Business Plan or Vision? You Need Both.
Source: Forbes by Erika Andersen
Sometimes I look at an article because I think I won’t like it. Quite often I have exactly the opposite reaction – I lose the scoffing opportunity, but I find something engaging, true and/or useful.
Today I clicked on Andrew Tjan’s Great Businesses Don’t Start With a Plan on HBR. I started out thinking, “What? – of COURSE you need a plan!” (I’m a big fan of planning.) But as I read it, I realized that Andrew was saying something very important, with which I completely agree: having a clear vision and a deep sense of purpose is much more important, if you’re starting a business, than having a classic paint-by-numbers business plan. In the course of doing research on entrepreneurs for a new book he has coming out in August, Andrew discovered the following:
“One of our most striking findings was that of the entrepreneurs we surveyed who had a successful exit (that is, an IPO or sale to another firm), about 70% did NOT start with a business plan.
Instead, their business journeys originated in a different place, a place we call the Heart. They were conceived not with a document but with a feeling and doing for an authentic vision. Clarity of purpose and passion ruled the day with less time spent writing about an idea and more time spent just doing it.”
Now, Tjan goes on to say that he believes in planning – the problem arises when leaders assume that financial modelling stands in for clarity of vision and depth of purpose.
I’ve seen this misunderstanding in businesses of all sizes. Quite often, when I ask leaders whether they have a vision for the future of their business, they’ll say yes – and then hand me their financial plan. Having a clear financial plan is a good thing, generally speaking – but it’s not a vision. (By the way, leaders sometimes say pretty much the same thing when I ask them about mission, or purpose: they’ll respond, Our mission is to make money.)
A financial plan simply describes the finish line (or the lap marker) and provides sign posts along the way. A vision, on the other hand, tells you the kind of vehicle you’ll use, how you’ll navigate the course, what you’ll do when you get there. And a mission tells you why you’re making the journey in the first place.
It’s very useful to have some agreed-upon markers of financial success: where you’re going, and whether you’re headed in the right direction. But if that’s all you have, it doesn’t give you nearly enough clarity about how you’ll get there, and what it will look and feel like when you do. A financial plan alone doesn’t provide a sense of what’s distinctive and compelling about your business; of what kind of a team you’ll want to build; of the culture that will be needed to achieve your unique premise. That’s what vision provides.
Creating a solid financial plan requires good logical thinking and a clear grasp of core financial tools and assumptions. Creating clear vision and mission requires accessing a different part of yourself. Tjan calls it your heart. If you feel uncomfortable with that, call it your ability to vision.
In order to create a powerful mission, you need to find the part of yourself that can answer the questions, “Why does my business exist? What will be missing in the world if this business doesn’t succeed?”
In order to create a clear and compelling vision, you need to be able to then answer these questions, “If we were more deeply fulfilling our mission, what would our business look and feel like? What would it be like to be a part of our team? What will we be providing to our key stakeholders?”
And once you have all three – a meaningful purpose, a clear vision and a solid business plan…the odds are definitely in your favour.
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