Wall Street Journal/The Accelerators: New Day, New Plan

wadhwa wsjVIVEK WADHWA: Not long ago, the common belief was that, before you started a company, you needed to develop a business plan. This needed to be a lengthy document that detailed business strategy and made long-term financial projections. Market research was supposed to provide the basis for this plan.

Some business schools teach these, but by and large, the technology industry has learned that business plans are the greatest pieces of fiction that an entrepreneur ever creates. This is because, in the fast-changing technology world, markets often change faster than products can be developed.

No longer. Now things change far more dramatically — at least in the technology industry. In tech, you have to keep watching for changes in markets, distribution methods and competitors coming out of nowhere. In other words, your business model has to be as iterative as your lean startup. You can never rest, and you can never assume that what worked yesterday will work tomorrow.It is the same with business models. These are a codification of methods that companies use to reach customers, to price and to differentiate their products, and also to produce, distribute and support these — hopefully in a profitable way. It used to be that once you had developed a solid business model, you could raise lots of venture capital, ramp up growth and coast to the IPO.

Link to article on Wall Street Journal’s website