Diary of a software start-up. Day 27.
Business plan? Forget that — I’m LEAN!
It’s been (again) a little longer than I anticipated but, hey, I have work to do. (if anyone knows of a used Wilson RF Autograph tennis racquet please let me know as I can’t find one anywhere — size 3 please.).
As I mentioned in my last diary entry I have been asked a few questions about ikooloo and the process of starting up. What books do I find interesting? How do you actually design a piece of software? This diary entry includes some books and some things that are vital when designing you product but it focuses on a question I was asked that I thought we should start with:
What’s your plan?
ikooloo is a lean startup so, obviously, has a lean plan. But what exactly is a ‘lean plan’? Since leaving Clicktools, I’ve spoken to many people starting-up and a common phrase is “yeh, we’re a lean start-up” which immediately starts me wondering what their lean plan is and how they produced it.
For those that don’t know — Eric Ries published the Lean Startup in 2008 and it quickly became probably THE goto book for many entrepreneurs. And, whilst Eric was ( I believe ) the first person to write specifically about, and use the phrase, the ‘Lean startup’ an earlier book from 2003 was the start of the movement: Four Steps to the Epiphany by Steve Blank described how to build a product based around ‘Customer Development’.
The Four Steps (Discover, Validate, Create, Build) and Lean Startup approach (encompassed in Build, Measure, Learn) are very complementary and provide a detailed and rich picture of how to run your business based around innovation — building QUICKLY, learning QUICKLY and improving QUICKLY. Then Repeat. Repeat. Repeat.
My head: I wonder if Eric Ries though about calling his book “Three steps to the Epiphany”? Editor: I doubt it but WHAT does this have to do with a plan?
Oops, sorry. So, whilst I would recommend these books to anyone starting out a new business, there is something conspicuously absent from both.
Both books reference a business plan (a lot). My kindle tells me that Lean Startup references ‘business plan’ 18 times. I can’t be bothered to count how many references there are in my physical copy of Four Steps but it’s definitely more than one.
So, when I speak to people about their Lean startup, or any new business come to that, my first question is: What’s your plan? And, here’s the rub. Most people seem to either either a) don’t have one or b) have one that is ~100 pages.
To quote John McEnroe:
Of course, the people I spoke to won’t be a representative sample but, the problem is neither book really tells you what a lean plan is and, whilst both books criticise traditional approaches to business planning, neither provide an alternative.
As a result, from conversations I have had, many people do one of two things — they either write what they have historically/traditionally written (i.e. the 100 page plan) or think ‘cool — I don’t need a plan’. I don’t honestly know which is more dangerous or more likely doomed to failure.
The “100 page plan” cohort happily spend 6 months writing their plan (it’s hardly a LEAN approach is it?). It details every resource they will need when they have 1,000,000 customers and all of their 412 competitors across the globe. In all honesty, I doubt it was worth writing because you will probably never read it again OR you spend sooooo much time worrying about it and keeping it upto date YOU NEVER ACTUALLY DO ANYTHING — my anecdotal #1 startup killer!
The “Cool — I don’t need a plan” approach can be just as limiting, especially if there is more than one of you. If you are building a product, I suspect you will never know what you are trying to build, when you are finished or why you are building it in the first place. YOU TRY TO BE EVERYTHING TO EVERYONE — my anecdotal #2 startup killer!
There is a 3rd approach. This is what I have used previously and have used for ikooloo. The start point is Alex Osterwalder & Yves Pigneur book Business Model Generation. This provides a detailed and step-by-step approach to building your business model canvas and includes a wealth of background knowledge and detail. I use this but create a Lean Canvas which was developed by Ash Maurya. The Lean canvas is basically the business model canvas with some of the elements changed to make it, I think, more suited to product and software based startups (this article explains why).
Completing your lean canvas involves answering 9 questions in the following matrix to produce a 1 page plan.
The 9 questions you answer are:
- What problem am I trying to solve and how does the person I am solving the problem for currently solve this problem?
- Who will use what I have and what do these people have in common?
- How would I describe what I have to this person and what other well know solution could I compare it to?
- What solution am I providing?
- How am I going to get it to the people I want to use it?
- How will I make money?
- What will cost me money?
- How will I measure my success?
- What makes you unique and unbeatable?
Answer each question with the most important 3 or 4 bullet points and, if you complete it on paper rather than on-line, make sure you keep it to one page.
The lean canvas encapsulates everything you read in a traditional business plan but the challenge of keeping it to one page forces you to hone in on what is really important and makes it easy to highlight any weaknesses or conflicts. The most important thing a lean canvas does for me is help me focus. It helps me to remember what I am trying to do and judge whether any new input or ideas or tasks are on or off plan.
Once completed, the sections will be useful as you move forward. Question 3, for example, can be used as the basis for customer personas used in product design and marketing; Question 4 can be used to group and prioritise feature requests. The whole plan should drive decisions and live with your business as it grows.
And, usefully, if you need a more detailed plan then these questions and answers give you the perfect model for a pitch and/or plan (10 slides or pages consisting of a 1 page summary with 1 page per question). And, it’s easy to reflect any changes based on feedback or that inevitable startup pivot!
So, whether you’re a “100 page plan” or a “no plan” startup may be it’s time you became a lean startup so make friends with Eric; get to know Steve and then write your plan alongside Alex or Ash.
