Business Plan vs. Business Model vs. Strategy. Eliminate the Blah-Blah-Blah in Startups & Companies!

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"Strategically executing and pivoting while tactically experimenting with your business model is most likely to translate an explicit vision and business plan into reality." Rod King

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In the world of business today, there are 3 “Musketeer”-questions for which there seem to be a virtually infinite amount of answers or “Blah-Blah-Blah!” Entrepreneurs, strategists, investors, and educators alike are struggling to properly answer the 3 Musketeer-questions. There are currently many misleading, half-baked, and "dangerous" answers to these questions.

The 3 Musketeer-questions are as follows:

  • What is a business plan?
  • What is a business model?
  • What is strategy?

Lack of consensus on the meaning of business plan, business model, and strategy creates a lot of confusion regarding the conceptualization, planning, and management of innovative business projects in startups as well as established organizations. In the absence of a shared understanding of what business plan, business model, and strategy mean, lots of money, energy, and time are wasted on business projects as well as on consultants who stress the mutual exclusivity rather than the complementarity between these approaches

Holistically examining and visually defining logical relationships between a business plan, business model, and strategy could resolve nearly all of the conflicts between these terms. There are strong structural and logical relationships as well as interdependencies between a given business and its business plan, business model, and strategy. It's time to get rid of the many platitudes and soundbites that are involved in conversations about the usefulness of business plans, business models, and business strategy.

The diagram of the Business Plan Circle below shows hierarchical relationships especially between a business plan, strategy, business model, and value proposition. Approaches to business planning can be top-down ("deliberate") as in classic/visionary strategy or bottom-top ("emergent") as in adaptive/shaping strategy. The Business Plan Circle diagram also highlights the need for fitness between the un/predictability of an environment and the content of a business plan.

The admittedly dense or multi-layered infographic below visually explores and synthesizes meanings of the terms of business plan, business model, and strategy. Also, similarities and differences between the terms can be visually observed. A particular advantage of the 1-page infographic is that it could facilitate the creation of a shared visual language for exploring as well as discussing the terms of business plan, business model, and strategy. Visually and deeply understanding the diagram could eliminate the confusion between the terms while increasing productivity in business planning, modeling, and strategy formulation.

As the business environment gets more turbulent especially in the computing industry where products, business models, and business plans have a high clock speed, the need for understanding the relationship between a business plan, business model, and strategy gets stronger. The emerging paradigm of Management by Business Models (MBM) is accelerating the paradigm shift from "business plan" as unit of analysis and management to "business model" as unit of analysis and management. Strategy is the bridge or vehicle that links a business plan with business models.

As a business evolves, it's important to note that its business plan, business model, and strategy goes through a metamorphosis of 5 "stages:" adaptive; shaping; visionary; classic; renewal.

The idea that there should be one business plan, business model, and strategy throughout the life cycle of a business is simply unrealistic. Such unrealism has led to the demise of former giants such as Blockbuster and Kodak as well as the near death experience of Blackberry and Nokia. Like in the lifecycle of a butterfly, the content of a business plan, business model, and strategy should be aligned with the level of unpredictability in its environment.

As the saying goes, a picture is worth a thousand words. Nevertheless, I’d say, a model is worth more than a thousand pictures. So, happy exploration with the terms of business plan, business model, and strategy.

Should you have further comments and questions, do let us know.

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