Guest Post: Business Plans vs. Business Strategy
This is my site Written by Austin on March 10, 2010 – 8:34 pm

This is a guest blog post by Austin Gunter.  To read more of Austin’s work, you should check out his blog at AustinGunter.com.

Conquer your enemies. Use your own agility to make your opponent move even slower. The faster you can make decisions and take action, the more deadly you will be when facing your opponent.

There is a business book making the rounds at the Tech Ranch that, similar to the last  paragraph, seems like it’s about military strategy.  But it’s not. The book, Certain to Win, does  talk a whole lot about military strategy.   The first half of the book finally explains how the Nazis used the Blitzkrieg and tore into the French lines.  Turns out, that was a two-week campaign that made all the difference for the Third Reich, and made the war last as long as it did.  The Nazis were far outnumbered, had obsolete technology, and lacked the resources of the Allied troops. Let’s replace the Third Reich and the Allies with small start-up vs. Microsoft, David vs. Goliath.

It’s been said that Bill Gate’s Biggest Fear is, “that some kid will brew up the next killer app in his garage in Kenosha and Microsoft won’t own it.”  What’s the difference between your startup and a behemoth like Microsoft?  The answer should be a cultural.  Since a small start-up lacks the sheer resources of a Microsoft, they have to have a culture of quick decisions, made with an emphasis on agility, not brute strength.  The difference is between a Business Plan and a Business Strategy.

Before I explain this, I want to make sure everyone understands that, just like the rest of you, I’m glad that Good triumphed over Evil in World War II.  I’m not advocating the sickness of Nazi ideology.

What I AM saying, what Certain to Win says, is that the Nazis achieved success against a more powerful opponent because they made decisions faster than their bigger, bureaucratic opponent.  This structure meant that agility won out over far superior numbers AND technology.

I am suggesting that we model aspects of this structure in our respective start-ups.  This structure will make us more agile and enable us to take down giant corporations (at this point, Microsoft is probably more Nazi-like than your start-up I’m sure).  By moving twice as fast as a bigger company, a start-up can release a beta in a few months, while the big guy is still sitting in meetings, waiting for approval.  Google is a notable exception of a billion-dollar company that structures itself like a thousand tiny start-ups.  Google is regularly releasing betas, some of them better than others.  By releasing the beta, Google invites the feedback of millions of users who ultimately decide if the product is hot or not.

This is how structural agility in a start-up should manifest.

Stop making Business Plans.

Business plans are like computer technology.  By the time you get all the figures and graphs printed, your financials, just like your microchips, are obsolete.  Your startup has changed, and your numbers are based on what used to be true.  Following a 20 page business plan inhibits making decisions based on what is true now.   In a start-up, sticking to your original plan is a very reliable way to become obsolete yourself because you are making decisions according to old information.

What do you do when your carefully made plans go astray?  Hint: the right answer isn’t panic.

Rely on Business Strategy.

Instead of making a step-by-step plan of how to drive from Los Angeles to New York, ask yourself a few questions and develop a strategy that will enable everyone in your company to make quick decisions.  Why are you making this trip?  If the goal is to arrive as quickly as possible, then fill the tank up and hit the gas.  Or if the goal is to get the most out of the trip itself, then you can spend time enjoying the scenery.  Either strategy will get you to your destination

The only way to make it as a startup is to create a culture that encourages innovation and independent thinking by your employees.  Let’s go back to the analogy of traveling from Los Angeles to New York.  If you’re the CEO and you’ve fallen asleep halfway through the Texas Panhandle, any of your employees that happen to be behind the wheel MUST be empowered to make a decision without rousing you from your slumber.  If they have to wait for your approval to change lanes, the opportunity will pass you by before you can take advantage of it.

How can you create a culture where strategy is more important than a plan?

I hope this helps.