Magazine Spring 2010 Research Feature

A Business Plan? Or a Journey to Plan B?

From Apple to Twitter, some of the most successful businesses are not what their inventors originally envisioned.

John Mullins and Randy Komisar Reading Time: 13 min 

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Courtesy of Apple Inc.

In March 2006, Biz Stone, Evan Williams and Jack Dorsey were working on a new venture called Odeo, a podcasting service. Odeo was in something of a creative slump, and Dorsey wondered if a short messaging service that would enable everyone in the company to communicate with others in the group might be of some help.

Their solution, which the world now knows as Twitter Inc., was to build a simple Web application that would let the team stay in touch by sending short 140-character messages to the rest of the group. It wasn’t long before they realized that the new application held considerably more promise than the original podcasting idea on which they had been working.

The rest of the story is history. Twitter reached its tipping point at the South by Southwest festival in 2007, where the number of tweets per day jumped to 60,000 and it won the festival’s Web Award. Whether or not Twitter will develop a viable business model remains in question, but the Twitter story is a powerful reminder that an entrepreneur’s main job is not to flawlessly execute the business idea so lovingly articulated in his or her business plan. It’s to embark on a learning journey that may, on occasion, reach the destination that the initial plan had in mind. More commonly, though, for open-minded entrepreneurs and innovators in large companies, the surprises that arise on this journey lead to a very different destination, which we call Plan B.

So, What’s the Problem?

Nearly every aspiring entrepreneur or innovator has a business plan, and virtually all of these individuals believe that their business plan — what we call Plan A — will work. They can probably even imagine how they’ll look on the cover of Fortune or Inc. And they are usually wrong. But what separates the ultimate successes from the rest is what they do when their first plan sputters. Do they lick their wounds, get back on their feet and morph their new insights into great businesses, or do they stick to their original plan? If the founders of Google, Starbucks or PayPal had stuck to their original business plans, we’d likely never have heard of them.

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About the Authors

John Mullins is an associate professor of management practice and the David and Elaine Potter Foundation Term Chair in Marketing and Entrepreneurship at London Business School. Randy Komisar is a partner at Kleiner Perkins Caufield & Byers in Menlo Park, California. Their latest book, from which the ideas in this article are adapted, is Getting to Plan B: Breaking Through to a Better Business Model (Harvard Business Press, 2009).

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Comments (3)
Fred Noham
The concept of being creating a great business plan and being able to create a new one if plan A fails is very important and very relevant to business.  However, apple, twitter and many of the large businesses mentioned had contacts and financing that no business plan would ever account for regarding the average person.  Plus the reality of where the money comes from is never addressed for these large "successes" which makes much of the business plan concept a fantasy versus reality.
Tristan Kromer
I'd be very interested in any statistical data on how many "plan A"s made it to market intact.

Examples like Apple and Google are great for inspiration and the principle of examining your own assumptions is a fantastic one.

I'd just like to know if this applies only to hi-tech companies reaching for the sky or it is something which can be applied to small businesses such as restaurants, retail outlets, law firms, etc.

In other words, how would you test plan B when your runway is only a couple months of cash flow for a retail outlet?

Cheers,
Tristan
kennedy mwinamo
what a wonderful insight to the world of business.clearly an entrepreneur needs to have more than one option to succeed. a good business plan is a recipe to reaping good returns on break even for any business.