Before the Business Plan Gets Written
A few steps before you write your next business plan
I then outlined a template to help form his ideas that looked like this for each idea:
- What is the business need in the market that needs solving?
- How are you (and your company) uniquely qualified to solve this?
- How will you identify such customers and how will you make contact with them?
His immediate comment was "I am not sure about some of these answers, should I makes guesses or leave them blank?" I asked him to make guesses and then we went through each business idea area and tried to answer some more questions:
- What is the biggest risk that is not known?
- How can it be tested quickly and on a small scale?
When I talk to Software Engineers, they tell me the technique I am using is called "Iterative Development". It is a series of cycles that target the highest risk areas. I use cycles leading up to a formal business plans, then more cycles as we discover the basic customer value and customer profile. Then if we continue to invest, the product or offering needs initial descriptions, first beta-customers, and a more refined sales-value plan. Cycles typically take weeks, but the entire process takes years.
Compare this to a more conventional Gartner research based business planning process. Budgets are set (almost always too limited for sales and marketing at the end), customer value is pre-determined, pricing models are prepared, and the full sales machine rolls out with the first product. Another naive approach is the total opposite. Nothing is planned more than a week at a time. Production people produce, sales people visit customers, and nature takes its course. In my opinion, these alternative approaches suffer from being over regimented or under disciplined respectively.
My advice, use a plan-test-replan iterative cycle to launch a new idea. Find that balance between reacting to the market and holding discipline toward a goal.
Update February 2014: Lean Startup & Business/Lean Canvas now formalize the concepts described in this blog entry in 2009-- lot's of information is now available.
You should also read:
What is your Core Business?
"Do you want to sell sugar water for the rest of your life, or do you want to change the world?"-- Steve Jobs, CEO Apple
Full Combat Business
Business in an era when 1+1 = 2 (not 3)
Most articles that discuss a company's mission, vision, strategy, or even marketing often cite Nike and their tag line "just do it". It is also well known that during an earlier time Nike had a different internal slogan of a completely different sort: "beat Adidas". About the same time Nike had their aggressive slogan, the company I worked for had a similarly aggressive internal slogan of "kill Weston-Loral" (our geographically closest direct competitor).
Why is it that these old style, aggressive slogans, that target a competitor are now so rare? Why are aspirational slogans like "just do it" all the rage? What can we learn about the effectiveness of these slogans in their time? My thesis is that such slogans were the products of their market environments and that much of the same market environment has returned leading to the conclusion that slogans and their consequential real action need to change back to the old again. Continue reading...
Business Relationship by Design
Almost every external facing business relationship requires activation in the form of a negotiation and a contract.. When I see good deals stall on small details it is usually because the discussions were initiated on a poor foundation. Getting the 'big picture' correct before getting involved in the negotiation and contract details is critical: Is this a win-win for both sides? How will healthy, normal communications take place during the execution period of the contract? What will happen when dissatisfaction, mistrust, or irrationality steps into the relationship?
This last question is rarely considered at the 'design stage' but it should be. Far too many contracts amplify the smallest conflicts by giving enforcement powers and ultimatums to one side or another. Look at the default terms and conditions from a big company like BMW and imagine that one or both sides are dissatisfied. The lawyers usually have ensured that there are lots of 'sharp sticks' and other weapons because they want to have a good foundation for a lawsuit. Courtrooms are "the nuclear option" where there are no winners or losers; there are only losers and bigger losers at the end of any court case. For this reason it is important that business people include a soft conflict resolution processes that will reduce tensions and that all 'nuclear options' in the contract have safety devices lest they be used too quickly. Continue reading...