Are You Building an Idiot Proof Real Estate Business & Why It Matters!
December 01, 2008 09:59 PM
Well over a decade ago, I read Michael Gerbers' famous book, 'The E-Myth.' I am the daughter of two entrepreneurs and an entrepreneur myself. I have lived through the 'technician syndrome' that Gerber described in which vast amounts of energy are siphoned from the entrepreneur who must run their business on a daily basis and subsequently becomes a slave to the work rather than the inspiration driving the company.
So, when the idea of making a business 'Idiot Proof' was introduced during a professional real estate seminar, I was eager to embrace the method. The process involved systematizing a business by breaking each action/segment into small, clearly defined steps. The BENEFITS: a precisely written manual which ensured that anyone could replicate the same results every single time with the aim of creating a consistent consumer experience.
To illustrate the point, the presenter used the example of the methods that fast food companies have perfected through their training systems to ensure that your burger is pretty much the same anywhere you get it. If you've ever worked in a fast food joint, you know that every single item that impacts the business is detailed in the manuals. The system is fully automated with cookware that tells you when the fries are done and guides you through the process of making every menu item. Most workers are hired to do one little segment of the work and not much else. Even the cash registers are coded with pictures to make sure that the right order is processed and the correct change returned. The RESULT: workers who know a few details very well, but may be largely ignorant when it comes to understanding how the operation works. The problem with this type of system is that it thrives primarily within a stable environment. An environment in which the delivery truck can be expected to arrive at the scheduled time carrying the necessary supplies. The system requires tremendous amounts of coordination and performs with supreme efficiency when that order is present. However if there is inadequate staffing or the supply chain breaks down, the system becomes vulnerable. Ultimately the problem with this type of system is that LIFE IS UNSTABLE. In the real estate industry, we have created our own versions of Idiot Proof systems. In a sense our Forms and transaction management systems have allowed many of us to facilitate millions of real estate transactions with efficiency and speed. These systems have also made it possible for anyone off the street to enter our profession with a mere 40 hours of training and then sit down with a client to list a Million dollar home. The agent simply needs to know how to fill in the blanks. However, just like the fast food industry, the real estate system of transaction management may be inherently vulnerable precisely because it requires certain 'anticipated conditions' to operate efficiently. When the stability of those conditions is threatened or upset entirely, as we are currently witnessing in the mortgage crisis, the entire house of cards is in peril, not unlike the perilous times in which we currently live.
Perilous times require creative, innovative individuals who possess the critical thinking skills to make intelligent assessments and respond to unforeseen and unexpected circumstances. Idiot Proof Mechanisms are guaranteed to fail in perilous times, because the conditions necessary to support them are wobbling or have crumbled entirely. The hidden gift of perilous times is that we are given a fresh opportunity to re-evaluate the true effectiveness of systems we have used without questioning.
So, I'm in the process of dis-assembly. Although we still use and appreciate our board supplied real estate forms, our agents are being challenged to not rely on forms to do the critical thinking. Agents are required to think through solutions and to be ready to explain WHY they think the options they are suggesting merit consideration. The days of using systems without thinking about what you're doing are numbered OVER, because fewer real estate transactions are falling into easily defined categories!
Today's real estate transaction involves, amongst a host of other critical skill sets, having the negotiation skills and patience to see a Short Sale through to the end. Being a competent agent means having the ability to utilize the Internet to create important professional networks and prospect for future business. Today's agent needs to understand what is happening in the financial world and be informed about the developments in ancillary services like the inspection and title industry. In my opinion, the days of 'cookie cutter' real estate are over...if they ever truly existed in the first place. Copyright 2008 Audu Real Estate All Rights Reserved
Picture of french fries courtesy of wEnDalicious photo-stream on flickr
Greater GRAND RAPIDS, MI Real Estate Real Estate Trends
You are absolutely correct. SAgents must realize that what used to work a year ago may no longer be working. We, as realtors, must maintain and continue with education courses
Dec 02, 2008 01:26 PM
Christine, Thanks for your sharing your thoughts.
