Thoughts of 3D Chess came to me the other day as I tried to explain to a friend the entrepreneurial process for designing and creating a new business.
The more I talked about planning and developing start ups, the more complex and less clear the whole subject seemed to become.
As an educator, the best strategy for understanding things is usually to reduce things to their simplest form. As one of my own lecturers insisted: “Sometimes the most practical thing is a good theory.”
But finding a good, simple theory to explain the entrepreneurial planning process seems to be somewhat alien…
The 3D chess metaphor appeals to me as being quite apt. Rather than focusing on just one game, the player needs to spread his or her attention across multiple battlefields simultaneously. For the entrepreneur, business planning needs to consider a range of areas, all of them demanding, all important in their own right:
Product
Usually, the technology is not the problem. During the R&D phase, first things don’t work and then, gradually, they do.
The real problem is figuring out how the new widget is going to make you rich. Converting a technology to a product and then packaging it up as a business solution is the real challenge. For many inventors, this is the terrible moment when the new product first gets to meet the customers and visa versa.
Over time, you need to plan for continuing iterations of R&D followed by market testing – an endless feedback loop.
And then there are all the competitors’ products to think about…
Finance
Nothing happens in business without money. And yet, money usually does not happen without business. The “bootstrap” approach of building businesses out of generated cash flow is typically too slow.
While the business is maturing, the main job of the CEO usually becomes capital raising – feeding the ever-growing beast. And the beast consumes money insatiably.
Somehow, the entrepreneur has to convince others to part with their money up-front and invest in the promise of future happiness. A tricky business when you cannot point to a reassuring history of past earnings.
Sales
Never mind marketing, the number one goal of every company is to sell its product or service and start to actually create a “real business”. Of course, a shot of marketing might help to communicate what it is that you are selling and convince the average punter to give up some of their hard earned wages to buy the product.
In spite of the fact that salespeople and marketers generally hate each other, the entrepreneur needs to make sure that both fit seamlessly together to generate revenue.
There are plenty of other layers that require contemplation – infrastructure, human resources, post-sales support. Check your favourite management textbook for more details.
What is clear is that each layer in turn actually breaks down into a whole galaxy of challenges and task, each requiring time and resources and each demanding constant attention and on-going management.
Connecting the dots
Just when you are getting on top of at least some of the more pressing individual problems, there comes a terrible realisation: the layers are not discrete – they are actually linked.
We have already visualised one Gantt chart for each and every layer of activity in the business. Now we need to realise that the Gantt charts are actually suspended one on top of the other and interrelated. (Think of little dependency arrows pointing from one task in one layer to another task in a separate layer.)
Having tried to compartmentalise all of the issues singularly, a whole range of cross-dependencies keep popping up:
- To date, Version One of your product has not maimed • too many people. However, how are you going to fund the R&D necessary to get Version 2.0 onto the market by Christmas?
- While your business plan nonchalantly indicated that customer service would be outsourced offshore, unfortunately, you still need to set up a “real” sales force. Funnily enough, this cannot be done from Bulgaria. Where is the money for all of those salaries, cars, mobile phones, laptop computers and (gulp!) corporate credit cards going to come from?
- You return jetlagged but triumphant from a three continent sales trip. Now all you have to do is convince your business partner that commuting between Helsinki, Cape Town and Sydney will give him plenty of time to complete the programming for Version Two
The usual response in the corporate world to these issues is inter-departmental blamestorming (the art of getting together in meetings to work out whose fault it is for some screw up – typically, someone who is not present). “It’s the fault of Customer Service / Senior Management / The New Zealand Office…” is the all-too-easy, feel-good solution for these situations.
Unfortunately, as an entrepreneur, the problems are all yours. You need to consider all of the multiple dependencies that exist not only within each layer, but also across multiple layers.
Yes, this is complex and no, this is not easy. In this space, no one can hear you scream.
Protect the queen
Even if everything is under control inside the tent, this is not the end of the story. The world outside refuses to play along or, at least, keep still long enough for the ink to dry on your current business plan:
- New competitors and new products are almost guaranteed, especially if you have identified a lucrative market segment. There are no “gentlemen’s agreements” at the cutting edge – everyone will fight for dominance in a new market.
- Spare a thought for the Government. If you are having trouble trying to manage one business, consider trying to manage a whole economy. Now multiply this by the number of countries in which you want to operate.
- People are probably the most unstable element of all in the equation – what worked yesterday with employees or customers just does not seem to work today. Don’t even waste your time wondering how people will react tomorrow.
So it comes down to this: this entrepreneurship thing is not a game at all. The level playing field not only does not exist but the goal posts are constantly moving, the players are being substituted all of the time and the bigger, nastier teams are constantly rewriting the rules.
While this may make for interesting sportscasting, the question remains: Does last year’s business plan still give you the competitive edge into the future?
As any military man will tell you, no plan survives contact with the enemy. This may be true but it is not a justification for ignoring the planning process.
General Eisenhower put it so well: “The output of planning is meaningless, but the process of planning is invaluable.” Ike’s message is actually rather convincing Zen: the journey is much more important than the destination. Accept the complexity and difficulty of the exercise and go with it.
Planning is beneficial for the “vision thing”. It helps us focus on what is really important. Don’t worry about trying to change things that are beyond your control or not going to make any quantitative difference to your business.
Thus, the critical thing is not what the plan is at any one time, but that there is an ongoing plan process happening in your organisation. It is this process that forces you to think strategically and not just respond to external stimuli. All of your competitors are facing exactly the same challenges. Whoever comes up with the most creative, audacious and forward-thinking plan based on all of the factors in the current environment will evolve fastest and prevail.
Just like in 3D Chess.
Stephen Belfer writes, speaks, teaches and even practises entrepreneurship. He can be contacted at [email protected]
