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Active Business Planning In A

#LeanStartup
By Chandra Gollapudi

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Active Business Planning In A #LeanStartup


How to manage the iterative process of planning, validating, assumptions, & mitigating risks

eBook Content

what is active business


planning
business planning vs. plan
elements of a business plan
lean startup movement
agile business planning
introducing lean canvas
get most of your lean canvas

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What Is Business Planning?


The guiding beacon for your startup journey!
Business planning
should clarify and
refine;

the value
proposition

the strategy
the business model
the underlying
risks and
assumptions

Value Proposition;

Strategy;

Strategy Considerations;

This is the compelling


reason a customer will buy
your solution? Analyze the
problem you are solving and
assess who has the most
urgent need and how badly
they want to solve it. Use
the customer persona
template to delve deep into
the psyche of your target
customer and unravel your
problem solution fit.

This is the key part of planning


and can be challenging for a
startup. In simple terms, it is
your blue print for the plan of
attack. Strategy is considerably
different according to the stage
of your business. A new startup
might focus on brand
awareness and crossing the
chasm rather than something
like diversification.

Things to consider include;

Strategy is typically longer


term, coupled with a short
term tactical plan. It is easy to
get caught in the day to day
chaos of startup life and lose
focus on the long term
strategy.

Unique Value Proposition: A single, clear


compelling message that states why you are
different and worth buying

Steve Blank

What is your addressable


market?

What is your niche?

How will you address


competition?

What is your core


competence?

Who are your partners or


collaborators?

What is your pricing model?

The essence of strategy is


choosing what not to do

Michael E Porter

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More On Active Business Planning


Business model is how to create, deliver and capture value
Business Model;

ER
LIV
DE

CR
EA
TE

STRATEGY

Strategy determines WHAT


to do. The business model
determines HOW to do it.
Strategy is the plan and
business model is the
tactics. Your model details
how to generate profits.
There are two sides to a
business model the
revenue aspect and the cost
aspect.

CAPTURE

COMPANY

TECHNOLOGY

Find synergy between your team


and technology required to
deliver the strategy (plan of
attack)

What Is Your
Differentiation?
On the cost side you should
consider supply chain,
partners, quality, HR etc. On
the revenue side you should
consider branding,
marketing, channel partners,
revenue streams, customer
service etc. Companies
operating in the same
industry and market are
likely to do similar functions.
When a company does one
thing uniquely different and
better than its competition,
they are using business
model as competitive
advantage or it can be a
unique value proposition.

Risks & Assumptions;


A startup is a hypothesis and,
thus has many inherent
assumptions and risks.
Identifying and creating an action
plan to mitigate risks and verify
assumptions is an important
aspect of Active Business
Planning. At every step in the
planning process you should
identify and prioritize the risks
and assumptions. Later in this
ebook we will discuss using
Business Model Canvas for this.
Execution should actively test
the assumptions and mitigate
the risks. As you learn from this
you readjust your plan and pivot
if required.
Since Business Plan is closely
related to the planning. It
warrants a discussion on the
purpose and roles of the two.

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Business Plan vs. Business Planning


Planning is more important than plan
Business planning;

central to Strategy
and Tactics
can be formal and
informal

many new tools to


accomplish planning
business Plan

uses for one

many ways to do
one

Why Planning Is
Essential?
Business Planning is the link
between strategy with the
tactics.

How you Plan?


People have found creative
ways to plan. Like the
famous story about how
Southwest airlines plan was
crafted on a bar napkin.
One prominent agile way to
plan is the Business model
Canvas.

About The Plan;


Planning is a cyclical
process. However, the plan
is like a balance sheet a
snap shot in time. An agile
plan, like the business
model canvas is highly
recommended. It helps
crystallize your model, value
proposition (why should
customers buy from you)
and actions to validate your
hypothesis. You may not
need to do a formal written
plan unless you plan to raise
external finance.

Steps In Writing The


Plan;
If you are writing a formal
plan. Consider doing the a
power point version first.
This helps you visualize the
plan for content and context
rather quickly.
If you are writing a formal
plan, you should allocate
most of your time on the
Executive Summary, and it
should be the last thing you
write. Most readers will not
get too far beyond that and
your exhibits.