Josh, Absolutely!
Sally & David, the old methods will always work, but without being tweaked will give less & less return for the investment of time, money and energy.
Mark, many of us have been caught off guard. That's why forums like this can be so helpful in discussing the changes we are all experiencing.
Dec 02, 2008 01:53 PM
Suzi, many of us can relate to what you described in your comment. You've described another layer of difficulty which has been added to the real estate process...the increase in personal STRESS for clients and the agents who serve them. Keeping things in perspective and managing client expectations is critical for success today. Because no situation or person is the same, a cookie cutter approach will not be sufficient although systems can prevent some unnecessary issues from developing in the first place.
Dec 02, 2008 01:59 PM
Peggy, I love this portion of your comment..."Open For Buisness...While Renovation Continues!" It's an apropriate motto for all of us!
Dan, you're welcome.
Joel, it does matter what type of system you have...some are definitely better than others.
James...we're all having to come to terms with this reality.
Tracy, Thank you for stopping to read and comment on my blog post.
Dec 02, 2008 02:07 PM
Don, Thanks for sharing your insights. I share your appreciation for systems and managing the transaction. However, I diverge in seeing it as a perfect solution for executing every element of the real estate transaction...particularly within the context of today's real estate market place.
Systems presume one thing...the future sustenance of the context in which they exist. When the context changes, all the assumptions which were the basis for the system no longer play out as planned. This vulnerability can create a crisis where obvious signals of distress are ignored or not responded to adequately because we choose to default to autopilot rather than take the time to truly understand what has changed and why. Obviously, design plays a huge part in the proper functioning of a truly successful system. Well designed systems will allow for more deviations from the norm, but even this falls short of the sort of creative insight which is so crucial when you find your self in the middle of 'all hell breaking loose.'
Dec 02, 2008 02:17 PM
Lauren, thanks for your comment.
David, good point...this pertains to all members of the real estate team.
Marzena...True!
You're Welcome Paul. Thank you for stopping to read and comment.
Erika, Thanks for reading my blog and commenting.
Rebecca, I am a strong advocate for education. Being a professional requires that we continue to learn and grow. Thanks for stopping here to read and comment.
Dec 02, 2008 02:23 PM
Wow! You put so much time and energy into this piece. Great work.
Dec 02, 2008 02:25 PM
Barb, the example you share demonstrates how important a true understanding of a transaction is. If the transaction had been closed without the appropriate details handled correctly, there would have been issues which created problems later on. Filling out the blanks...simply is not enough!
Dec 02, 2008 02:26 PM
Lola, Great thought provoking post. I have systems in place and check lists for sellers and buyers but there is no check list for the different personalities we deal with and the different problems that come with each transaction.
Dec 02, 2008 05:29 PM
Is a great post and I agree that the "cookie cutter" days are over and there are immense changes ahead. It is up to the agents to embrace them and become specialized in areas that they can excel in.
Dec 02, 2008 06:05 PM
Hi Lola, Obviously, we must have quality systems in place to do the higher number of transactions. "The hidden gift of perilous times is that we are given a fresh opportunity to re-evaluate the true effectiveness of systems we have used without questioning." Very well said. I too am in the process of breaking down my systems for re-evaluation & better implementation.
Lola, great article and I like you have read the book and found it an enjoyable read. I think almost everything is coming with systems now from making coffee to herat surgery. When I got into real estate I started with a great system and have fine tuned it over the years.
Dec 02, 2008 09:54 PM
I am a huge Michael Gerber fan and have built my real estate brokerage based on his concepts. I have created the McDonalds of Real Estate. Our entire office is built on duplicatable systems which has propelled us to the number 1 brokerage in buyer transactions the past two years in our county of over 500 offices. Not bad for a company that hasn't turned 4 yet! This is my 15th business but the first business I have used his formula. It's also the first business I have owned that I can plug any Agent into my system and within a few short months they are productive Agents. I teach all of my systems at The eHomes Realty Network. It's an education site mostly teaching step by step processes to capture and convert Internet leads as well as do seminars, convert floor calls, work fsbo's ect. The response has been great so far!
