Rip Up The Five Year Plan On Virgin.com

I've just written a guest post on Virgin.com entitled 'Rip Up The Five Year Plan', check it out here

Tom Fishburne: Waterfall Planning

Tom Fishburne learned how to draw cartoons at Harvard Business School by doodling on the backs of business cases and publishing in the school paper. Tom lives and draws near San Francisco and now speaks at campuses, companies, and conferences on marketing, cartooning, and how to spread business ideas.

Tom’s just written a great post on unplanning. You can read the post in full on his site here; meantime here’s an excerpt:

“We need to accept that there will be risk and uncertainty in any worthwhile plan. We don't make that risk go away by crunching the spreadsheet yet another time. Instead, once we plan what we know, we should set the plan aside. Apply that time, energy, and focus on coming up with bigger ideas and making things happen. Place a few audacious unpredictable bets. Minimize the risk by maximizing the upside”.

Tom illustrated the post with a great cartoon which I have reposted with his permission above.

It's About The Business, Not The Business Plan

US entrepreneur/ blogger Tim Berry just posted on his site the full text of an email he'd received. This is it:


"Tim, I have a web business idea that no one believes it would work. I believe if I have a well written business plan that might help my chances of getting it started. Please help."


No comment!

Flexible Business Design

Alastair Dryburgh wrote a price in last month's Management Today, 'Eight ways to design a better start-up’. The notion of business design (i.e. how you shape your venture) is an overlooked consideration for start-ups and he makes some good points about planning:

 

“Be wary of planning. This may sound heretical, but don't have a detailed business plan. Plans are dangerous because you can become wedded to them, even if it is soon clear they won't work.”

Alistair’s principles can be useful but effective design is less about fixed blueprints and more about creating the right attitude as the foundation for business success. Design the shape and culture of your business, yes; but don’t spend too much time creating a beautiful theoretical model that will never work in the real world. Being liberated from a plan means you have the flexibility to prototype your ideas in the market and then reinvent your offering accordingly. For me, business design is not about getting your model right first and sticking to it. It’s about getting your mindset right but staying agile and flexible to adapt as you go.

And the October issue of Management Today just published a letter from me saying just that (click on the above image to view).

The 'Light' Business Plan: by Nina Kaufman

Nina Kaufman is an award-winning New York City attorney, edutainer and author. She has just written a piece 'The Light Business Plan' that appears on WomenEntreprenuer.com and FoxBusiness.com. I have pasted the article below (article copyright remains Nina Kaufman).

I was all set to write a column on business planning, employing Gen. Dwight D. Eisenhower's overused quote, "If you fail to plan, you plan to fail." But then I read Ian Sanders and David Sloly's booklet,"Unplan Your Business," which gave me a very different perspective.

While Eisenhower wasn't wrong, businesses has changed radically over the past five years . . . so the standards of business planning that many of us grew up with may no longer apply. In particular, the days of the detailed three-, five- and 10-year plan may well have gone the way of the Betamax. With the rapid pace of change, who can predict how things will look in one year, much less five? And the newly self-employed (a.k.a. the recently unemployed) may not have the luxury of time to engage in business plan navel-gazing.

Sanders and Sloly don't advocate no planning--they simply raise the valid point that too much planning, evaluating and cogitating can lead to what's known as "analysis paralysis." They suggest that many entrepreneurs--especially those in service-based businesses that are not capital-intensive--will go further with plans that "are short, sweet, and clear; plans that inspire, excite and motivate you to fill them." Why? Because ultimately, your business will go nowhere with just a plan. You have to take action to implement the plan. And if you have filled the plan with too many impossible details, one of two things will happen:

1. 1) You will lose the passion to bring that plan to fruition.
2. 2) Or, you will lose the flexibility you need to respond to market conditions.
3. 
   

Ask most successful business owners, and they will tell you that "carefully plotted linear routes" (Sanders' and Sloly's phrase) are not the way they achieved success.