Its Not enough to do your best ; you must


know what to do, and then do your best

Everybody has a plan, until they


are punched in the face

Edward Deming

Mike Tyson

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The Elements of Business Plan


Guy Kawasakis suggested 10 point enchanting business plan

Ten Elements of A
Business Plan;
1. problem
2. your solution
3. business model
4. underlying magic
5. marketing & sales
6. competition
7. team
8. projections
9. milestones

Problem;

Underlying Magic;

Financial Projections;

State the problem you are


solving. Is it financially
attractive?

Your secret sauce. Why


customers will cry for you
and why nobody else can
copy you

Focus more on your costs,


burn rate and capital
requirement. Revenue is just
a wish at this time.

Competition;

Milestones;

Show who your major


competitors are and how
you will battle them. Use the
Blue Ocean strategy canvas
or any thing else to show
differences between you and
the competition.

Show what you have


accomplished so far and all
the good things coming your
way

Your Solution;
What is your solution. Show
any testimonials or
validation by your
customers. Why you? What
is your unfair advantage?

Business Model;
How are you going to make
money?

Team;

Summary & Status;


Close strongly, tune
message for the audience

Show more than one person


dedicating their lives to
make the venture a success

10.summary & status


Business Plan is a tool that may help you get
funded and may help you get your team
working as a team. But it is not an end in itself

Guy Kawasaki

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The Lean Startup Movement


Changing how business planning is done

Lean What?

lean startup
movement
lean discovery
lean influence on
business planning

Lean Startup
Movement;

Lean Discovery
Process

Lean Influence On
Business Planning

Steve Blanks book 4 Steps


To Epiphany started the lean
startup movement. Eric Ries
in his book Lean Startup
evangelized the concept.
And the rest is history. There
is now a Lean Startup
Conference, several Lean
startup meetups, workshops
and tools.

Steve Blank reminded


startups the importance of
validating the solution early.
He introduced the four step,
customer development
process for testing the idea
through customer discovery,
customer validation,
customer creation and
company growth. This
involves early and frequent
testing of the hypothesis.

Tech Startups were spoiled in


the dotcom era. They only
needed a idea to get funding.
The bubble burst and the
world needed to reset back
to fundamentals. Lean
Startup Movement does a
great job at this. Eric Ries the
use of minimum viable
product (MVP), which is core
to continuous validation and
pivoting. With MVP, you start
testing the most important
assumptions and the value
proposition early in the
product development cycle

Farming looks mighty easy when your plow is a


pencil and youre 1,000 miles from the corn field

Dwight Esienhower

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Agile Business Planning

Making the business planning come to life with tasks and current actions

Introducing Agile
Business Planning

business plan vs.


business model
business model
canvas
lean canvas

Business Model
How a startup creates,
delivers and captures value

Vs. Business Plan


Statement of startup
objectives, strategy and the
tactics of achieving them.

Business Model
Canvas
Created by Alex Osterwalder
is the first visualization of a
combination of the business
model and plan. the ability
to succinctly capture the
business model on one page
was powerful and widely
accepted.

Lean Canvas
Ash Maurya adapted the
business Model Canvas to
the needs of technology
startups. Both have become
extremely popular tools
used today. The lean canvas
has a web based interface to
make it easy to use on the
go

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Introducing Business Planning Canvas


Capturing the market and product requirements on one page

Nine Elements Of A
Business Planning
Canvas
1. problem
2. customer
segments
3. unique value
proposition
4. solution
5. channels
6. cost structure
7. revenue streams
8. partners
9. unfair advantage

Below is a very brief


explanation of the different
segments of a business
planning canvas. This is a mix
of both canvases to focus on
planning.

Problem
How intense is the problem
and how urgent is the need to
fix it.

Solution

Partners

Features that address each


problem stated.

Capture key partners,


collaborators, influencers.

Channels

Unfair Advantage

Distribution and paths to


reach customers.

Why is it difficult for


somebody else to copy.

Cost Structure

Key Omissions

Identify costs, capital


requirement, and your burn
rate. Know breakeven point.

I replaced Key Metrics on


Lean Canvas with Partners.
Metrics is important but I
wanted to focus on
actionable, and lead
indicative factors. And
entroids.com framework has
other ways to cover metrics.

Customer Segments

Revenue Streams

Who is/are the customers and


collaborators (other users).
Identify the early adopters.

Pricing. Start with validating


your premium pricing first.
Estimate customer life time
value

Unique Value
Proposition
Why your solution is different
and worth buying.