Dec 02, 2008 10:01 PM
Excellent work, thank you for the insight. I am new to Real Estate, but I am learning that you must be knowledgeable in more than the area of finding a house. You have to understand your client, market and be able to understand the real estate process. Critical thinking is a necessity to be successful. I am currently working on my Real Estate process and marketing strategies to ensure I am successful in RE. I really enjoyed your blog and thank you again for the insight. Dec 02, 2008 10:08 PM
Lola - So you aren't a big fan of the "Real Estate for Dummies" syndrome;) This may be one of the best posts I've read from you, which is a hefty accolade in of itself. This is what I truly love here, the learning. I'm nowhere near astutely familiar with Mr. Gerber. Adaptation and the ability to think on or off your feet seems key. While I'm guessing there is a place for a streamlined and assembly line approach to this gig, I doubt that it will work right now. There are too many variables, makes me want to re-visit that critical thinking course from years ago. It always applies.
Dec 02, 2008 11:26 PM
Estate Settlement LLC - Brandon, FL
Finally a deep thinker apprears. I could use your membership is our Financial Services Reform Group.
Dec 03, 2008 06:08 AM
Great post Lola - written systems are what keeps me organized and I am learning with short sales, meticulously written notes also!
Dec 04, 2008 06:53 AM
First of all congratulations on your two year anniversary in the rain and now back to your post. I wish I could make it idiot proof, but everytime I do, I find a better idiot. I love the e-myth, but still working on implementing it in to my life even though I really know I should if I want to live past 50!
Once again thank you and have a successful 2009 and I be watching your posts and enjoying as usual.
Dec 07, 2008 01:20 PM
Wow, Todd, thanks for the reminder! Two years has passed so quickly! I'm so glad that Active Rain became a part of my life and has helped me to learn so many new things.
Dec 09, 2008 05:45 PM
Are You Building an Idiot Proof Real Estate Business & Why It Matters!
December 01, 2008 09:59 PM
Well over a decade ago, I read Michael Gerbers' famous book, 'The E-Myth.' I am the daughter of two entrepreneurs and an entrepreneur myself. I have lived through the 'technician syndrome' that Gerber described in which vast amounts of energy are siphoned from the entrepreneur who must run their business on a daily basis and subsequently becomes a slave to the work rather than the inspiration driving the company.
So, when the idea of making a business 'Idiot Proof' was introduced during a professional real estate seminar, I was eager to embrace the method. The process involved systematizing a business by breaking each action/segment into small, clearly defined steps. The BENEFITS: a precisely written manual which ensured that anyone could replicate the same results every single time with the aim of creating a consistent consumer experience.
To illustrate the point, the presenter used the example of the methods that fast food companies have perfected through their training systems to ensure that your burger is pretty much the same anywhere you get it. If you've ever worked in a fast food joint, you know that every single item that impacts the business is detailed in the manuals. The system is fully automated with cookware that tells you when the fries are done and guides you through the process of making every menu item. Most workers are hired to do one little segment of the work and not much else. Even the cash registers are coded with pictures to make sure that the right order is processed and the correct change returned. The RESULT: workers who know a few details very well, but may be largely ignorant when it comes to understanding how the operation works. The problem with this type of system is that it thrives primarily within a stable environment. An environment in which the delivery truck can be expected to arrive at the scheduled time carrying the necessary supplies. The system requires tremendous amounts of coordination and performs with supreme efficiency when that order is present. However if there is inadequate staffing or the supply chain breaks down, the system becomes vulnerable. Ultimately the problem with this type of system is that LIFE IS UNSTABLE. In the real estate industry, we have created our own versions of Idiot Proof systems. In a sense our Forms and transaction management systems have allowed many of us to facilitate millions of real estate transactions with efficiency and speed. These systems have also made it possible for anyone off the street to enter our profession with a mere 40 hours of training and then sit down with a client to list a Million dollar home. The agent simply needs to know how to fill in the blanks. However, just like the fast food industry, the real estate system of transaction management may be inherently vulnerable precisely because it requires certain 'anticipated conditions' to operate efficiently. When the stability of those conditions is threatened or upset entirely, as we are currently witnessing in the mortgage crisis, the entire house of cards is in peril, not unlike the perilous times in which we currently live.
