Do you love plans? Do you consider them as blueprint for your execution? Do you think that the more perfect your plan, better your chances of success?
Consider the following tale which is true unfortunately:
In 2011, Rick founded his startup with an aim of developing a Mobile App that he thought will change the world.
He hired a consultant to create a Business Plan for his startup and paid a hefty fee to her.
He ensured that he executes as per the business plan he got created for his dream startup.
Estimated App Development time was about 40 weeks. He tracked the development and ensured that each feature he envisioned of having is included in the App.
When the development was about to get over, he started executing his marketing and promotional activities as per the business plan.
He got Press Releases written and bought premium press release plans so that his App can generate good traction in media.
He contacted App Review Sites and opened a negotiation dialogue with them. He hired video creation experts to create video commercials for the App that were to be uploaded in different video sites such as YouTube and Vimeo.
And came the Launch Friday. A perfect day. Weekend was about to follow and lot of people should be using the App as they have ample time to play with their iPhones.
He launched the App with all positives: positive press, good reviews, video commercials live on YouTube and Vimeo, Search Optimized Website for his App, a comprehensive FAQ section about how a particular feature could be used and more.
The result? 2000 downloads at the end of first day.
Good, isn’t it?
He thought his App is now going to be successful. He was relieved. He went off to weekend outing with his girlfriend to celebrate. He wanted to have an extended weekend. Monday was his first day off in past 40 weeks.
On Tuesday, when he returned from his weekend outing, he was keen to check how the App users are doing. So he opened his Analytics Software.
He found a sad metric about the App: DAU (Daily Active Users) – they were just in two digits. The number was much less than 99.
Desperate as he also checked Monday’s downloads and they were just 7.
Just 7 new App downloads. Not even in two digits.
He observed the same pattern for next whole week.
He searched about his App’s prime keywords over web to figure out that one person had tweeted about his app saying – XYZ App sucks. ABC app which came a few months earlier does a much better job than this.
His app was not getting any good downloads. Users who had already downloaded the App were not using it.
He perfectly executed the project as planned and still this result. What went wrong?
The core assumption was that people need such an App, turned out to be wrong.
The problem was that he PERFECTLY executed the project as per the business plan. He did not question it till he experience his first failure.
Lot of hard work. Demotivated Rick. Failure at a higher cost. What a waste.
And, let me tell you that, Rick is not the only one who has passed through similar situation.
Stop and reflect on what Steve Blank, who is considered an extremely respected authority in startup world:
“In a startup, no business plan survives first contact with customers.”
But wait, what does it mean? Business Plans are useless?
I don’t think Business Plans are useless. Plans are good when things are right. The problem is, we don’t know what’s right till it is proved as the RIGHT thing!
It’s okay to create business plans. It’s okay to talk from the perspective of business plans with potential investors and other stakeholders.
But, it’s not okay to presume that your business plan is THE BLUEPRINT, upon which you should base execution of your startup.
In startup, Business Model Discovery is much bigger problem than mere executing a business plan.
Business Plans often work well in corporate world because in their operations frequency of change and uncertainties are less. They have discovered the business model. Their chief problem is execution and good amount of their focus is on efficiency.
But with startups, your ability to deal with an uncertain next while you’re discovering a business model that will for your startup is much needed skill than having an MBA degree from a reputed university.
If you’re working in a startup, whether it is a technology oriented startup or not, master the art of Agile Business Model Discovery.
Inspect regularly and adapt timely. Ship fast and ship often. Involve customers early and seek their feedback. Don’t focus on perfecting a product until you have identified a business model. Try different product ideas, Create lot of MVPs and ensure that you’re keeping costs of creating MVPs as low as possible.
Keep your mind steady and your actions…AGILE!
The sooner you’ve discovered the Business Model, the better the chances of your startup to see its 1001th day of existence
Once you’ve discovered the business model for your startup, you are no longer just a startup. You’re a growing company. A company where inputs, processes and outputs are predictable. This is where good MBAs can help you establish the processes and bring out the best possible efficiency out of the resourcing.
Enter Rick’s story again, a better choice for him would have been to create a non functional version of his app, contact at least 100 potential users and seek their feedback. Had his idea been invalidated, he would have invested in some another idea and would not have wasted weeks and weeks of his time.
In closing, I cannot agree more with what Steve Blank says, “When you’re building a startup, get out of your building, there are no facts in it!”