from the ordinary to the exceptional. The ordinary to the exceptional. Now Brian has taken that mindset and applied it to now for more ordinary products, services all do that with home. Painting a home in one day.
Michael: Painting a home in one day. I said, how do you paint a home in one day? He said instead of having two painters, we have 20 painters. And each of those painters is focused on one thing and each of them doing that one thing simultaneously. So understand, he saw the system and he turnkeyed it before he even opened his doors. So effectively I'm saying whether you own a small company, whether you want to own a small company, whether you've been doing it, doing it, doing it for 18 years is irrelevant. Everybody gets to started anew. And you need a path to do that. And so your piece on the path, Chris, is well would find it starts in year two. And in year two, after we've done the dream, the vision, the purpose, the mission, after we've awakened the electricity, the energy, the fusion of our mindset about the difference we're going to make in a very specific world.
Michael: The next step is the job and the job is your client fulfillment system and you're going to go to work on the job while going to work in the job to turnkey the job. Just like Brian did, just like so many, many, many, many, many tens of thousands of readers of my books have done just as you have done, just as you did in your video business, which you then built and sold just as you're doing right now in your documentation business. Effectively, you've got to work on the sucker to get it to work. Then you can replicate yourself with other people, and when you're able to do that, you're able to grow from a company of 1 to a company of 1000.
Chris: Now, let me ask you this. I have a theory that the most scalable businesses have the fewest number of roles needed to accomplish a particular task. For instance, Brian's painting business, he has 20 painters doing the same thing. So for him, there's a lot of ROI on documenting their processes for a painter to paint. For McDonald's, they've got someone working on the burgers, they've got someone working at the register, and they're able to scale that role infinitely across the country. But for a business that has a thousand different roles in one person doing each role, there's less ROI on the documentation. So is that something you've seen that, that the scale of businesses that scale the fastest have the fewest number of core production roles?
Michael: Well, understand that there is no business that has a thousand unique roles in it. So effectively it's the focus that's needed to reduce the number of roles to the most critical. In short, you're designing a production system and that production system, whether it's a restaurant, whether it's an online deliverable, whatever it might be, that production system calls for very specific roles to produce it.
Michael: Now understand while there are 20 painters, there's only one painting system. So the expansion of the two week process of painting your home to be able to deliver it in one day said we have to reduce this to a competency and capability that will enable us to get the job done now. How do we do that? So you understand the dream, the vision, the purpose, and the mission, launch that passion for discovering what it is you're going to do, why it is you're going to do that, to move you to begin to ask how it is you're going to do that. What are we going to do? We're going to transform the state of small business worldwide. Why are we going to do that? So that we can literally transform the economic reality of small business owners worldwide. How are we going to do then by emulating the most successful small business on the planet McDonald's.
Michael: So we're going to take McDonald's as our model, as absurd as it might seem. See how they did what they actually did to be able to open over 37,000 stores worldwide.
Chris: Even beyond McDonald's, the explosion of fast casual concepts and coffee shops and this and that is all based on the same mentality of having a production system. I'm so glad you brought up Brian and the painting example, I actually spoke with Cameron Herold a few weeks ago and he said that he remembered you coming into 1-800-GOT-JUNK. He was the COO and saying that, “Wow, I've never seen someone put the E-Myth into such a practical application as what you guys have just done with this.” So Kudos for that.
Michael: It was wonderful. It was wonderful, and it is wonderful. Every time I see it, it brings me joy. Every time I see the breakthrough from a technician suffering from an entrepreneurial seizure, who's created a job for himself or herself, consumed with work and have lost any idea whatsoever why they started in the first place other than to make a living. I'm saying, if you're there to make a living, you're there for the wrong reason. So you've got discover the big reason you're there, what's the difference you're going to make in the world? That's where joy comes from. The joy that comes from seeing Brian doing what Brian has done to create a 400 million plus year enterprise, applying the E-Myth religiously to each and every category of work. Replicating and replicating and replicating and replicating it. His employees love it.
Michael: His leaders love it, his franchisees love it, his customers love it, his bank loves it. Everybody loves it. But Brian didn't do it to get a Ferrari. So when you begin to see the pitch on Facebook of the shiny, bright red car, you've got to tell yourself there's something missing in this picture. This ain't what I'm here for. I'm not here to become a – you understand what I mean?