A business model describes the rationale of an


organization creates, delivers and captures
value

Alex Osterwalder

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Using The Business Planning Canvas


How to get most out of your business planning canvas

Getting Best Of
Canvas

pre- canvas work


post-canvas work

Post - Work

Pre-Work
A Good understanding of
product and market is
important. Here is a list of
essential tasks and some
tools you can use;

1.

Customer Discovery

2.

Competitive Advantage:
The Strategy Canvas
from The Book Blue
Ocean Strategy

3.

Core Competency:
Knowing what to focus
your resources on and
what to partner or
outsource

This is very impactful to your


team performance and
progress. Planning is wasteful
it you do not drill down to
actionable tasks aligned to
your strategic needs. It
involves fleshing out the
underlying assumptions and
risks. Understanding their
relative importance and
defining actionable tasks and
experiments to validate and
test these.

http://entroids.com/Blog/?p=185

2
http://www.theinnovativemanager.com/blue-ocean-s

3
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Putting The Canvas To Work


Drive meaningful actions that test your business hypothesis

Business Planning
Cycle

Capturing
Assumptions

Every item on the canvas


should be screaming
validate. Questions to ask
while completing the canvas
to help flesh out the
assumptions are;

capturing
assumptions
taking actions
cycle of revelation

How so?

So what?

Where is the proof?

Taking Action

Cycle Of Revelation

The next step in the process


is to prioritize your risks and
assumptions and create
experiments and tasks to
mitigate your risks and test
your assumptions. You could
use a simple to do list, or
automated software like
Entroids.com

You should instill in your


team the discipline of
executing these
experiments and feeding
back the learning to make
adjustments to your product
and plans. The success and
failure of a team is
dependent largely on the
ability of the team to
accomplish this.

Successful teams get into the habit of executing the business planning cycle.
Use automation and productivity tools to your advantage to get more done
faster & better

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Success = Planning + Execution


Execution is the art of getting things done

Key Concepts For


Success

perfect execution
strategic execution
the science of
startups

Perfect Execution

Strategic Execution

The best selling book by


Larry Bossidy and Ram
Charan has the title
Execution The discipline
of getting things done.
Perfect execution is an
extension to this definition.
Startup life is chaotic and its
easy to get caught in the
whirlwind of daily firefighting
and lose focus on more
important things. Keeping
focus of the team and the
habit of getting important
things done is the core of
Perfect Execution.

Key to success is simplifying


strategy to tactical activities
that result in achieving the
goals; and keeping the team
focused and getting these
tasks done. The activities of
the team will be in flux
depending on
circumstances. Keeping
team tasks nimble and
aligned to strategic needs it
the ultimate challenge. It is
the key differentiator for
winning execution.

The Science Of
Startups
I wish we could say there is
a formula for success. Next
best thing is to use
productivity tools that keep
your team tasks aligned to
the strategic needs. One
simple and effective tool to
use is the A3 Management
Process popularized by
Toyota. At Entroids.com, we
understand the need for
speed and consistency in
getting results. It is one way
to automate productivity
and promote team
accountability.

Strategy without tactics is the slowest route to


victory. Tactics without strategy is the noise
before defeat.

Sun Tzu

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Thank You

Please help improve and develop this E-book to the voice of Startups

chandrag@entroids.c
om

About the Author

About the eBook

About Entroids.com

Engineer turned marketer by


day and avid wine sipper in
the evening. I love home
improvement and back yard
projects. Wish I learn to finish
more than I start. But that is
exactly what I am focusing on
these days. After more than
20 years of experience in
marine, automotive, &
electrical equipment spanning
operations, product
management and marketing;
it is time to turn my energy to
entrepreneurship. The
trenches of startup world
seems home to me. I have
diverse experience in new
product development, product
management and Lean
manufacturing that I am ready
to put to good use.
I am the co-founder of
Entroids a strategic project
management platform that
helps startups get better
results faster.

I hope you enjoyed reading


this mini ebook as much I
enjoyed writing it. This is a
small step in the journey of
studying the secrets of
success in execution. Please
let me know what you think
of this ebook and of the
www.entroids.com . I hope to
improve this book with your
comments and experiences.

@entroids is striving to
understand the hidden art of
startup execution. Our first
step is to automate startup
activities for faster results
and enhanced team
performance.

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