If life seems to be moving faster than at any time in the past, it’s because it really is. According to Physics Nobel Laureate Brian Schmidt and the High-Z Supernova Search Team (a completely not-made-up name) that Schmidt led in 1998, the universe is expanding at an ever-accelerating rate. According to Kurzweil’s Law of Accelerating Returns, the rate of progress in technological and evolutionary processes doubles every ten years. According to Ray Kurzweil, who formulated the law, we tend to think that rate of progress happens in a straight line rather than exponentially. In a project that lasts 20 years, however, you’ll see the biggest innovations in the second 10 and even more in the last five. Or consider the advent of parallel computing. Instead of treating data in sequential order, parallel computing breaks processes into chunks that can be performed simultaneously to increase speed.
It’s no wonder, then, that the business sector follows similar speeded-up trajectories. Forget about the old way of starting a business. There just isn’t enough time. Or so Bernard Schroeder, author of “Fail Fast or Win Big,” claims. The advice you used to get – develop a thorough business plan before you launch – isn’t relevant anymore. By the time you’re done putting everything on paper, conditions in the world may change significantly, rendering your plan so 10 minutes ago. In other words, innovation has already passed you by.
It’s not that you don’t need to do research and really know your market. There’s a good dose of traditional advice in Schroeder’s book. If you want to open a pet supply store, for example, spend time talking to pet owners and checking out your competitors. “As a potential entrepreneur, you need to be manically curious about a potential product or service.” The difference now is that the product or service you want to launch needs to be no more than “minimally viable.” In other words, the app you’ve just come up with to tap into the mindset of 14- to 20-year-olds. (But wait! Too late; someone has already done it.) Okay, for the sake of example, let’s say it really is your idea. To launch your business, you develop the app in a sort of draft form with only core features. Then you test it on your customers. They provide feedback that helps you improve the product at the same time you are promoting it to them. The result is a better design and a toehold in the market with a chance for greater success. In the old days, you might still be struggling over the Marketplace and Competitive Analysis section of your business plan while other startups are already being bought out.
Key to your hedge on success is Schroeder’s Lean Framework Model that asks you to develop a business model instead of a business plan. He writes, “Starting quickly with lean resources, developing a business model, rapidly prototyping a product or service, crowdfunding to raise capital (when necessary), and then using customer feedback will get you moving to fail fast or win big.” Getting customer feedback is crucial because it provides insight into how well your product is received, and which features work best. According to Schroeder, “Customers are not always right, but they are never wrong.”
Schroeder’s model makes a good deal of sense. It’s far better to start out lean, in your garage, for example, instead of a corner office on Park Avenue. Customer feedback (or customer truth as Schroeder calls it) is, indeed, valuable. And, busy people who might invest in your ideas don’t have time to read a 20-page business plan. Venture capitalists “like business plans that present a lot of information in as few words as possible.”
Valuable advice, but it has to be noted that the real difference between a business model and business plan is length and visuals. You still spend time developing it, which demands both thought and research. Just make sure you can explain it in the rapidly decreasing time available to those who might invest in it. In any case, Amdahl’s Law in parallel computing and Moore’s law in microchip processing suggest that there are natural limits to even the fastest computer processes. FBN
By Constance DeVereaux
Flagstaff Business News