Business Plans and Other Works of Fiction

The purpose of a business, Peter Drucker famously said, is to create a customer. Yet, rather than creating customers, many innovators create a fantastical piece of what you might call Microsoft fiction.

This hit home for me during a recent client project. I was working with a team that had been tasked by the company’s CEO to develop a new venture in a promising market space. Its three members had been working for about six weeks. They’d conducted detailed research, talking both to prospective customers and numerous industry experts. And then they used Microsoft’s most popular products to produce what they thought was a business plan. But it actually was a kind of fiction built in three chapters: an Excel spreadsheet with sophisticated analyses showing breathtaking financial potential, a PowerPoint document blending facts and figures with compelling videos and pictures, and a Word document summarizing all of it in prose so lucid Malcolm Gladwell would shed a tear.

Still, it isn’t a business until you create a customer. After listening to the team describe its work, I asked a simple question: “Who is your first customer?”

The team turned to page 12 of chapter 2 of their Microsoft fiction, proudly displaying a PowerPoint slide citing detailed demographic figures. The slide said that 60% of the target market would be 18-to-34-year-old males with annual incomes within a certain range.

So I asked the question again. Instead of summary facts and figures, I wanted the team to be very precise. What is the customer’s name? Where does he live? What does he look like? What are his hopes, dreams, and aspirations? What does he love? What drives him crazy? How would the team’s idea fit into his life?

After we had that first customer mapped out, we then turned to thinking about how the very first transaction with the customer would work. This involves answering questions like:

  • What exactly will the customer be offered?
  • How will he hear about the offering?
  • What will trigger him to purchase it?
  • How much will he pay? When and how will he pay it?
  • How will he receive it?
  • What has to happen to make and deliver it?
  • What will induce him to use it for the first time?

By the end of the process, we had mapped out a real first version of a business model – the way the team will create value for the customer, deliver it to that customer, and capture  value for the company.

It’s always easy to confuse motion for progress, particularly inside large companies where executives often demand Microsoft fiction. Start from the customer and the value he or she seeks. Detail your first transaction. And begin the real process of building a business.

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