Should you throw out your business plan?

30th March, 2017

If you want to keep up with your customers, the key is to embrace uncertainty and start planning in a whole new way.

That’s the call from Patrick van der Pijl, who’s the author of 1 million copy selling Business Model Generation and CEO of Business Models Inc.

He’ll be telling budding entrepreneurs and established business titans alike at this week’s Myriad festival to throw out the old playbook – because it’s based on old methodologies.

“We’ve been building companies that were built around efficiencies, building the bigger systems, or developing the products or reducing the stock – it was very much focused on the production side,” he told The Pulse earlier this week.

“Right now it’s shifting to the customer side so you need to see what they want.”

He says that customer tastes and habits are shifting so rapidly that operating a model derived at a time when customers were more sticky and had less choice is verging on madness.

“What we see right now is that customer behaviour is changing so fast, it means that you need to keep up with what’s going on with the market,” said van der Pijl.

If there’s one thing which characterises the business environment at the moment, it’s uncertainty – and those who embrace it will win.

Embracing uncertainty

While talking about the age of disruption is almost passé, van der Pijl said the key to survival in an uncertain world is to embrace the madness – but we’re almost hardwired to seek the warmth and comfort of routine.

If people can’t control the environment around them, that makes them uncomfortable,” he said.

“The stress of this situation on our brains means that it’s hard to switch them off at night – you’re still trying to solve problems as you’re going to sleep and that can be uncomfortable.

“So people want certainty because they can go home at the end of the day and unwind – it requires less energy.”

While he said embracing uncertainty almost triggers a biological aversion in humans, the customer landscape and the role technology plays in shifting preferences means that business leaders simply need to in order to survive.

“I think that we have always assumed that business is linear, meaning that we could just predict what’s going to happen– but that was true many years ago but not now,” van der Pijl said.

“A manager who is able to present a plan to their boss saying ‘this will happen’ sounds better than someone who doesn’t have one – but the one with the plan can’t possibly know what is going to happen, not now.”

“People don’t want to step up if the outcome is uncertain. They don’t want to lose their job.”

He said the key to embracing the fact that you really can’t sketch a roadmap in a disrupted environment was recognising that clinging to certainty would hold you back.

In fact, van der Pijl says throwing the plan out altogether is a good start.

Design thinking

“One tool that people should throw overboard is a business plan, because you write a lot of things in a business plan and then nobody reads it,” said van der Pijl.

“A business plan never survives the first customer contact because it’s always different than you imagine.”

He said there were a raft of tools businesses could use to embrace the newer, uncertain world such as lean and experimentation canvases, but advocated for design thinking to be at the core of it.

“It’s about thinking like a designer, which has different skills than a manager,” said van der Pijl.

“A designer before they start to do anything, they will observe customers first. A manager would figure out what they want to do and build something and think about the customer later.”

A fashion designer doesn’t ask a potential customer what colour they want a piece of clothing to be for example, because often customers won’t know what they want until presented with it.

Instead, a designer knows what’s in vogue, takes the zeitgeist and can sketch out different options instead of building one thing and hoping their customer likes it.

“They do experiments and they learn. These are the capabilities businesses need nowadays,” said van der Pijl.

You can hear more from Patrick van der Pijl at this week’s Myriad festival in Brisbane