So if an agonizingly detailed business plan isn't necessary, what is?

Your business plan needs to outline two objectives:

1. 1) How you will achieve growth
2. 2) How you will manage your risks
3. 
   

Growth is the easy and fun part. That's describing your ideal target market, how you will attract them and what makes your product or service unique.

Risk management is the not-so-fun part. It's the part that acknowledges that you do not have unlimited financial resources to bail you out of trouble (or avoid bankruptcy). How will you bootstrap your business with the resources you have? The key is not to run out of money before your business has had an opportunity to become profitable. You'll want to make a note of:

• - Startup expenses. What are your initial (and, usually, one-time) costs for business filings, equipment, website launch and related marketing, and professional fees? 
   
• - Fixed expenses. What bills will come in every month, regardless of how much business you're doing? For example: cell phone bills, rent, insurance, internet access, other hosting or online membership fees.BestSmallBizHelp.com has a good video that explains this if you're a little fuzzy on the topic. 
   
• - Variable expenses. Do you have any expenses that change depending on the quantity of business? For example: additional independent contractor expenses to staff an unusually large project, or inventory, packaging and shipping of product orders.
• 
  

Gathering this financial data isn't exactly sexy--but then, neither is going bankrupt. What is sexy is power. That's the power that comes from knowing your true financial situation. And with that knowledge, you can manage your legal risks. Those are the risks that come from not paying each vendor, employee, and credit institution you use for your business in a timely manner.

So sure, let loose and "unplan" . . . but be a little tight when it comes to your numbers. In the end, your business needs to generate enough money for you to live on. And you can't know whether you're meeting the mark if you don't measure it.

Unplanning The Moo.com Community

Ever since I discovered Moo.com a couple of years ago, I've been a huge fan and have bunches of their business cards, stickers and postcards to prove it. Before Moo came along I’d spend up to £250 getting business cards designed and printed. Now you can get cards done for under £25 and even choose different backs for each of your cards. What a game-changer!

And that’s been their success, such a cost effective solution that customers can change business cards whenever they fancy refreshing their marketing. As well as traditional business cards, I’ve used cards to promote my books, created personalised postcards for clients and have had stickers made to promote my books, plug my session at South By South West and even had stickers featuring my kids to put on thank you cards.
Moo have assembled a great community of like minded folk: the ‘I have an idea’ generation, start-ups, freelancers, small businesses, those with hobby businesses - so it’s a great fit with the spirit of Unplan Your Business. I’ve just written a short column on business unplanning for Moo's 'Expert Tips' pages: CHECK IT OUT HERE

If the risk is low, press ‘go’.

So a friend told me about this entrepreneur. He’s planning on setting up a retail business. The idea’s been over a year in gestation. He’s spent 12 months trying to secure his ideal premises, he’s been thinking about price promotions to offer, he’s even got staff t-shirts branded and ready to go. He’s played around with different financial models on spreadsheets.

Great. His idea has gone off the laptop and into the real world.

But the problem? He’s not actually done anything with the business yet - he hasn’t made it happen. Rather than get t-shirts done and spend months searching for premises wouldn’t it be more effective to launch and test his idea? Take a market stall somewhere to test his products. Talk to a landlord of an empty shop about having a ‘pop-up’ shop for a month trial, even trading online to crowd source and test demand. He could kick-off the business like that in a flash. Getting t-shirts made for his non-existent staff is the least of his worries! If the risk is low, he just needs to press ‘go’.

(Yep, he just needs to #unplan it)

Unplan Your Business in Management Today

I've just written a column for Management Today's Expert section on 'unplanning your business' - introducing innovation into your business thinking.

You can read it HERE.

Business Planning Vs. Business Doing

Here's a post I've just done for Virgin Media Pioneers. What's your focus this week: business planning or business doing?

