Posts tagged ‘Business plan’

March 24, 2012

Business Model vs. Business Plan

There is a fundamental difference between a business model and business plan. A Business Model defines how you will make your product or service economically viable. A business plan describe how you are going to make your business model work. One does not always know how the plan is going to evolve, so building detailed plans although a great thought or intellectual exercise adds no real value because you are wasting time making assumption about the world out there and hope that your strategies or “plans” will address those assumptions and hypothesis. The truth could not be far from it. Most people confuse this with the product development road map and the classic example I get is people saying “hey, Steve Jobs did not go and interview his customers before he created the iPod, iPad, the Mac Air or any of the products that has come out of Apple…” to that I have only one answer, unfortunately there was only one Steve Jobs and how do we know that Steve did not do that? he had a keen eye for design and detail, he spend considerable amount of time in Silicon Valley being part of the information

revolution and he had many fails to learn from. I try to remind those I am talking to that they need to spend 30 years in Silicon Valley, formed 2 or 3 multi-billion dollar companies, have the same network and experience of Steve Jobs before being able to compare themselves to what Steve Jobs did.

There is a simpler way, Steve Blank, has written books, taught classesand has done many things to showcase the Customer Development Methodology, which is nothing but a Business Model. If you approach problems with the Customer Development method, you can build a pretty good hypothesis and once you have an hypothesis, it can be validated and based on the results you can build a business. The trick is to get through that cycle as fast as you can and then execute based on the learning. It is never simple and straight forward you have change your hypothesis several times and build and re-build your business model that is why it is a startup.

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