Business Planning vs Modeling

Busi­ness plans get beat up a lot. The real­iza­tion that I’ve come to over time is that the entire devel­op­ment par­a­digm needs to be the con­text. I’m talk­ing step­ping back and look­ing at the entire plan-launch-monitor-adjust process. Busi­ness plans are just one facet of the equa­tion. More pre­cisely, it is the out­put of a series of activ­i­ties thus a sum­mary of the cur­rent think­ing. Unfor­tu­nately, it is often quite easy to for­get that all busi­nesses are built upon a foun­da­tion of facts (mar­ket size, eco­nomic fac­tors,…) and assump­tions (buy­ing pref­er­ences, pric­ing struc­ture, …) any of which can shift and change. This is why the con­cept of con­tin­u­ous dis­cov­ery is some­thing that have preached for years. The push to write this mini-post was pro­vided by Steve Blank’s post on Busi­ness Plans ver­sus Busi­ness Mod­els. Steve con­tends that we are bet­ter off build­ing and test­ing mod­els than writ­ing busi­ness plans. Just for the fact that plans are con­structed on unsub­stan­ti­ated assump­tions while mod­els are built to be ver­i­fied in the real world. In prac­tice I’m sure that this is more often the case than not. My take is that this behav­ior could be more the result of peo­ple pri­mar­ily being exposed to one of the devel­op­ment process’ out­puts than the full process. The bottom-line, reserve the right to change to mind at any given point in time based on new evi­dence. Start to under­stand the big­ger game, go read Steve’s post.