GUEST AUTHOR BLOG by Anthony K. Tjan, Richard Harrington, and Tsun-yan Hsieh co-authors of "Hearts, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business."
Want your business venture to succeed? Start by throwing out your business plan
Is a business plan always necessary?
Actually, it may be detrimental, especially at the beginning of company creation (the conception stage when most people believe they need a business plan the most). The best businesses are less likely to have started with a business plan than they are by founders who jumped into the fray and just started doing. In the course of our research, we asked entrepreneurs across the globe how they launched their businesses. Of those who had successful exits, nearly 70 percent did not start with a business plan. These successful businesses kicked off far less formulaically, with a quality we call Heart.
Too often, aspiring entrepreneurs over think how they should launch a business. What is the exact market size of the opportunity? they ask themselves.
What is my projected first-year share of the market? What is the pro forma five-year financial plan? Although questions such as these can be helpful if approached as approximations, they often deliver answers that are “precisely incorrect” (meaning very, very detailed work that completely misses the mark). From our perspective, there are times in a business life cycle where the right call to action and the right type of “research” is to “Just Nike It”—that is, to just do it—to start, iterate, evolve, then use these experiences as the research input to begin formulating a plan. Heart-dominant individuals are far more likely to take this path. (Later in this chapter, “Do You Really Have Your Heart in Your Business?” offers a set of True North questions you can use to help evaluate the Heart in your business.)
70 percent of founders with a successful exit started without a plan.
MBAs often spend considerable time looking outside themselves for an idea that would make for a good plan, versus looking inside themselves for the purpose and passion that might underlie a great vision. That is the difference between a true-blue founder and someone who is seeking to become a founder. As we will see, the markets also recognize this distinction, and end up disproportionately rewarding the starters of businesses—that is, the real founders. The founders who start, execute, and win on big ideas are seldom those who have methodically planned their way. Instead, their Heart gives birth to an idea and a culture. Founders tend to start through an iterative set of tests of their ideas. Passionate trial and error is more the order of the day than spreadsheets and erudite reflections. Larry Page, the cofounder and CEO of Google, has said that there are no good slow decisions, only good fast decisions.
Of our four business-building traits of "Heart, Smarts, Guts, and Luck, Heart" is perhaps the most challenging to define. To both new and experienced business-builders, it risks coming across as ephemeral and soft.
Heart hahrt noun 1 : the source of an authentic vision and the soul of a business or calling
How Heart Reveals Itself
Passion and Purpose + Sacrifice / Work Ethic + Nuance
Which is ironic, as Heart may be the most critical distinguishing feature between people who have successfully started companies and those who choose to be part of another person’s vision. We’re reminded of our informal canvassing of alumni from top MBA programs. When asked which courses have had the most subsequent impact on their lives, most name an organizational behavior or leadership class. In short, what can seem and feel soft in the moment becomes real and powerful over time.
Three distinguishing traits characterize the Heart-driven individual:
1. Purpose (and the passion that comes with it): You cannot plan Heart, or “in vitro fertilize” a truly great business. A company’s foundation lies in its purpose.
2. Sacrifice and agape: The concept of agape (defined later in this chapter) and the natural maternal-like sacrifice that comes with creating and building a business.
3. Nuance: The subtleties and thousand points of light that emanate and coalesce from a genuine Heart that ultimately differentiate a business from its competitors.
Reprinted by permission of Harvard Business Review Press. Excerpted from Hearts, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business. Copyright 2012 Anthony K. Tjan, Richard Harrington, and Tsun-yan Hsieh. All rights reserved.
ABOUT THE AUTHORS:
Tony Tjan is Managing Partner of the venture capital firm Cue Ball, and former entrepreneur of the Internet advisory group, ZEFER. Based in Boston, he is a fellow at the Harvard Kennedy School of Government.
Dick Harrington is a Partner at Cue Ball. Dick began his career as a small business owner and transformed a Canadian holding company into Thomson Reuters, now the largest information company in the world. He sits on the boards of Aetna, Xerox, and several Cue Ball portfolio companies.
And, Tsun-yan Hsieh, based in Singapore, counsels founders and CEOs throughout the Americas and Asia as founder and lead counselor of the LinHart Group. Previously, he worked for McKinsey, serving clients across dozens of industries and countries.