December 9

Why Intrapreneurs Don’t Need a Business Plan (And What You Should Use Instead)

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Business plans are usually thought of as crucial to any project that aims to bring a new product or service to market. They’re seen as the “roadmap to success”. But in reality, they are actually detrimental to innovation projects and a LONG way from being the best tool for intrapreneurship.

In this article we’ll look at why they fail and provide you with a better alternative to use instead.

The Problem with Business Plans

If you’ve ever worked on a project, led a business unit, or proposed any new piece of work at your company, then you’ll likely have created an outline planning document to set out the costs, the intended benefits and a plan of action.

Depending on your company processes and the size of the project you are proposing, this planning document might have been called a Business Plan, a Business Case, or possibly a PID (Project Initiation Document).

You might even have called it something else in your company, but regardless of the name, it will likely include the same basic content:

  • An explanation of the scope of the work
  • An estimate of costs, effort and resources
  • A timeline, possibly including a Gantt Chart
  • Some milestones along the way
  • An estimate of the benefits / results expected
  • A revenue forecast for the next 2-3 years
  • A justification of the costs of the project based on the expected benefits.

That’s a heck of a lot of planning effort. And a heck of a lot of GUESSWORK.

Yes, guesswork! Let’s be honest about what’s happening here. When we work on innovation projects, we genuinely don’t know whether our innovation will be successful.

Jeff Bezos quote: "Any business plan won't survive its first encounter with reality. The reality will always be different. It will never be the plan."

We don’t know if people want it, we don’t know if they’ll buy it, and we don’t know if they’ll use it. We can’t even be confident that the solution we end up with will resemble the same one we started out with! In a project where there are so many uncertainties and ANYTHING could change, any plan we create at the start is no more than a work of fiction. In other words, everything about an innovation project plan is guesswork. It’s a plan based on what we HOPE will happen, rather than a plan based on any kind of EVIDENCE of what will happen.

Eric Reis put it well when he wrote “Planning and forecasting are only accurate when based on a long, stable operating history and a relatively static environment.”

Innovation projects have neither.

And yet companies cling to the business plan, because they lack any kind of credible alternative.

The Challenge of Planning Innovation Projects

Unlike a plan for an existing business unit, innovation projects have no operating history; we are often striving to enter a new market where we have little experience; and (because companies are seeking to manage the financial risk) we usually have modest funding.

Putting it all together we have:

  • An incomplete Business plan,
  • Untested Market Demand, and
  • Inadequate Funding.

When we put it like that the challenge for intrapreneurs and companies alike is clear.

Instead of a “fantasy plan”, what we need is a way for us to document our strategy, and a process through which to evolve it: A new kind of plan that can adapt and change as we learn more about the market, about our own capabilities, and about what really brings us success.

The Tools to Use Instead

Okay, we’re all agreed. Business Plans are useless for intrapreneurs. But the learning we get from the act planning is essential.

How can we do some planning and document our learnings without the onerous and ineffective process of writing a business plan?

As intrapreneurs we do two things instead:

  1. Create a “best-guess” Business Model to use as a starting point for our exploration
  2. Use a structured and systematic process to help us decide exactly what to do next, as events unfold

Let’s look at both of those in a bit more detail.

The Business Model

For early stage exploration, we love using the Lean Canvas. It’s our tool of choice and we teach it in all our courses.

If you’re familiar with the Business Model Canvas and it’s companion, the Value Proposition Canvas, you’ll find that that the Lean Canvas omits some of the boxes that aren’t so important for early-stage innovation projects. By doing so it provides wonderfully succinct one-page summary of all the key things you need to think about on a day-to-day basis.

When we use the Lean Canvas, instead of spending days or weeks researching and writing a business plan, we can often brainstorm a business model in a few hours. The business model captures all our assumptions about the customer, our offering, how we will enter the market, how we will make money… and much more.

Then it’s time to move rapidly on to testing our ideas in the real world. That’s when we need a process…

Running Growth Experiments

Launching a new product or service is an iterative journey. At the heart of that journey are Growth Experiments. These are experiments that are performed by intrapreneurs who want to test out parts of their business model and validate (or invalidate) their assumptions.

The Iterative Process of Intrapreneurship

Growth Experiments provide the structure through which intrapreneurs can deliver new value to customers and drive growth.

Growth Experiments work like this:

  1. Review your business model and identify the assumptions
  2. Prioritize the risks
  3. Formulate a hypothesis. Like a scientist, make a prediction about what will happen if you perform a specific, repeatable action
  4. Plan an experiment to test your hypothesis
  5. Build your experiment and collect the data
  6. Analyse, learn and make a decision about what to do next

To learn more about how to develop a business model for your internal startup, and how to plan, build and learn from growth experiments, the best place to start is our Intrapreneurship Mastery Programme. Or, if you want to read some more first, we’ve got a free intrapreneurship guide that goes into more detail too.

Conclusion

We hope this article has provided some insight into why business plans should be avoided by intrapreneurs. If you have any questions about business plans, business models or growth experiments feel free to message us.


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