Day 19 of 21 days with Chuck’s new book, Why Employees Are ALWAYS a Bad Idea
Not a single Fortune 500 was started with a business plan; not one. They understood that the second worst thing someone starting a business can do is create a business plan, and the worst thing they can do is follow it.
Pre-Planning Is a Disease
Exhaustive pre-planning is a disease of the Industrial Age that became popular as companies grew to giant proportions and as educators began imposing the cognitive world view on an otherwise intuitive business world.
Pre-Planning is a New Thing
Pre-planning wasn’t a hallmark of business before the Factory System of the early 1900s. But when you’re propping up a giant factory or trying to take over an entire industry, it lends itself to a lot of pre-planning.
Business plans really only became popular in the latter days of the Industrial Age (1950 on), and the rest of us have caught the disease. It has become an obsession in business schools and has only picked up steam as the Industrial Age fades behind us. This obsession is a natural (but unhelpful) outcome of an Industrial-based education system that relies more heavily on cognitive and didactic lecturing than on real-world learning.
Pre-Planning Is Unsupported By The Facts
In 2011 a website posted an article about Fortune 500 businesses that had started in a garage or other interesting places. They listed the top five, then gave the seven lessons you should learn from these startups. Number one was “Develop a business plan”. This was a strange conclusion, since there was nothing in the history of these startups that would lead anyone to conclude a business plan was a good idea. It was a giant, illogical and biased leap, and completely ignored the history of these companies. But the obsession with pre-planning that we inherited from the Industrial Age is so ingrained that we see it even where it doesn’t exist.
Pre-Planning Favors Lawyers, Not Business Founders
The roots of this obsession go back to the late 1800s. Judge Lord Esher, an Englishman steeped in the Industrial Age, expressed the need for pre-planning in every facet of life. His teaching has evolved since into what is called the Precautionary Principle, which generally states that if you can think of something that might go wrong, don’t do anything until you can either prove it won’t go wrong, or you have a contingency in place to cover for that possibility. And if you do something without having covered all possible contingencies, according to Judge Esher, you’re liable.
Lawyers, who are largely Industrialists, love the Precautionary Principle. It cost McDonald’s millions of dollars because someone spilled coffee on herself that already had a warning label on it. But the lawyers argued the warning wasn’t big enough or prominent enough. The Precautionary Principle says they should have never served hot coffee without knowing that some judge would find their warning too small, or that someone would try open the cup one-handed in between their legs while driving.
The amazing advances of the Industrial Age have allowed us to focus on levels of safety that would never have been imagined for thousands of years. But the more cleaned up our lives are, the more the we are obsessed with making sure we’re not doing anything that might go wrong.
Pre-Planning Kills Creativity
That all sounds pretty reasonable, except it is sucking the life out of our willingness and ability to create, innovate and take the risks necessary to build great things. The cleaned up world we inherited from the 19th and 20th century Industrialists have nearly sterilized the creativity right out of us. We are becoming so risk-averse that it is a national epidemic. The education system, the government and big business all are teaching us to live by the Precautionary Principle; don’t move until you have it all figured out.
Great Founders Do Very Little Pre-Planning
Great businesses don’t start that way, regardless of how much professors and the education system extol the virtues of pre-planning and the sacred cow called “The Business Plan”. But Bill Hewlett, one of those guys who started in a garage, lived in the real world:
“When I talk to business schools occasionally, the professor of management is devastated when I say we didn’t have any plans when we started. The idea of having a business came before our invention of the audio oscillator. We were just opportunistic. We did anything to bring in a nickel. We made a bowling alley foul-line indicator, a clock drive for a telescope, a thing to make a urinal flush automatically, and a shock machine to make people lose weight. Here we were, with about $500 in capital, trying whatever someone thought we might be able to do. So we got into this thing not by design but because it worked out that way.”
That’s how real businesses start, including virtually every business you can think of today that has been highly successful – they made it up as they went along, and planning was something they did as they moved, not before they moved. While speaking to thousands around the world, I find that somewhere between 3-6% of business owners who did not need a bank loan to start, created a business plan anyway.
Pre-Planning Doesn’t Work
Only 3-6% are obedient to what they are told to do by their professors. But I have yet to find a single business plan at any level that worked out the way the plan said it would three to five years later.
Move, Then Plan.
I’m not against planning – we should be doing it at every step along the way as we are moving. I’m not even against a little bit of pre-planning. But massive pre-planning has a near 0% effectiveness at doing anything but killing innovation.
Massive pre-planning like you see in three to five year business plans is a business disease that has its roots in the Factory System and in the cognitive-based education system that grew up to serve that system. Successful companies do it like the early years at HP. They come up with a very simple idea, get moving, then evaluate and plan as they go. They don’t stop to plan, because successful companies understand that planning never creates movement, but movement can create a good plan. Every Fortune 500 is a testimonial to this. Stop planning. Get moving.
Massive pre-planning is a business disease. The Industrial Age was wrong. Implement now. Perfect as you go. If you do, you have a much higher chance of success than if you plan it all out before you get started.
This is a summary of a chapter from Chuck’s new book, “Why Employees Are ALWAYS a Bad Idea (And Other Business Diseases of the Industrial Age)”. Click here to pre-order this new ground breaking book at a discount on IndieGoGo.com until July 28.