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Strategic Plan versus Business Plan
by H. Randall Goldsmith, Ph.D.

In 1822, an eccentric Englishman had a vision. Charles Babbage’s vision was to create his Analytical Engine. Charles, the son of a banker, had a natural inclination to analyze and calculate. He once baked himself in an oven for five minutes at 265 degrees to test the human response to heat. He was fascinated by the new advancements of the industrial age such as optics, electricity, and manufacturing, but above all he was fascinated with calculating everything from life expectancies to vital signs of farm animals; from 464 ways to break glass plate, to celestial tables. Charles concluded that his vision for an analytical engine would eliminate the need for 60 to 80 people who performed or computed calculations. His design, which consumed most of his adult life’s work, would allow the machine to store 1000 numbers of up to 50 digits each in memory, but it was so far advanced for its time, the technology to build it did not exist.

Though Babbage died discredited and disappointed, his vision became a reality in 1991 when British scientists built the machine in commemoration of his birth. The analytical engine’s 4000 parts stood 10 feet tall, 6 feet wide and weighed 3 tons and as predicated, could calculate perfectly with 31-digit numbers. Charles Babbage never gave up hope in his vision. In reflecting back on his life’s effort, he wrote: “The whole of the development and operations of analysis are now capable of being executed by machinery. As soon as an Analytical Engine exists, it will necessarily guide the future course of science.” The first modern computer, invented in 1946, used all of his basic concepts for a revolutionary mechanical computer.

Vision is a fundamental characteristic of inventors and entrepreneurs. While strategies and tactics may ebb and flow in a new venture, it is the vision that ultimately drives their efforts. In fact Amar Bhide, author of The Origin and Evolution of New Business, reports that only 4 percent of the Inc 500 companies began with a written business plan and 50 percent never even consulted a lawyer. The National Commission on Entrepreneurship states in Five Myths About Entrepreneurs: Understanding How Businesses Start and Grow the Strategic Vision Myth is that “most successful entrepreneurs have a well-considered business plan and have researched and developed their ideas before taking action.” They don’t.

Throughout history it was rare to find any entrepreneur with a written business plan, and even today it is not common for entrepreneurs to have a formal plan. The formal business plan is a relatively new business tool. It is a living document that evolves with the company—setting the company’s course, defining the milestones, timelines, and financial and market strategies. Business plans become more critical as the company matures and becomes an absolute necessity when the entrepreneur seeks outside financing.

Written plan or not, the important thing is to have a strategic plan. It is vital in today’s world that the entrepreneur realistically understands how their product is positioned in the market place. The key strategic questions relate to what market problem or need does the product address, how big is the problem, why is this product the best solution, what management skills are required to bring the product to market, how much money is required, how will the funds be used, how will competitors be neutralized, and how much money will this venture make? This set of questions leads to another level of strategic questions that subsequently lead to hundreds of tactical questions that will ultimately be addressed in the execution of the plan. The more questions that can be asked and answered before the venture gains significant momentum, the greater the opportunity to coordinate resources, eliminate potential mistakes, and accelerate the commercialization process.

Winners and losers among entrepreneurs are usually determined by personal traits – open-mindedness, decisiveness, ability to take setbacks and rejection, and persuasiveness. For potential entrepreneurs who have never traveled this path, the following are my guiding principles for commercialization:

Don’t bother, if…

… you intend to manage your business opportunity to success rather than race your vision to reality;

… your primary objective is not to make a profit;

… you are not prepared to devote all of your time and energy to commercialize your venture;

… your family has not given you permission to temporarily neglect them while you commercialize your venture;

… you can’t cope with failure;

… you are infatuated with your product;

… you are not prepared to lose serious money;

However,

When you have exhausted every ounce of your energy and can reach deep inside your spirit for one more drop…

If you hit seemingly insurmountable barriers and not only persevere but conquer them…

If you can get it all done without misplacing your priorities and sacrificing your values…

If you can allow yourself to fall in failure then get up, dust off and begin again…

If you can give up control to achieve your objectives…

And if you are driven to win…

Then you have the right stuff to join the rank of individuals called entrepreneurs.

Good luck.