David Heinemeier Hansson: Follow Your Instinct

I recently had a conversation on email with REWORK co-author and 37signals partner David Heinemeier Hansson. That will be the subject of one of my columns for BNET.com later this month, but in the meantime here's an extra in the shape of a question I asked David about planning:


Ian: "I know you guys don’t like long-term plans. But you’ve decided to design your business in a certain way. What guided that process – just raw instinct or something more strategic?"


David: "We rely heavily on instinct. An instinct that has been developed and formed from a decade in business. Some times careful analysis is helpful, but often times you're just trying to justify what your instinct is already telling you. Why not follow that straight from the get go."

"When There's No Plan A"

I've been talking to Jonathan Moules, Enterprise Editor at The Financial Times for a while about #Unplan, putting him in touch with entrepreneurs I know who embrace the 'unplan your business' philosophy. So I'm delighted to see the results of that in an article in today's FT "When There's No Plan A" featuring my #unplan buddies Gary Vaynerchuk, David Hieatt and Raj Dey. You can read the article online at FT.com here (registration applies). You can also click to view a scan of the article below (this content is copyright The Financial Times). Finally, a big shout out to my #Unplan collaborator David Sloly who was not mentioned in the article; I'd like to point out that 'Unplan Your Business' is a collaborative project with David and that he is the co-author of our free guide, that you can grab here.

Peter Bregman On Unplanning

I just discovered a couple of posts from Peter Bregman. Peter is  CEO of Bregman Partners  and writes a weekly column, How We Work, for HarvardBusiness.org.

It's worth checking out his column “Don’t Get Distracted By your Plan” where he talks about his business journey:

“I started my company over 12 years ago with a 50-page business plan. It was a very useful tool — it kept me focused, helped me avoid mistakes, enabled me to settle on a growth strategy. But if you look at my company today, it looks nothing like that plan. Because the economy changed, I changed, my clients changed, and the opportunities changed. If I had stuck to my plan, I would have failed. It was by keeping my eye on the changing environment, and being willing to toss the plan and create a new one in sync with new realities that enabled me to grow my business”

There’s a follow up column “Why Not Having A Plan Can Be The Best Plan Of All” where Peter advocates the need to stay flexible in career development and the qualities entrepreneurs need to experiment in business:

“The entire path need not be clear. Most successful people and businesses have meandered their way to success by being willing to exercise their talents in ways they never would have imagined at the onset.”

David Heinemeier Hansson: Planning Can Be Harmful

David Heinemeier Hansson is a partner at Chicago software house 37signals. He’s the co-author of a great book ‘Rework’ which I have mentioned before on this blog because it really resonates with the whole Unplan ethos.

Here’s a great little video (2 mins) called ‘Planning Is Guessing’ taken from David’s presentation at Stanford University’s Entrepreneurial Thought Leader Lecture Series in January this year. David's take on business planning is that a start-up doesn't even know if it will be doing business in five years, let alone five months. A new business in a new industry has no clue what it will need long-term. In fact, he adds, most decisions for a start-up are incredibly temporary. His own experience at 37signals is that although they’ve been around for ten years, they only worry about ‘the next two weeks’ or if things are really crazy ‘two months’. They don’t worry about what next year might look like as it has very little impact on what it will actually look like.

Boost your business by Pivoting

As the Ash Cloud over Europe causes chaos forcing us to change our plans, it’s a reminder that we’re not in control of our businesses, and flexibility and adaptability are key to survival. A key tenet of #unplanyourbusiness is the ability to adapt our business idea on the fly, changing our model to meet demand or reflect user feedback.

Jonathan Moules wrote an article ‘A pivotal moment in the life of a start-up’ in the Weekend FT. ‘Pivoting’ is a term derived from basketball, where players move around the court. Moules quotes Mark Suster, partner at LA venture capital firm GRP Partners that the ability to pivot is one of the key characteristics of a successful entrepreneur: 

“Every entrepreneur starts with an idea that they believe makes sense. But then your customers start using your products, your competitors come out with new offerings and your partners decide to launch a similar product rather than working with you. You’re forced to pivot on a regular basis”.*

 There are some great examples of pivoting in the article including Moo.com, Facebook and Twitter.

