In this post we are going to look at two juxtaposition on the subject of business planning from, founder and owner of The Crankest Group, Chuck Blakeman, and seasoned entrepreneur and Harvard recognized “Master of Innovation”, Steve Blank. While Blakeman believes that a business plan is just a waste of time, Blank believes in a business model, rather than a business plan.
Chuck Blakeman has done it all, when it comes to business. He started and built seven successful businesses in 25 years both in the U.S. and internationally, as stated in his biography, and he currently focuses on his company, The Crankest Group. During his career Blakeman has worked with top companies, such as Microsoft and Apple; has been asked to be a conventional speaker and magazine contributor; has published a #1 Business Book of the Year; and has done appearances at Harvard Business Journal, CNNMoney.com, NYTimes.com, among others. Chuck Blakeman definitely know a thing or two about business.
When it comes to business plans Blakeman has a unique approach to them, he doesn’t believe in them. He believes that spending time to draw out possible outcomes and making plans to seem that you know what you’re doing. To him its just a waste of valuable time you could be spending actually doing business. When starting a business, Blakeman recommends to first take your product and service to market on high price and go from there. According to Blakeman, developing a business plan is “nonsense and fortune-telling, and they keep you from going out and trying to sell your product to see if you have something viable” (Blakeman, 2012). He suggests to do a two page strategic plan, which is a quick reference document that details the objective (which does not change), and movements (directions toward objective, which can change along the way). “A simple 2-page Strategic Plan is set up to change, adapt, and be clarified every one to three months” (Blakeman, 2010).
Then we have Steve Blank, who also has a lot to say (and teach) about starting a business. During his career, Blank, managed to startup eight technology companies at Silicon Valley including his own company E.piphany, published three books, and currently working as a professor at Columbia Business School. His latest book, “The Startup Owners Manual” integrates 10 years of new knowledge and experience in the field.
His view on business plans is that they do not serve a useful purpose. As he stated, “a business plan is the execution document that large companies write when planning product-line extensions where customer, market and product features are known” (Blank, 2010), which wouldn’t work for a startup business because they are only speculating, and they have no knowns. He proposes a business model instead. “A business model describes how your company creates, delivers and captures value” (Blank, 2010). His theory is focused on the customer opposed to the market. It’s based on a constant evaluation of the company performance rather than following the initial drafted plan. He proposes a dynamic model that you can change, instead of a static plan that is usually left as is.
While both approaches may seem different, they both concur that a business plan does not take into account the changing nature of businesses. Nevertheless, Blakeman and Blank, both agree that a business plan is a great tool to define a financial model, establish a path, and calm investors in general. In the end, the most helpful tool for a business is to develop a business plan. That way business owners have an outline to follow and present to investors, but that doesn’t mean its written on stone and it can’t be changed. As a business owner launches a company, he/she can learn as they go and adapt their proposed plan. After all, business plans serve as a safety blanket for the unknown; but business owners have to be open to new ideas and development, and different icons.
“Unless you have tested the assumptions in your business model first, outside the building, your business plan is just creative writing.” (Blank, 2010)
Resources:
- Blakeman, C. (2010). Planning won't even get you a good plan, let alone success. Chuck Blakeman. Retrieved from: http://chuckblakeman.com/2010/4/texts/planning-wont-even-get-you-a-good-plan-let-alone-success
- Blakeman, C. (2012). How to start a business. Chuck Blakeman. Retrieved from: http://chuckblakeman.com/2012/4/texts/how-to-start-a-business
- Blank, S. (2010). No Plan Survives First Contact With Customers - Business Plans versus Business Models. Steve Blank. Retrieved from: http://steveblank.com/2010/04/08/no-plan-survives-first-contact-with-customers-%E2%80%93-business-plans-versus-business-models/
- Blank, S. (2010). No One Wins In Business Plan Competitions. Steve Blank. Retrieved from: http://steveblank.com/2010/05/17/no-one-wins-in-business-plan-competitions/
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