I'm wrapping up a business plan and since I'm not comfortable screaming the concept out loud quite yet, I thought I'd share the process I used for the actual business planning. I'll note that this process is an outgrowth of the 'Two Things' principal I learned from Marty Anderson at Babson College during a course called "Extended Enterprise Management." I'm not an expert on business planning, but for what it's worth, here's what I've done.
A traditional plan has sections such as Opportunity, Problem, Business Model, Competitive Advantage. So does mine. The mistake I wanted to avoid however, was writing my plan in those sections. I've wasted time in the past trying to build an organism on paper in those stages. It doesn't work.
I should note, this process really began after considerable research had been done on market trends, niche markets, supply and demand chains, etc. Never with a specific solution in mind, but just to appraise an industry that I think is ripe with opportunity.
Within any set of entities that assumptions have defined as an industry, there are a complex set of connections. They can be summarized into those between members of Demand Chains, Supply Chains, and Communities (markets). My first task was to define those demand chains, supply chains and communities as best I could. This included members, interests, operations, financial information, trends, leverage, and opinions. Often, I tried to relate demand chains, supply chains, and communities from other groups of entities to the one that had my focus.
While defining these command like organizational structures, I was also plotting the three layers of each entity as well as the the sum of the entities along three common criteria. Those are their physical layer, information layer, and mental model layer. An over-simplified example for the music industry in the late 90's might be:
- Physical: CD's, home entertainment centers, car stereos, retail
- Information: prices, marketing
- Mental models: compete for 'share of wallet,' CD sales are key to making money from promoting musicians...
I found you never really finish an exercise like this, but you decide to slow down advancing it and begin to examine and organize it. What I had created were a series of notes that could almost all be organized like this matrix.
I then highlighted commonalities across these maps that fit together into a larger network map. The implications internal to each of these highlighted players determined the value proposition (or lack thereof), balance of power, and flow of money. Out of these connections fell the opportunity and out of understanding the opportunity in this way, fell the business plan. When plotted against a supply and demand chain map that represents market conditions, our commonalities open up funnels that can be put together in unique ways to maximize an opportunity.
It was a painful process that was often frustrating but equally enlightening. To tell the truth, now that I've put the opportunity on paper, I wonder if all that work was worth the end concept. Even if the opportunity is not big enough or bound to succeed, it's put together in the most rational way I could think of given the current pace of the market.
What do you think, rational method? Would you change it?
Did you see this from Loic:
The idea does not count only execution matters: 10 rules to launch a startup today
http://loiclemeur.com/english/2007/12/the-idea-does-n.html
Posted by: steve Garfield | August 18, 2008 at 06:19 PM