Recently Asking Better Questions was commissioned by the East Midlands Chamber of Commerce to deliver a series of online workshops to its members in Nottinghamshire, Derbyshire and Leicestershire.
Designed to support businesses of all shapes and sizes to navigate through the turbulent times that 2020 has delivered to date, part of the series focused on Lean and Traditional approaches to developing strategy and asked “which one meets your needs?”
In this two-hour webinar (demonstrating our own ability to pivot from face to face into screen to screen delivery), we explored the concept of the lean start-up model versus a more traditional approach with a classic business plan. The session ran through a series of approaches, tips and techniques which can support businesses of all types to start, scale and succeed. Turns out that there isn’t a ‘one answer fits all’.
“By failing to prepare, you are preparing to fail.”
Benjamin Franklin, Founding Father of the United States
Why do businesses fail?
Before delving into definitions, tools, tips and tricks, it is important to look at the reasons why 75% of start up businesses fail within the first five years.
Aside from obvious things including ill-conceived ideas, poor execution or questionable business practices, there are some classics reasons why businesses don’t survive:
You can’t make accurate predictions about the state of the market in five years’ time
You’ve spent your life savings and gone into full production before you have tested the product or service with your target audience
You’re trying to execute an established business model, when you haven’t found what model suits you yet
“Everybody has a plan until they get punched in the mouth.”
Mike Tyson, World Championship Boxer
This is where the Lean vs Traditional models both might have merit, depending on your type of organisation and your overall objectives.
Let’s look at ‘Lean’
Lean Start Up is a relatively recent phenomena in the world of business. Developed in the late 1990s by software companies, it has had a profound impact on how businesses start scale and succeed. It focuses on being agile, adaptable, constantly learning, developing and improving based on customer feedback. There is a plan, but it’s a fluid one which is built upon through a series iterations and refinements.
Using tools including the Business Model Canvas to develop the building blocks of a business and test ideas, assumptions and hypotheses, before major investment is made can be a valuable resource.
Listening and learning is a key trait of the Lean process. Customer development is core to testing your ideas, innovating and coming up with a Minimum Viable Product which offers the most learning from the least effort and investment.
When it comes to product development, the Lean approach operates in short quick cycles, developing the product in parallel with customer learning to constantly rework thinking, test ideas and validate concepts.
The ability to be agile and innovate is more important than ever at the moment as many business owners are uncertain and looking for insight, direction, holding back from investments and potentially pivoting in a whole new direction.
However, some businesses are not set up in this way and can struggle to be reactive, but is it their plan that is holding them back?
Taking ‘Traditional’ into account
Early business thinking from the 1950s onwards emphasises the need for a full Business Plan which maps out the company direction for, say, three to five years into the future and includes:
Executive Summary
Company Description
Industry Analysis
Market Analysis
Marketing Plan
Management Team and
Company Structure
Operations Plan
Product (or Service) Design
and Development Plan
Financial Projections
There is one main reason for developing a business plan and ultimately that is to communicate what your business is to both your internal team and also external partners such as investors, financiers, partners and suppliers.
A business plan is beneficial, particularly to larger more established organisations, as it sets out focus and direction, provides accountability and sets targets and measurements. Using tools including SWOT and PEST you can create a picture of your organisations in relation to market conditions, spot opportunities and make predictions for changes.
What many business plans fail to do though is be adaptable and once the plan is in place it’s full steam ahead with that, rather than regularly reviewing, reacting and adapting to market conditions and customer feedback.
Which one is right for you?
There’s something we should acknowledge, now we’ve been through an analysis of both approaches. Each approach, done effectively, forces businesses to ask questions of itself, to have conversations with internal and external stakeholders. The value of each approach is in the questions and their answers.
The business model canvas, for instance, demands a really intimate understanding of your customers and their behaviours through ongoing conversation. The traditional business plan demands the thrashing out of ideas, roles, preferences by founders as they plan their way to success. Both are deep investigations of people and their wishes and move a business from the theoretical into the human.
In the spirit of asking better questions, which approach is right for your business? Are you agile, customer focussed and constantly seeking input to adapt and innovate? Or, are you flitting from one idea to another without a clear plan and dedicated direction? Do you need to focus more on your future trajectory? Can you communicate your aims and ambitions to your team, potential investors and your clients?
If you need some support with your approach to strategic planning drop us a line for a confidential, no obligation chat steve@askingbetterquestions.co.uk.