Why you shouldn’t stick to your business plan in the fast-moving startup world

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“The world has a way of undermining complex plans. This is particularly true in fast-moving environments. A fast-moving environment can evolve more quickly than a complex plan can be adapted to it. By the time you have adapted, the target has changed.” –Carl von Clausewitz

So you have raised funds, built your startup team, and set into motion the business idea that has been keeping you up all these nights. What comes next?

It is often counterintuitive but the important next step for a startup founder is to forget everything you know about your startup. Forget the unbridled optimism that has gotten you this far and guided you in pitching to your seed investors. Forget the business plan that you had so meticulously crafted. Because in a startup journey, nothing quite happens the way you expect.

Startups and wars

The clear lesson from Clausewitz on war can also be applied to the startup context. By tying yourself too tightly with the plan that you have from the start, you lose the flexibility to respond to market opportunities and challenges.

Helmuth von Moltke the Elder also observed that no plan of operations extends with any certainty beyond the first contact with the main hostile force. The tactical result of an engagement forms the base for new strategic decisions, as victory or defeat in a battle changes the situation which no human acumen is able to see beyond the first battle.

Running a startup is very much like trying to win a war, and launching it is only the first battle, especially if your business aims to be disruptive. Its launch changes market conditions, and the market’s reactions are variables that are not easily predicted when preparing the business plan.

Jack Welch, former CEO of General Electric, similarly subscribed to such a philosophy in leading the company, that is to see strategy as the evolution of a central idea through continually changing circumstances.

So, what guides the startup in the absence of a plan? First is the philosophy, unique selling points, and execution path of the startup distilled in the broadest manner, and second is seizing unforeseen opportunities as they arise.

Defining the central idea of your startup

The best way to define your central idea is to summarize your startup concept in one sentence. The beauty lies in the simplicity of that one central idea.

In my own one-sentence central idea, I explained that my startup allows retailers to offer a commission to users to refer their friends and fans as customers.

The rest of the pitch is simply about the details that expand the central idea:

• The benefit to retailers is that they are rewarded upon customer spending they reward upon customer spending (which disrupts the current advertising model of paying upfront fees without actual customer conversion), and the growth in the customer base (instead of other platforms’ focus on users’ own spending)
• The benefit to users is that they earn from word-of-mouth referrals and social media sharing, which are activities that they already engage in (and from which social media platforms are deriving advertising fees)

Safeguarding against unforeseen circumstances

Not blindly following the buzz

Implementing the central idea