Business Plan vs Business Model Canvas: A Shift We Can All Learn From

Launching a Business

The Old Model:  Create a business plan of at least 25 pages.  Fill it with tidy market research. Put in detailed plans – all the way down to 3 years of proforma financials. Find an investor. Build the product or service – the more features the better. Hire marketing and sales. Then go into the market and sell, baby, sell. Cross fingers. Hope for the best.

The New Model: Sketch your preliminary ideas on a business model canvas, capturing your initial hypotheses about 9 key business elements. Put them on post it notes and be prepared to change them. Test them by getting out of the building and in front of your target market. Be curious. Listen hard. Learn fast and either validate, improve, or toss out your initial hypothesis. Update the canvas with your new insights. Repeat, over and over again, as needed to get to the point where your hypotheses hold together and your customers concur. Start with the leanest version of your product (minimal viable product). Sell some, listen, improve.  Once you finally have a model that works – then and only then – build the company around it.

Clearly there is much more involved in either approach – but I think you get the idea. Two different approaches, two different philosophies, two different outcomes.

The motivation for creating a business plan is to think things through thoroughly so as to execute well and avoid some of the risks associated with new ventures. The paradox is that this planning, while it avoids early failure, promotes ultimate failure. It likely contributes to the 50% failure rate of new ventures. By the time you have planned, secured funding, produced, marketing and sold – much time, money and energy is invested. Most likely, the market has shifted. You’ve hedged a big bet that you are right. Sometimes you are, and sometimes not so much.

The business model canvas approach feels uncertain and risky. It’s hard to risk failing early with an idea and then sticking with it through multiple iterations. Even more so when you are emotionally invested in it – you cringe when others don’t see the possibility that you do. Yet learning what works and what doesn’t early means that you no longer invest precious resources into what doesn’t work – and sooner rather than later. You instead divert (or pivot) into what does. If you listen and observe, you begin to craft a product or service that resonates – and ultimately sells. You shape a business model that works, that is resilient and has longevity – and are much more poised for long term success.

What applies to start-up businesses has great parallels to each of us. While we want to create a foolproof, locked down plan for our lives and our careers, that approach is fraught with peril. While we may want to avoid failure, trying some things out on a small scale (some of which will fail) can be both informative and freeing. We learn from them – we discover what works and what does not. We also learn that we can survive failure, dust ourselves off and begin anew. When we are adaptable, rather than getting locked into a plan conceived many years ago, we can find fresh opportunities. And as with start-ups, perhaps the biggest long term failure is being wedded to a plan that no longer works for us.