*Copyright Financial Times 2010

Why NOT having an MBA is an advantage for starting your first business

Yesterday I met Marianne Cantwell of FreeRangeHumans who did a video interview with me on #Unplanning. You can check out her blog post here and watch the video below:

Bored of books on 'business planning'?

If you're bored of books on Business Planning, download the free e-book 'Unplan Your Business' here. Already 3,000 people have checked it out...

Ben Kaufman: 7 Tips For Rapid Iteration

A principle at the heart of unplanning is iteration: the value of constantly testing and adapting business ideas to see what sticks. So I liked Ben Kaufman's post at the 99% website '7 Tips For Rapid Iteration'; Ben explains his career has been all about rapid iteration – generating lots of ideas and then quickly testing them to find the ones worth pursuing. Ben is the founder of Quirky, a social product development company that launches a brand new consumer product each week. He argues that success is about having lots and lots of good ideas:

"The trick is killing good ideas quickly and swiftly in an effort to focus on great ones. This requires being a ruthless prioritizer and relentless critic. You need to be able to sift quickly through a long list of ideas both good and bad, slicing and dicing until you end up with a great, effective, and elegant solution".

Rajeeb Dey: Learn By Doing

Rajeeb Dey is passionate about start-ups and taking new ideas to market. He launched his first business when he was just 17 and although he only graduated from Oxford University in 2008 he’s already carved out an impressive portfolio of business interests. He’s Founder and CEO of Enternships -a service connecting talented students and graduates to start-ups/SMEs, and now lectures students on enterprise and business. He advocates that if people want to launch a business – especially if it is web based where the barriers to entry are so low – that they should just do it. “Learn by doing, iterate and get feedback from the market, learn as you go along” is his advice.


Here’s his take on planning and his story of how he launched Enternships

If the video above does not display properly, watch it on YouTube here.

Guest Post On The Cube

I've just written a guest post for Red Cube Marketing's blog 'The Cube' aimed at small businesses operating in the digital space; about the need to have a fresh approach to planning to reflect the increasing need to be agile. Read it here.

Guest Post On Smarta.com

I've just written a guest post for Smarta.com about rethinking business planning with advice for anyone seeking to launch their business idea. Read it here.

David Sloly at Ignite Bristol

Before we launched #Unplan at SXSW in Texas, David Sloly gave a sneak preview at Ignite in Bristol. Here's a video of his presentation (video from Ignite Bristol - thanks guys):

John Borthwick: A Process of Constant Iteration

One of the principles behind #unplan is not to sit on your idea crafting a detailed business plan but instead to take your idea to market rapidly and test it as you go.

John Borthwick is CEO and co-founder of Betaworks, who invest, build and buy companies in the real time web space. In this video interview ‘Going From Small To Big’ posted on the American Express Open Forum, John argues that you should iterate quickly. He advocates taking ideas to market very quickly within 90 - 100 days; pushing the idea into beta, watching users react and adjusting from there:

 “A couple of years ago people would sit around, think about a business, create a deck, go pitch it to people. That’s not what people are doing today: you build the thing, you push it into market, you see if it gets traction and then you go talk to people about partnering”.

Avoid Analysis-Paralysis: Why Too Much Analysis Can Kill A Good Business Idea

One frustration in business is that everything has to be over-analysed and measured to the nth degree. Businesses are obsessed with metrics: data, strategic plans, financial forecasts, analytics. There was a great session at SXSW called ‘Is Too Much Math Killing Marketing?’ where Mike Teasdale of Harvest Digital argued that some things are easier to measure than others, and too much analysis can kill creativity. I share the same view about too much analysis killing great business ideas.

