Presumably there’s no surer sign then the whole industry is about to melt down than the increasing talk about businesses that don’t have any plan to move to profit being bought or re-financed with millions of dollars of pension fund money. There’s a horrible sense of deja-vu from the 90s.
Antony reports on this sort of behavior here, with Twitter funder Umair Haque suggesting that traditional business plans are no longer relevant, and the seductive although meaningless quote, ‘Spreadsheets aren’t strategy’.
Well Twitter’s obviously an interesting example. A lot of people have asked how they can afford to continue to fund the volume of SMS traffic without any inbound revenue streams. Did they have a secret plan? Or will this be reminiscent of the brilliant ‘underpant gnomes‘ strategy in Southpark captured by Richard at AdLiterate?
Well I, for one, am not delighted to hear that they don’t know either!
Bill Gates pointed out recently that Google’s record of monetising products is actually fairly poor. It’s just that their biggest product is a barn-stormer so they get almost infinite R&D money to play around with. Microsoft has been doing the same, working on a “get it out first, monetise it later” approach; and all the talk now is of failing fast. Obviously Microsoft and Google can now afford to do that for a while. Can Twitter?
Old style, 5-year business plans may be obsolete, if only because looking five years into the future is becoming harder and harder, but that does not mean that you don’t need constantly understand what you are in business for and how it is sustainable. The market (in the capitalist sense) is not a pure abstraction, it is by definition the reason you are in business.
Can we take ideas from the world of Lean to apply to the purpose of a while business? What would Shingo and Ohno say? Should the business plan be allowed to iterate? Monthly? Presumably the whole company (and as far as we could take this) its customers should be involved and take responsibility for the plan; should be rewarded for its success or failure.
But, to take the analogy more into Agile, what should happen when the business plan doesn’t build, when the numbers don’t add up (even after a hefty dose of 2.0 or 3.0 futurecasting)? It is important too that, the business be able to change course. How many companies are truly willing to close down or to re-invent themselves because they have become obsolete, ?