Chris: Yeah. So everyone who's listening, but I think loud and clear, the message here is to start with the dream. Start with the vision. Start with the purpose and the mission and Radical U, Michael's project, is the best place that you can go to get that information. So I'll make sure to link to it. And everywhere that this video is. Michael now as someone who's watching this, let's say they, the fact that they're even watching this, they recognize the importance of documentation and their getting started and then they want an operations manual and they've started to go down this path. Is it a crowdsourced team effort? Is it an individual effort? How do they get it done and is it ever done?
Michael: It's never done because it's in continuous evolution, continuous improvement. I’ve been doing this work for over 40 years and I'm continually seeing more about how to improve it, how to improve it. 40 plus years, Chris. I'm 82 years old. Understand there's no absence of passion and enthusiasm for this improbable and impossible thing we set out to do, because it can be continually improved upon. But that's what entrepreneurs do. They don't just settle down and do it, do it, do it, do it. They don't just take their money and go home. They continue creating. Steve jobs started out with in the garage with a dream, with a vision, with a purpose, with a mission, which is best expressed in that commercial that apple ran at the Superbowl. If you remember throwing a hand, remember, that's the dream. That's the dream expressed visually. That's the dream expressed passionately.
Michael: We’re those guys who are bringing this great transformation to the planet. Our little product is about to do that. Well, he continued to do that. With the iMac, with the iPhone, with the iPad, and on and on and on and on. And you begin to see how Apple became the first trillion dollar value company because of his built upon making a huge difference. Not so Steve could drive a big car, not so Steve could become a parity of wealth and entrepreneurship. That's disgusting. But so Steve could add this profound impact on everybody's lives. That's what he did. How extraordinary. Amazing that you get to do that. You went 33 you'll get to do that right where you are. You get to do that.
Chris: So as we wrap up here, of course we've talked about creating the dream and the passion it takes to be an entrepreneur and the, the having the vision that you've cast and documenting everything that you're doing so that other people can do what you do and creating a client fulfillment system and a production system with the most efficient number of roles. So any thoughts just to wrap up on if someone is just thinking of getting started and feels like they don't have enough time? This isn't an important project. It's not something I've prioritized. I want to get to it eventually. But why should someone start documenting today?
Michael: Let's, let me put it in a different way. Why should somebody start working on their business today? Somebody should do that because you've got nothing better to do. So understand our dreams to transform the state of small business worldwide. But our dream has become to transform the state of entrepreneurship worldwide. But our dream has persisted in transforming the state of economic development worldwide. Cause until and unless you transform the state of entrepreneurship worldwide, you will never transform the state of small business worldwide. And until you transform the state of small business worldwide, you will never transform the state of economic development worldwide. So you see those three key integrators as a piece of what we've set out to do every single day of our lives. Since we launched the Michael Thomas Corporation, way back then in 1977 we'd been working on our enterprise while triggering the various same path for every single person we come into contact with. So I do that through my books. I do that through our work. I do that through my passion. I do that through people just like you, Chris. And as you do that, you begin to see how the people who come to you are impassioned, inspired to understand it's more than just documentation, it's replication. It's the ability to replicate the very best capability you possess. And in the process of doing that, producing a qualified result, it's quality, it's authenticity. It's absolutely predictable once you understand the power of it.
Chris: Perfect. Well said. So for everyone that's listening, if you're in a place right now where you don't like going to work, you've lost the passion for your company, then I would ask you to go to Radical U and learn how to reignite the passion, or just ignite your current business, light it on fire, fire everyone, and start over with a new passion, a new dream, a new vision, a new mission at Radical U. And if you are at a place where you want to replicate the results that are working inside your business and you're ready to work on the business, then you can check out our system at trainual.com so Michael, with that, we'll wrap up this chat and I so appreciate you taking the time to talk documentation with me today.
Michael: My delight. And let me give another gift to everyone who's listening to us right now. We wrote a book and the book is Making It On Your Own in America Or Wherever You Happen to Live: A Radical Journey Toward Self Employment, raises the question, what do we mean by radical self employment? Get the book. It's a gift. It's a gift from Chris and ourselves so that you can understand, truly internalize what we've been talking about here. You can get the book at freebook.michaelegerber.com, free book at michaelegerber.com. Get it.
Chris: Get it right now. Get it right now, right now. Stop listening and go get the book. It's time to work on your business and that is a great place to start. Michael, thank you so much. I really appreciate your time.