Michael D. Moberly April 30, 2014 ‘A long form blog where attention span really matters’!
There should be no question by now that the business development and transaction terrain has become increasingly (globally) competitive, aggressive, and predatorial, particularly as intangible assets, e.g., intellectual, structural, and relationship capital have become the dominant drivers (producers) of most company’s value and sources of revenue. These rapid paced realities have certainly influenced, as well they should, entrepreneurially-minded management teams to re-examine the relevance and applicability of conventionally structured business plans.
I am not suggesting conventionally drawn business plans are irrelevant. They can serve as descriptive (projective) roadmaps of what start-up entrepreneurs want (a.) their business to eventually look like, and (b.) tactical and strategic paths to get there!
Such business plans remain largely portrayed in many college (business) textbooks and curricula, as being the very first step one should take toward starting a business. Interestingly, in an MBA (business management) course, which I taught numerous times at a university, this alternative ‘business plan’ perspective being advocating here, was purposefully integrated in my classes in which there were numerous ‘entrepreneurial spirited’ students who aspired to start their own business, with some already in the early stages.
For some, this alternative perspective with it special attention to (a.) speed, (b.) adaptability, and (c.) intangible assets, prompted numerous and generally adverse reactions, particularly from individuals who had already toiled over writing a comprehensive business plan and now felt wedded to it. Such reactions are understandable because some types of businesses, may require more ‘start-up’ structure than others, thus a strong and detailed business plan may be necessary.
The issue however, for this post, is that there remains an inclination on the part of some management teams to attach far too much symbolism, in my judgment, to conventionally framed – written business plans as if Justice Scalia (U.S. Supreme Court) were debating whether a business plan…
- constitutes a living document that’s malleable and flexible as circumstances warrant, or
- is a more static (stationary) document that should be applied – interpreted only relative to its original intent.
I am finding more management teams exhibiting a greater sense of responsiveness, adaptivity, and preparedness to rapidly execute to reflect the often abbreviated and asymmetric time frames (windows) which new business opportunities arise today.
In other words, there is less necessity for entrepreneurially oriented management teams to feel compelled to adhere to the sequential rigidity associated with a conventionally framed business plan. In other words, while the tactical remains central, management teams are well advised to not overlook or neglect the necessity to be strategically speedy and forward looking – thinking!
Admittedly, by choice and preference, most of my engagements, are with small, mid-size, and early stage companies. For these, assembling a structured and strategically focused business plan may be subordinate to merely trying to remain viable beyond the first year of launch.
But again, it’s not uncommon to find myself visiting companies which, at first blush, may appear somewhat rudderless, but instead, they are continually evolving, emerging, and have adapted to a perpetual state of re-inventing themselves to reflect and/or accommodate the rapidity of change they are experiencing in their market space and/or exhibited by consumers and an expanding and diverse set of stakeholders.
Underlying this un-conventional ‘business plan’ model lies in management teams’…
- to be in perpetual state of forward looking – thinking (tactically, strategically)
- obligation to retain sufficient flexibility and maneuverability in their outlook
- accommodating transactions and/or opportunities in their market space as quickly and effectively as circumstances warrant.
- achieving confidence in identifying and exploiting their intangible assets which may not always mesh well with conventional, structured, and inflexible ‘roadmap’ perspectives of formal business plans.
- to devote much more attention to identifying, developing, safeguarding, and exploiting the intangible assets and embrace flexibility, i.e., being prepared to adapt, change, and have the necessary information, at the ready, to make sound decisions as rapidly as a new deal, proposal, or circumstance warrants.
But, admittedly, a substantial portion of the financial services – lending community finds little, if anything, to be enamored with regarding this alternative model for business plan development. For this profession, a comprehensive and sequentially structured business plan generally serves as the requisite starting point for most any ‘start-up’ business discussion to reach a second level.
By now, there should be no argument that intangible assets have become the key and irreversible underliers to the success and profitability for most companies. Remember, it is an economic fact that 80+% of most company’s value and sources of revenue evolve directly from intangible assets. But, intangibles must be recognized, developed, and used (exploited) effectively to achieve the value, revenue, and competitive advantages which most are capable. An important marker for demonstrating the effective use/exploitation of intangible assets, in my view, occurs when management teams…
- recognize intangibles as being very maneuverable, flexible, adaptable, and ‘bundable’ to accommodate the development and execution of a new product, service, or transaction.
- know when, where, and how to use them best to achieve particular objectives, i.e., the wisdom, timing, and sense of foreseeability.
In other words, there should be an intangible asset intelligent ‘managerial culture’ in place when conceiving – writing startup business plans!