Unleash the canvas: Business Plans are DEAD

 

 

 

 

There's something interesting about entrepreneuring that's very similar to painting. The greatest entrepreneurs and impresarios are those that see life as a canvas. These people see their enterprises as canvasses for them to articulate their view of life. In a sartorial fashion, today's entrepreneur no longer bask in the euphoria of thick plans. Instead, they are agile enough and smart enough to dump the business plans. They unleash the canvas.

 

 

In this piece, I will be revealing by way of reiteration a gem. I can say with every confidence that this is one of the best kept secrets in the start-up community and I'm glad to be in a position to spread it. As you know, I don't need any permission to do this. I have chosen to make it (anything that's got to do with the start up community) my personal bone of contention and to this end, I remain very unapologetic! By the time you finish reading this blog post, I hope you will become equally angry with the status quo. In fact, I see you set ablaze your repository of business plan templates. This is yet my essential goal.

 

 

Traditional business plans are DEAD. I asserted this in one of my previous blog posts. Trust me on this one. I know exactly what I am saying and please feel free to quote me. I decided to write on this subject again after several encounters with some start-up practitioners and budding entrepreneurs revealed a huge lacuna in the knowledge graph. I will again speak about the magic portion. The secret is the BUSINESS MODEL CANVAS. I've found no better way to describe the feeling I get every time I relate with this tool. In any case, the Business Model Canvas is the ultimate tool for any start-up that's interested in solving real problems using ingenious ways.

 

 

According to Steve Blank, there are three objectives in business namely:

 

1. Create value

2. Deliver value

3. Capture value.

 

These above objectives are golden and how well a business (start-up or existing, for profit or social) is able to balance these three acts eventually determines how much the business would be worth. Ceteris paribus, these three objectives represent the holy grail of business.

 

Q

What makes Google more valuable than Facebook inspite of the fact that the latter has a bigger community of users?

A

Google is creating, delivering and capturing more value than Facebook.

 

The ultimate business challenge today is not resources (inadequate or lack of it). It is not even competition although various market segments are highly commoditized. I posit that the greatest challenge is that which is posed by the three factors raised. The ultimate business challenge today is the BUSINESS MODEL which is defined as how a business intends to create, deliver and capture value.

 

How are traditional business plans developed?

 

Step 1: The light bulb moment

This is the aha moment when an idea drops into the seething mind. Sometimes, this comes as a mysterious galactic event. In some other cases, it's a moment of pure discovery where someone decided to investigate the way to solve an existing problem. It could also be just an event of opportunity. Once an idea comes together as probable, the next step comes.

 

Step 2: Feasibility Study

This is the process of gathering information and collecting relevant data with a view of being able to write a robust plan. For the most part, the process of conducting a feasibility study is treated in isolation from the process of actual writing of the business plan.

 

Step 3: Business Plan Writing

This process involves putting together a supposedly comprehensive plan that considers all aspects of the business. Most business plans are truly exhaustive in nature. In fact, most are fraught with analysis paralysis caused by boiling of the ocean.

 

The above process should be sufficient to ensure a business is up and running but sadly, this is not the case especially for new businesses. 11 out of 12 new businesses have been said to fail less than three years of incorporation and in most cases, they surely have thick business plans.

 

So why do businesses fail?

 

Businesses fail for many reasons. Some of the reasons range from running out of cash at critical stages without funding, exuberance with respect to the cost profile of the start-up e.t.c. The singular most unpopular but more often than not reason why businesses fail is WRONG HYPOTHESIS. It has been discovered that most business plans beyond the thick pages contain very lame assumptions.

 

 

As identified earlier, because the traditional business plan development process often isolate the feasibility study from the actual writing of the plan, this leaves room for unsound assumptions to be built into the business plan. When untested hypothesis (assumptions) go untested, failure is inevitable.

This weakness and many others are eliminated when a Business Model Canvas is used. The objective of the canvas is to ensure coherence across all aspects of the business. This is achieved by a process of getting out of the building. This is an iterative process which ensures that all assumptions are subjected to adequate proofing.

 

 

Now is the time to get out of the building. Before you do that, don't forget to please burn that thick thing you called a business plan and unleash the canvas.


Image Credit: Google Image