So I was very interested to discover Jeff Stibel’s post on The Harvard Business Review called “Why Wise Leaders Don't Know Too Much”. Jeff is an entrepreneur, brain scientist and author. He argues that whilst knowledge is – of course – a good thing, there is a limit to what we can digest and understand and that too much knowledge undermines the greatest insights. Here’s some edited extracts from his article:

“The more information you pile on, the less likely you are to make educated guesses. But educated guesses spring from wisdom: all of your past experiences, knowledge and knowhow, coupled with the most recent information and analysis. In other words, wisdom comes from your gut”

“…. faced with an abundance of information you fall victim to analysis paralysis — unable to make any decisions in the face of so much data. To be frozen by information is perhaps the single biggest risk of knowledge. Ancient Greek philosophers used to warn their children about this ailment and Peter Drucker did a good job of combating it in the business world. But is anyone really listening? People often become victims of the "knowledge trap" or "analysis paralysis," thinking they need to weigh every bit of information against all possible outcomes. Those people rarely make it very far. Those who avoid these traps — who realize they'll never have all the answers no matter how much knowledge they gather — are often the ones who succeed.”

Mike Southon: Delegate Finance!

Mike Southon is an entrepreneur, Financial Times columnist and co-author of the 'Beermat Entrepreneur' series of books. I asked him for his take on unplanning:

“I don’t think it’s about whether business planning is a good or a bad thing; it’s acknowledging the importance of a Finance person in your start-up line-up. That means the entrepreneur can be free to evangelise about how great the business idea is and how it’s going to change the world; whilst your finance person talks about numbers and forecasts to the money guys. That separation of powers means the entrepreneur is liberated to be visionary about the idea, while your sensible Finance cornerstone worries about the long-term plan.”

Unplanning Using Post-It Notes

James Barlow was in the audience last Saturday at our SXSWi ‘Unplan Your Business’ session. James is currently with the National Collegiate Inventors and Innovators Alliance in the US, and previously was CEO of the Scottish Institute Of Enterprise. He’s got a rich experience of working with start-ups and told us about a user-friendly route for business planning he's developed: Strategy Mapping with post-it notes. Ditching the traditional business plan approach, James uses a post-it note wall to visualise the process from idea to customer. It’s a really simple way to think about business process in a entirely flexible and rapid format. And it’s lo-fi so you only need a marker pen and a bunch of post-it notes to do it. In this 8 minute video James explains how it works:

Give Up On The Guesswork

I finally got my hands on a copy of 'Rework' this week, the new book by Jason Fried and David Heinemeier Hansson of 37signals, that I've talked about on this blog before. On Saturday at SXSW, Jason gave a great little talk about the themes in the book; I went and said hi afterwards, telling him about 'Unplan Your Business'. I took some time out yesterday afternoon to get out of the convention center and dive into the book; here's an extract from the chapter 'Planning Is Guessing':

"Give up on the guesswork. Decide what you're going to do this week, not this year. Figure out the nest most important thing and do that. Make decisions right before you do something, not far in advance. It's OK to wing it..... Working without a plan may seem scary. But blindly following a plan that has no relationship with reality is even scarier".

Core Conversation at SXSW 2010

We'd like to thank everyone who made the effort to turn up at 5pm on a beautiful Saturday in Austin Texas to join our conversation 'Unplan Your Business'.

We came to SXSW to discover peoples' take on how to launch their business ideas. The core conversation really got people thinking; a show of hands immediately discovered that over 70% of the audience ran a small business. They were quick to crush the myth that a traditional business plan is required. Instead, they spoke of the power of vision, passion and a rapid journey from your product to consumer. We discussed tools to enable that journey such as crowdsourcing, project management tools and other apps.

The buoyant conversation lasted for an hour and spilled out to the corridors. For us, the core conversation experience was about discovery; indeed to crowd-source entrepreneurs and people taking their own business ideas to reality. We're not #Unplan experts yet, we're #Unplan evangelists who aim to curate, create and publish the interviews, experiments and learnings for taking your business idea to market rapidly.

