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Business Planning for the 'Lean Startup'

This next-generation strategy calls for planning--and revising--as you go.
September 22, 2010
URL: http://www.entrepreneur.com/article/217343

There's lots of talk these days about the so-called "lean startup." Most would think that just meant a startup without a lot of outside capital. According to thought leaders Eric Ries and Steve Blank, a lean startup is one developed along a build-test-revise-build-more-test-more strategy. It's closely related to what they call agile (or rapid) program development. It's product development that doesn't mean spending forever planning a project before getting started. Instead, it's a cycle of build, test, correct, then build, test and correct.

And that idea, the cycle, the test and revise, the small correction, and the quick pace, is ideal for a next-generation style of business planning. So I'd like to explore here what kind of planning might be related to the lean startup. And I hope, as you read this, that it sounds like a better planning process for a lot of organizations, not just the lean startups. 

  1. Keep the planning simple and practical.
    The plan should live online, not on a document printed out somewhere. It could be in the cloud, on an online application, or a local area network. The key players can grab it from where it is, work on it and put it back. 

    It doesn't need any extra frills of editing for the sake of appearances. It doesn't include an executive summary or a description of company background or management team. It's a plan, not a sales brochure. If you need that document later on, you can start with the plan and add the extra descriptions, summaries and editing required for showing it to outsiders. 

    Your plan should include strategy, steps, dates, deadlines, metrics, accountability, and basic projections, plus a review schedule. The review schedule is critical: When will we review and revise? This keeps the plan alive. 
  2. Grow it organically.
    The worst thing you could do is develop a plan before you take any action. Start with the heart of it--what's most important--and build it like an avocado grows, from the heart outward. Don't put anything off for planning; plan as you develop your business. 

    What comes first? Probably strategy, but not necessarily. Some people build their plan all around a sales forecast. It's all modules, like blocks, and you do it in whatever order fits your personality. 
  3. Think it, plan it, test it.
    It's not like you're not going to plan, manage and steer your company just because it's a lean startup. On the contrary, you need to stay on top of the quickly changing plan, managing your assumptions as the reality emerges. As assumptions withstand tests--or don't--you can quickly make adjustments. 

    That agile development website took off even faster than hoped? Cool. Your plan tells you how those dots were connected so you can adjust everything else. Did it take longer than expected? Same thing: Go back to the plan; look at how everything related. 
  4. Match your agile development with agile planning.
    I love all the similarities between rapid development and plan-as-you-go planning. So let's bring the vocabulary together. Real-world business planning, particularly in this rapidly changing real world we live in, should also be pretty damn agile. And rapid. 

    Plan it, build it, revise it, plan it again. That's called the planning process, and without it you don't control your destiny. You can't move quickly enough. You're always reactive and you're not optimizing. 
  5. Lather, rinse, repeat.
    Planning has to be like steering, a matter of constant small corrections within a broad navigational plan. The details change, but all within context of the long-term direction. A good planning process is cyclical. You're always reviewing and revising. 

To me, all five points seem to be a pretty good way to build planning into your business, whether you're a "lean startup" or not.