Who needs a business plan?

This is the second time I hear it in a week: Not all startups need a business plan. The way I had heard it was that if in fact you are starting something new, it would be almost impossible to know how you will be making money. That made sense, but Paul gives the more technical reasons why having a business plan could in fact hurt you: people are picky, if you give them options. In the end is all about trust. Instead you should focus on the execution of the idea and the people you need to make it happen.

I have not been in the startup world, but most of my career at IBM has been about pitching ideas to different people at so many different levels (the one left is the CEO, but we’ll see about that). In most cases, I always had the support of my management, but not often, I was successful at getting the support of my IBM “VCs”. Why? Paul nailed it on the head: I was promising too much. I remember once pitching to the head of IBM Global Services (the boss of half of IBM) and although our technology was disruptive and ahead of its time, we were shut down. We had sketched a very poor business plan (I hadn’t read The Long Tail then) and our gains would be two or three orders of magnitude less than what he was already getting from much older technologies. However, in hindsight, I could see the winnings of that effort if we had stuck with it, given the current state of the Web, would have been as large if not larger as those older technologies. Another but very relevant experience, was a task force I invited myself to join to create something else disruptive, but déjà vu all over. We were consumed creating a business plan that would convince our sponsors would be generating large amounts of revenue in a year or less. Taken that direction had crippled us. We had to think of technologies and solutions already cooked and ready to sell. We had to think of customers that were already lined up and so on. The chances of coming up with new and disruptive approach zero at a very rapid pace. At the very moment, I’m working on a project and might be part of yet another task force. The technical project I run is like my startup. My management supports me, I have the resources to make it happen, we are executing and we’ll then wait and see what is the business model: intranet consumption, externally hosted, researchers’ haven or simply a product. We’ll see. The task force is a much larger vision. I cannot code that by myself, but this time, I’ll try to make sure we don’t get caught up in the business planning and simply take some risks, IBM can afford it.