Our ask for you now is to kindly comment with links, thoughts, tips and tools that have been helpful in launching your business.

Follow the discussion at:
#unplanyourbusiness

Views on why entrepreneurs don't bother with business plans

Last November there was an interesting piece in the New York Times by Scott Shane called “Why Don’t All Entrepreneurs Write Business Plans?” Scott, who is professor of entrepreneurial studies at Case Western University (Cleveland, Ohio), came up with 3 reasons why entrepreneurs don’t plan:

1. The ignorance theory - the one most cited by business school professors.
2. The ‘Just Do It’ theory – people like to be more action-oriented.
3. The ‘don’t-look-under-the-hood’ theory – people who don’t want to test their ideas in case they fail.

I think ‘2’ is the most common reason; that people get frustrated by over analysis and want to put their ideas into action instead. It’s not about entrepreneurs being lazy or ignorant; but smart: they know too much analysis will paralyse their idea, so they want to take a leap and put it out there.

The entrepreneur and blogger Neil Patel who's founded two internet companies, posted a great response to the NYT piece (check out his post here). I think his reasons are much more spot-on:

1. Business plans do not automatically result in getting funding.
2. You can’t predict the future.
3. Time is money: it takes time – away from your business – to write a plan.
4. The business world has changed – the idea of a business plan is outdated, things move to quickly for rigid plans.

Neil doesn’t think having a business plan will increase your chances of success. I think he’s right, plans can limit your potential; you need to be flexible, open and enterprising to make the most of a changing market.

Why It's Time To Rip Up Your Five Year Plan

I've just written a post for the BNET website 'Rip Up Your Five Year Plan', check it out here.

37signals: Long-Term Business Planning Is A Fantasy

I’m looking forward to getting hold of Jason Fried and David Heinemeier Hansson’s book ‘Rework’. It’s clear that Jason and David share my thinking on ‘Unplan Your Business’ and some of my ideas on work and business from 'Juggle! Rethink Work, Reclaim Your Life'.

Their company 37signals agrees that organisational obsession with long term planning is futile. Here’s an extract from a great post on the 37signals blog by Matt from last May explaining why:

"Why don’t we just call plans what they really are: guesses. Unless you’re a fortune teller, long-term business planning is a fantasy. There are just too many factors that are out of your hands: market conditions, competitors, customers, the economy, etc. Writing a plan makes you feel in control of things you can’t actually control.

In fact, you might as well change the name of your business plans to business guesses, your financial plans to financial guesses, and your strategic planning to strategic guesses. Do that and you’ll probably start putting a lot less weight into those things".

37signals have created a great little video to promote the book. I love it; it could have been one of ours for ‘Unplan Your Business’! Check it out here:

Fred Wilson: Trying Stuff Out

Unplanning your business is about having the guts to try things out, to make decisions, to be spontaneous. And that means you’re going to make mistakes. That’s part of a ‘just do it’ mindset, part of prototyping your ideas. And once you realise you’ve cocked up, you need to quit, and move on.

Fred Wilson is a Venture Capitalist in New York who blogs at AVC.com (cool domain). It’s great to hear Fred’s VC take on entrepreneurship and I love this post about the importance of being action oriented:

 “People ask me all the time about the traits I look for in entrepreneurs and action orientation is at the top of the list. I'd much rather back someone who makes 100 decisions a day and gets 51 of them right than someone who makes one decision a day and gets it right”.

 I’ve seen so many management cultures get stuck in the analysis of an idea, before it’s even launched. Whereas, it’s much more effective to just go for it – try something out, then stand back and measure how you did. Fred Wilson is a fan of the ‘trying stuff out’.

“You can think and debate about stuff all day long or you can try stuff out and see what works. From my experience, the latter approach is a much better one”.

* I love this seat made out of a pallet. I took the photo above on holiday in Crete last year. I doubt the guy that made it spent hours looking over drawings or design concepts; I like to think s/he just tried it out.