(This article originally appeared on The Business Journal)
The E-Myth was first published in 1986 and as recently as 2007 it was still in the New York Times Best Seller list. I'd argue it should be compulsory reading for anyone starting a business. With over 5 million copies sold, it looks like there are plenty of people who agree.
Unfortunately though, the E-Myth's central premise - that entrepreneurs need to systemize or franchise their businesses so they can become business owners instead of self-employed, burned out and miserable - isn't as applicable to professional services businesses as the bakeries, factories and florists featured in the book.
This has given rise to what I call the S-Myth: it isn't possible to systemize a professional service business in a meaningful way. Sure, you can write an operations manual. But for anyone doing truly creative, high-value professional work, every client and project is different. Since you can't just create a checklist for a professional services project, you can't really systemize it.
Why should you care? Acceptance of the S-Myth means your small, growing professional services businesses is destined to remain forever bonded to the capacity of its principals and partners. Acceptance of the S-Myth means success is more a result of hard work and good luck than a sustainable business with good management - the kind of work that burns people out or the luck that inevitably runs out. Acceptance of the S-Myth means you are stuck being self employed, with dozens of bosses and no real path to realize the value you're building in the business every day.
Here are three steps every professional services business can undertake to systemize their operation, firm or agency, without forcing the kind of standardization that stifles creativity.
Professional services businesses are unique because the main value is created not from a product you buy and sell, but by the knowledge, expertise and brain-power of your professional team. However, attempting to systemize those creative skills and expertise of your team members is a recipe for disaster, and is the most common reason service companies fail when trying to apply the lessons of the E-Myth.
The solution is actually fairly simple. Instead of starting from the bottom up and systemizing the work, start from the top down and think about your business from a larger perspective. For example, when trying to systemize your sales process from a bottom up point of view, you'd probably do things like create a large number of proposal templates or productize your service offering into a rigid catalog of services. This sounds great, but it can turn your account executives into order-takers instead of trusted advisers who consult clients around their needs and put together a proposal the client wants to sign off on.
If you think from a top-down perspective, you can focus on the process that directs your people first. You can build in the tools, templates and time-saving tricks only once you've got everyone following the right high-level processes. This will help you make sure your account executives are being responsive to client inquiries, for example, or that sales leads are scored and categorized correctly so your management reports are accurate. Once you have a foundation set, you can systemize the processes that shouldn't have deviation later.
Even after you follow the advice above, you still might be tempted to simply write an operations manual and call it a day. The problem, though, is that your people will be working day-to-day on their work (which remains creative and flexible) and few will be taking the time to refer back to the operations manual; even if they have it memorized, busy people will often miss steps or cut corners by accident.
This gives rise to the second lesson to overcoming the S-Myth: you need to make sure your system is implemented as a tool your people use to manage their work, rather than a reference they can ignore or forget about.
At the simplest level, you can implement your processes through a software that helps with the specific tasks, like project management or sales software. The key is to make sure the product you choose allows you to customize the key phases, processes and rules that you mapped out above. It's also important that your people actually use it as their place to see their work and report back progress and completion details.
Once you've taken the time to define your key business processes and have integrated them with tools your people use, you need to determine if they are the right systems and processes. “Controlled Flight Into Terrain” is the cause of almost a quarter of USAF crashes, so just being in control isn't good enough if you business is going to crash!
Most business owners have a handle on their company's finances, but in many ways the finances are a report on what's happened in the past, similar to the “black box” on an airplane. Once your business is being run by a system and your people are all using it as a tool to get their work done, you can overcome the biggest S-Myth: that running a professional service business means giving into chaos and hoping for the best.
After living with the chaos for the better part of a decade, I know just how hard control and predictability can seem. Any time you're doing work for a client, you're surrendering control; you're relying on them for input, feedback, approvals and more. And even if your clients are super well-behaved, your professional staff aren't machines or robots - some days are great days, others are so unproductive they should have just gone to the beach!
This doesn't mean you can't get on the front foot. Like cars driving around a city, you can get a really good handle on the bottlenecks, snarls and problems you need to focus on if you stand back and look at the system as a whole.
One of the things that helped me the most when I was running my agency was the ability to forecast workloads and utilization of my team. While some clients might delay things or drag their feet, others are catching up from previous delays - having a system that could respond to this chaos automatically and let me see key business information in real-time across the entire business proved to be much more valuable than trying to keep everything in my head.
Importantly, you don't need to turn your team into robots to be able to take control and drive the business where you want it to go - just make sure your system rolls up handy dashboards that allow you to see the bottlenecks (I love traffic light reports) so that you can continuously improve and smooth things out.