Everybody Has A Plan Until They Get Punched In The Mouth: Why Business Plan And I Run In The Opposite Direction!
It happened almost four years ago. It was a bright sunny day and I was on my way to Enactus workshop with my teammates. What happened in the workshop is something I’ll never forget. We were
given a simple task: in eighteen minutes, teams must build the tallest free-standing structure out of 20 sticks of spaghetti, one yard of tape, one yard of string, and one marshmallow. The marshmallow needs to be on top.
The teams were shuffled so that we don’t have a team with all members from the same college. When our time started, we jockeyed for power and we tried to come out with a grand plan of how to build the tallest structure. Then we tried to build the structure which kept on falling and in the nick of time somehow we were able to erect a standing structure. Finally, oof! Though we had the tallest standing structure, I realized that at the core our approach was wrong when we were shown this video.
As a kid, I was not good at studies, so I always sided towards drawing (and sports). It so happens that my early fascination with art has inculcated in me the qualities of the following intuition and failing. Even though almost two decades have passed since the first time I picked a pencil (to draw, of course) in my hand. Somewhere on the way, those qualities got imbibed in my DNA. And this is the reason why the tagline in my social media profiles says, an artist in the business world and even if I’m not one, I’m striving to be one.
And on that day of the workshop – the quality as a child was so in me – my learning from the kindergarten kids was the importance of prototyping and failing early. It goes on to prove that how right I was when I said, “Whatever you do, have an enthusiasm and curiosity or rather heart of a child.” The One Thing You Should Have Never Lost!
Before launching a business, it’s usual for entrepreneurs to create a brand (business) plan to ascertain the viability of the business before one starts implementing his/her idea. The problem here is that refining ideas in a business plan won’t make them more likely to succeed. Unfortunately, new ventures take place under high uncertainty. Therefore, systematically testing ideas to learn what works and what doesn’t is a far better approach than writing a plan. One might even argue that plans maximize risk. Their refined and polished nature gives the illusion that with great execution little can go wrong. Yet ideas dramatically change from inception to market. Testing ideas come with failure. Yet failing cheaply and quickly leads to more learning, which reduces risk. Value proposition Design Book
The 1958 Ford Edsel was supposed to be the new car for middle-class Americans. Ford was so confident in the product that it pumped $250 million into it. But instead of starting a revolution, the company lost $350 million on the gas-guzzler, making it a great example of how not to develop and market a new product. WhyThis Historic Ford Flop Is One Of Bill Gates’ Favorite Case Studies To Angus MacKenzie, editor in chief of Motor Trend magazine, there’s a lesson in the Edsel debacle: “Market research has never created a great car,” he says. “Great cars are the product of passion.” TheFlop Heard Round the World
The thing with understanding consumer needs or preferences is that what customers say and do are two different things. Something many of us can relate to and according to Alan Murray – the editor of Fortune Magazine – “The Pew study found that millennials put “a high-paying job” near the bottom of their list of work priorities—but so do other generations, in roughly equal numbers. Count me a skeptic on all counts. What people say when surveyed over the phone and how they act when an offer is on the table are different things.” What millennials do and don’t want from their employers
In Ikea’s case, even surveying 8,292 people doesn’t always get you the right answer. The problem is that people lie. Ydholm puts it more delicately. “Sometimes we are not aware of how we behave,” he says, “and therefore we can say things that maybe are not the reality. Or it could be that we consciously or unconsciously express something because we want to stand out as a better person. That’s very human to do it like that.” One way Ikea researchers get around this is by taking a firsthand look at themselves. The company frequently does home visits and—in a practice that blends research with reality TV—will even send an anthropologist to live in a volunteer’s abode. Ikea recently put up cameras in people’s homes in Stockholm, Milan, New York, and Shenzhen, China, to better understand how people use their sofas. What did they learn? “They do all kinds of things except sitting and watching TV,” Ydholm says. The Ikea sleuths found that in Shenzhen, most of the subjects sat on the floor using the sofas as a backrest. “I can tell you seriously we for sure have not designed our sofas according to people sitting on the floor and using a sofa like that,” says Ydholm. It’sIkea’s world. We just live in it.
