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Getting to Plan B: Breaking Through to a Better Business Model Hardcover – September 1, 2009
"Rebound" by Kwame Alexander
Don't miss best-selling author Kwame Alexander's "Rebound," a new companion novel to his Newbery Award-winner, "The Crossover," illustrated with striking graphic novel panels. Learn more
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From the Inside Flap
This is a fantastic book. The stories are excellent . . . deep and insightful . . . and the storytelling is real. Getting to Plan B isn’t as much about second tries as it is about the authors’ helping you understand what it takes to drive an early-stage company to success.” - Bill Campbell, Chairman, Intuit
This great book will guide business leaders and help them stay focused as they transform their plans. Whether they are reshaping a new business model, or executing a quarterly strategy review in an ongoing business, this book will help leaders overcome the unpredictable waves and obstacles that stand in the way of their envisioned goals.” - Takaaki Hata, Partner, Globis Capital Partners, Tokyo
Getting to Plan B is the definitive handbook about the mind-set and moves required to lead any company in our messy and ever-changing world. This is more than the most useful book I’ve ever read on entrepreneurship: Mullins and Komisar challenge and redefine how organizational strategy and innovation ought to be managed in any company. - Robert Sutton, professor, Stanford University, and author of The No Asshole Rule
Getting to Plan B is a treasure trove of clear, practical lessons for entrepreneurs. It is real-world, hard-hitting, and prescriptivenot the fuzzy theoretical stuff found in too many business books. Komisar and Mullins repeatedly challenge conventional wisdom with experience and insight. This is a must-read.” - John Doerr, partner, Kleiner Perkins Caufield & Byers
John and Randy perfectly capture the trials and triumphs of entrepreneurship. They weave in antidotes that can be successfully applied. I wish this book was published a decade backI could have used it as an entrepreneur. Now as a venture capitalist I would suggest this as required reading to all my CEO’s.” - Vani Kola, Founder, Indo U.S. Ventures, Bangalore
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Mullins and Komisar's book remains a very good book thanks to a rich variety of cases and lessons. In their preface, the authors say important things. "Entrepreneurship is not easy. [..] they are countless tales of companies that quickly went down in flames. Ultimately [many of them] failed because the economics of their business model didn't work" [Page viii]. I was a little puzzled because I am not so sure; many companies failed because customers did not buy. But it might be the same! The authors claim "they developed a process and a framework to discover the best business model" [page ix]. Again I am puzzled, I am not sure this exists. But still, they certainly provide interesting tools.
One of the most interesting one is the use of analog and antilogs, that I had already mentioned when reviewing Ries' Lean Start-up. Again For the iPod, the Sony Walkman was an Analog ("people listen to music in a public place using earphones") and Napster was an Antilog ("although people were willing to download music, they were not willing to pay for it"). Analogs are successful predecessors worth mimicking in some way whereas antilogs are predecessors (whether successful or not) in light of which one explicitely decides to do things differently [Page 14]. But when they claim Apple's plan B was to transform itself from a struggling PC maker to a consumer electronics powerhouse [page 21] , I find the broadness of the plan B concept really too broad!
Then their methodical dashboard is about validating leaps of faith by testing hypotheses. And what is new compared to other important references such as Steve Blank's customer development is the focus on the business model through 5 elements: revenue, gross margin, operating expenses, working capital and investments. Why plan A won't work? The authors answer, page 3, by quoting Albert Page: "it takes 58 new product ideas to deliver a single successful new product". And a few lines below, "figuring out what the customer wants is not easy." PayPal worked on its plan G! Google's plan C works. Plan A had no revenue model, plan B was licensing, plan C was advertising. (But remember Google was always a search engine. In terms of product, it was still plan A! That is why I said before I was misled by the title Getting to Plan B)
They begin chapter 1 with the following: "Mediocre success - finding a passable business but missing the real potential - is equally problematic. Arguably, it's worse than missing the target completely because it will tie down your considerable talent in a venture with no real future. You and other entrepreneurs and innovators like you are the lifeblood of today's economy. And to waste your talent on something mediocre would be a real shame." Now the book shows that success does not have only one way. The Silverglide case [pages 74-78] shows that an entrepreneur can succeed with $80k for friends and family money whereas I am not even sure how many hundreds of millions Jeff Bezos needed before reaching profitability for Amazon.com [pages 186-192]. Many case studies illustrate how to optimize each of the 5 business models elements [chapters 3-7], whereas chapter 8 shows that you will need to find a balanced solution trying to get the best of these 5 key financial objectives. Amazon.com needed to reach a very large size to make its automated process worthwhile but "great lessons are born from leaps of faith" [page 192].
I fully agree with their final chapter's early sentence: "As you know by now, this is not a book about business planning. It's about, in a sense, business discovering. Quoting Eisenhower, "plans are useless, but planning is indispensable" or McArthur: "No plan ever survives its first encounter with the enemy". So again, the building blocks of the process are:
- an identified customer pain and a solution or an opportunity to offer delight, - some relevant analogs and antilogs, - which lead to some as-yet-untested leaps of faith, - which lead to a set of hypotheses to test them, - a dashboard to focus your attention on what's most important right now and to provide some mid-course corrections, - all comprehensively organized, in just the right sequence, to inform and create the five elements of your business model. [page 208]
Does this mean you need a plan B right from the start? The answer [page 212] is nice: "There's a temptation to think that, since plan A probably won't work, you should have plan B in your hip pocket. Don't do it. A contingency plan would probably be just as flawed." There is clearly in the eraly 21st century a new trend in that business plans may not be a sufficient tool, not to say even necessary. From Randy Komisar, through Eric Ries, to Steve Blank (including my recent account of Cohen's Winning opportunities), the important element is the discovering process of your business, of your customers in an iterative and flexible manner. This is clearly an important lesson to remember.
In short, the book points out that any innovative business will always involve one or more "leaps of faith." These are aspects of a plan that no one else has done before in the same form and so have no real examples to demonstrate they are correct. (You can never be sure how customers will react until you interact with them in a real situation.) Other aspects of the business can be modeled on what existing businesses do (analogs) or don't do (antilogs) in the same or another industry, and thus have a track record. The most important thing for the entrepreneur is to identify the leaps of faith in his or her plan, and to find a way to test them in the marketplace as early as possible and as inexpensively as possible. He or she can then adapt those things that don't work as anticipated early in the process, and have a much better chance of achieving success. Doing detailed planning without testing the leaps of faith is a waste of time and resources because too often the leaps of faith don't translate in the way the entrepreneur believes they will. This book helps one understand how to develop a business model in the adaptive manner, and it is an easy read.
Randy Komisar is a serial entrepreneur and now venture capitalist in Silicon Valley. I find him to be very articulate about what really happens in an innovative business or project, probably because he has experienced both success and failure and has developed an appreciation for each. John Mullins is a London Business School professor who, I assume, provides much of the organization and structure for the ideas and process. The combination makes a very effective book.