Many companies have trouble making the transition from a failing business model to one that works. Often, one culprit is an inability to experiment.
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As the scientific community has long known, experimentation is the key to knowledge. It enables people to check their assumptions and run various “what if” tests to expand the base of what they know. In the business world, executives generally recognize the importance of experimentation, but many don’t practice it nearly as much as they should. For such executives, the recently published Getting to Plan B: Breaking Through to a Better Business Model (Harvard Business Press, 2009) should be required reading.
Written by John Mullins, an associate professor at London Business School, and Randy Komisar, a partner with the venture capital firm Kleiner Perkins Caufield & Byers in Menlo Park, California, the book makes a strong case that organizations need to experiment regularly to overhaul a business model that’s broken or to fine-tune one that needs adjusting. Indeed, many successful companies originally had very different business models from the ones they eventually adopted. Getting to Plan B is filled with such case studies, from the famous (the online payment service PayPal Inc.
1 Comment On: Do You Have A “Plan B”?
I enjoyed the piece but feel that it may not have conveyed the right message. The “savvy entrepreneur or street-smart executive” is only able to identify their longer-range vision and thier starting business model, what you call Plan A; and what I call thier Pushcart Business Model. Once they operationalize Plan A they will take in information that will enable them to validate or invalidate Plan A’s core assumptions. Learning what assumptions are right and which are wrong will allow them to then develop their second iteration, Plan B, if you will, and so on.
I first described this iterative process of information – assumptions – practice – information … in my 1998 book, The Rhythm of Business and elaborated upon it in 2001 in Collaborative Communities: Partnering for Profit in the Networked Economy.
Jeffrey Shuman, PhD
The Rhythm of Business, Inc.