Perilous times require creative, innovative individuals who possess the critical thinking skills to make intelligent assessments and respond to unforeseen and unexpected circumstances. Idiot Proof Mechanisms are guaranteed to fail in perilous times, because the conditions necessary to support them are wobbling or have crumbled entirely. The hidden gift of perilous times is that we are given a fresh opportunity to re-evaluate the true effectiveness of systems we have used without questioning.
So, I'm in the process of dis-assembly. Although we still use and appreciate our board supplied real estate forms, our agents are being challenged to not rely on forms to do the critical thinking. Agents are required to think through solutions and to be ready to explain WHY they think the options they are suggesting merit consideration. The days of using systems without thinking about what you're doing are numbered OVER, because fewer real estate transactions are falling into easily defined categories!
Today's real estate transaction involves, amongst a host of other critical skill sets, having the negotiation skills and patience to see a Short Sale through to the end. Being a competent agent means having the ability to utilize the Internet to create important professional networks and prospect for future business. Today's agent needs to understand what is happening in the financial world and be informed about the developments in ancillary services like the inspection and title industry. In my opinion, the days of 'cookie cutter' real estate are over...if they ever truly existed in the first place. Copyright 2008 Audu Real Estate All Rights Reserved
Picture of french fries courtesy of wEnDalicious photo-stream on flickr
Greater GRAND RAPIDS, MI Real Estate Real Estate Trends
You are absolutely correct. SAgents must realize that what used to work a year ago may no longer be working. We, as realtors, must maintain and continue with education courses
Dec 02, 2008 01:26 PM
Christine, Thanks for your sharing your thoughts.
Josh, Absolutely!
Sally & David, the old methods will always work, but without being tweaked will give less & less return for the investment of time, money and energy.
Mark, many of us have been caught off guard. That's why forums like this can be so helpful in discussing the changes we are all experiencing.
Dec 02, 2008 01:53 PM
Suzi, many of us can relate to what you described in your comment. You've described another layer of difficulty which has been added to the real estate process...the increase in personal STRESS for clients and the agents who serve them. Keeping things in perspective and managing client expectations is critical for success today. Because no situation or person is the same, a cookie cutter approach will not be sufficient although systems can prevent some unnecessary issues from developing in the first place.
Dec 02, 2008 01:59 PM
Peggy, I love this portion of your comment..."Open For Buisness...While Renovation 
Continues!" It's an apropriate motto for all of us!
Dan, you're welcome.
Joel, it does matter what type of system you have...some are definitely better than others.
James...we're all having to come to terms with this reality.
Tracy, Thank you for stopping to read and comment on my blog post.
Dec 02, 2008 02:07 PM
Don, Thanks for sharing your insights. I share your appreciation for systems and managing the transaction. However, I diverge in seeing it as a perfect solution for executing every element of the real estate transaction...particularly within the context of today's real estate market place.
Systems presume one thing...the future sustenance of the context in which they exist. When the context changes, all the assumptions which were the basis for the system no longer play out as planned. This vulnerability can create a crisis where obvious signals of distress are ignored or not responded to adequately because we choose to default to autopilot rather than take the time to truly understand what has changed and why. Obviously, design plays a huge part in the proper functioning of a truly successful system. Well designed systems will allow for more deviations from the norm, but even this falls short of the sort of creative insight which is so crucial when you find your self in the middle of 'all hell breaking loose.'
Dec 02, 2008 02:17 PM
Lauren, thanks for your comment.
David, good point...this pertains to all members of the real estate team.
Marzena...True!
You're Welcome Paul. Thank you for stopping to read and comment.