You would be certainly familiar with the commencement speech of Steve Jobs. “When I was 17, I read a quote that went something like: “If you live each day as if it was your last, someday you’ll most certainly be right.” It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: “If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.” ‘You’ve got to find what you love,’ Jobs says
If I ask the same question to myself; if today were the last day of my life, would I want to do what I am about to do today? And my answer would be definitely a “No”. I would rather spend my time putting my vision into the product and not a paper.
Right now, I’m doing my MBA in Entrepreneurship and my first year, we had a subject titled, Entrepreneurship Theory and Practice and the one thing that I haven’t still forgotten from the textbook I read for the course is, these lines; Howard Stevenson, Harvard’s chaired professor of entrepreneurship, says, “Why is it so easy [for small companies] to compete against giant corporations? Because while they [the giants] are studying the consequences, [entrepreneurs] are changing the world.” And that’s the whole purpose of a business plan, study the consequences.
This is what Steve Blank – considered as one of the “The Godfathers of Silicon Valley” – has to say about the business plan; after decades of watching thousands of start-ups follow this standard regimen, we’ve now learned at least three things:
1. Business plans rarely survive the first contact with customers. As the boxer, Mike Tyson once said about his opponents’ prefight strategies: “Everybody has a plan until they get punched in the mouth.”
2. No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally fiction, and dreaming them up is almost always a waste of time.
3. Start-ups are not smaller versions of large companies. They do not unfold by master plans. The ones that ultimately succeed go quickly from failure to failure, all the while adapting, iterating on, and improving their initial ideas as they continually learn from customers. Why the Lean Start-Up Changes Everything
As Ed Catmull – the co-founder of Pixar – in his book Creativity Inc. puts it, “It is the notion that if you carefully think everything through, if you are meticulous and plan well and consider all possible outcomes, you are more likely to create a lasting product. But I should caution that if you seek to plot out all your moves before you make them – if you put your faith in slow, deliberative planning in the hopes it will spare you failure down the line – well, you’re deluding yourself. So if your primary goal is to have a fully worked out, set-in-stone plan, you are only upping your chances of being unoriginal. Moreover, you cannot plan your way out of problems. The rover planners just take longer to be wrong (and, when things inevitably go awry, are more crushed by the feeling that they have failed). There’s a corollary to this, as well: The more time you spend mapping out an approach, the more likely you are to get attached to it. The nonworking idea gets worn into your brain, like a rut in the mud. It can be difficult to get free of it and head in a different direction. Which, more often than not, is exactly what you must do.” “Our directors lack a clear picture of what their embryonic will grow up to be. As we forge ahead, while we imagine what might be, we must rely on our guiding principles, our intentions, and our goals – not on being able to see and react to what’s coming before it happens.” “Within organizations groups often hold so tightly to plans and past practices that they are not open to seeing what is changing in front of them.”
And if you think experts in your field are in a better position to predict the success of your startup, then you’re wrong in your assumption. Even they can go wrong!
“$500, fully subsidized, with a plan! That is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard, which makes it not a very good email machine.” Steve Ballmer, former chief executive of Microsoft, on the iPhone shortly after Steve Jobs announced it.
This is just one instance out of many where they’ve gone wrong. It is revealing that so many breakthrough technologies and companies, from airplanes to Airbnb, were at first dismissed by critics as toys or niche markets. Old habits die hard and few people have the foresight to see how innovations will eventually change their routines. The book – Hooked: How to Build Habit-Forming Products – Nir Eyal
It goes on to prove the importance of validating your product and no your idea, with the customers. Instead of a business plan, you can use these approaches (as a whole) – value proposition canvas, business model canvas, and lean startup methodology. But how you approach the alternatives to business plans depends on your vision for your startup, which is unique to every entrepreneur. What’s wrong with the lean startup methodology?
At the end of the day, the amazing thing about business is that there is no single right.
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