Erika, Thanks for reading my blog and commenting.
Rebecca, I am a strong advocate for education. Being a professional requires that we continue to learn and grow. Thanks for stopping here to read and comment.
Dec 02, 2008 02:23 PM
Wow! You put so much time and energy into this piece. Great work.
Dec 02, 2008 02:25 PM
Barb, the example you share demonstrates how important a true understanding of a transaction is. If the transaction had been closed without the appropriate details handled correctly, there would have been issues which created problems later on. Filling out the blanks...simply is not enough!
Dec 02, 2008 02:26 PM
Lola, Great thought provoking post. I have systems in place and check lists for sellers and buyers but there is no check list for the different personalities we deal with and the different problems that come with each transaction.
Dec 02, 2008 05:29 PM
Is a great post and I agree that the "cookie cutter" days are over and there are immense changes ahead. It is up to the agents to embrace them and become specialized in areas that they can excel in.
Dec 02, 2008 06:05 PM
Hi Lola, Obviously, we must have quality systems in place to do the higher number of transactions. "The hidden gift of perilous times is that we are given a fresh opportunity to re-evaluate the true effectiveness of systems we have used without questioning." Very well said. I too am in the process of breaking down my systems for re-evaluation & better implementation.
Lola, great article and I like you have read the book and found it an enjoyable read. I think almost everything is coming with systems now from making coffee to herat surgery. When I got into real estate I started with a great system and have fine tuned it over the years.
Dec 02, 2008 09:54 PM
I am a huge Michael Gerber fan and have built my real estate brokerage based on his concepts. I have created the McDonalds of Real Estate. Our entire office is built on duplicatable systems which has propelled us to the number 1 brokerage in buyer transactions the past two years in our county of over 500 offices. Not bad for a company that hasn't turned 4 yet! This is my 15th business but the first business I have used his formula. It's also the first business I have owned that I can plug any Agent into my system and within a few short months they are productive Agents. I teach all of my systems at The eHomes Realty Network. It's an education site mostly teaching step by step processes to capture and convert Internet leads as well as do seminars, convert floor calls, work fsbo's ect. The response has been great so far!
Dec 02, 2008 10:01 PM
Excellent work, thank you for the insight. I am new to Real Estate, but I am learning that you must be knowledgeable in more than the area of finding a house. You have to understand your client, market and be able to understand the real estate process. Critical thinking is a necessity to be successful. I am currently working on my Real Estate process and marketing strategies to ensure I am successful in RE. I really enjoyed your blog and thank you again for the insight. Dec 02, 2008 10:08 PM
Lola - So you aren't a big fan of the "Real Estate for Dummies" syndrome;) This may be one of the best posts I've read from you, which is a hefty accolade in of itself. This is what I truly love here, the learning. I'm nowhere near astutely familiar with Mr. Gerber. Adaptation and the ability to think on or off your feet seems key. While I'm guessing there is a place for a streamlined and assembly line approach to this gig, I doubt that it will work right now. There are too many variables, makes me want to re-visit that critical thinking course from years ago. It always applies.
Dec 02, 2008 11:26 PM
Estate Settlement LLC - Brandon, FL
Finally a deep thinker apprears. I could use your membership is our Financial Services Reform Group.
Dec 03, 2008 06:08 AM
Great post Lola - written systems are what keeps me organized and I am learning with short sales, meticulously written notes also!
Dec 04, 2008 06:53 AM
First of all congratulations on your two year anniversary in the rain and now back to your post. I wish I could make it idiot proof, but everytime I do, I find a better idiot. I love the e-myth, but still working on implementing it in to my life even though I really know I should if I want to live past 50!
Once again thank you and have a successful 2009 and I be watching your posts and enjoying as usual.
Dec 07, 2008 01:20 PM
Wow, Todd, thanks for the reminder! Two years has passed so quickly! I'm so glad that Active Rain became a part of my life and has helped me to learn so many new things.
Dec 09, 2008 05:45 PM