When a development team has an idea for a new product for their organization, one of their first steps is to design a prototype. While they do need a streamlined internal plan to get initial buy-in and start the process, what they don’t need is a full-blown traditional business plan that explores every aspect of their overall organization, the marketplace and other factors in order to convince the internal team that it’s a good idea. If they took the time to do that work (even though it may be needed down the road for external audiences), it would be months and months before they could even start development. By that time, it’s likely competitors would have beaten them to market.
Likewise, sometimes my clients need a business plan for internal use only, rather than an elaborate plan for external audiences. They need a plan to help articulate strategy, tactics, business data and measurement. In many cases, they already have a more robust document, but even with that in hand, they greatly benefit from a solely internal document that allows them to quickly explore opportunities and implement and revise strategies.
When that’s the situation, I recommend that my clients conduct lean business planning.
What’s the difference between a lean business plan and a traditional business plan? There are several key factors that set them apart:
Internal vs. External Use
A lean business plan is for internal use in helping your organization figure out how to accomplish goals. Therefore, it doesn’t need to include all of the background or organizational data typically found in an external business plan. The assumption is that the reader already has a certain level of knowledge about the market, the organization, competition and trends.
Lean vs. Beefy
A lean business plan is just that. Lean. Think strong, efficient, pared down, and containing only the most relevant information for the task at hand. Traditional business plans have sections on market drivers and trends, product/service, as well as information on the organization overall and the competition. This level of detail is only helpful for certain occasions, like when applying for a bank loan or raising investment capital. Internal parties simply don’t need that much information. Lean business plans encourage the team to include only the basic information needed to take action. And let’s face it – who wouldn’t rather be lean over beefy!
Dynamic vs. Static
A traditional business plan captures a point in time of an organization with supporting data from the external environment. The reader knows it reflects a single snapshot of the organization, plus a series of projections. Conversely, a lean business plan is a living, dynamic planning tool for your business. You should be looking at and revising your lean business plan monthly. Just like in other “lean” movements in business, such as manufacturing and technology, the key to lean planning is the iterative and flexible nature of the process.
Bullet Points vs. Narrative
A lean business plan consists of bullet points, lists and tables, rather than a narrative. The lean business plan contains the information needed to run the organization and review and revise. This creates a concise, streamlined tool to move your organization forward. A traditional business plan needs to tell a story, so in that case, the narrative approach is the most effective way to engage the reader. But the senior leadership of your organization doesn’t need the narrative – hopefully they know your story and are already drinking the Kool-Aid.
Process vs. Event
A lean business plan is a tool for an ongoing management process of an organization. The format and information contained in the plan help the organization to develop, execute, review and revise in a continuous loop. This isn’t about market position three years from now or closing a round of investment. Lean business planning is focused on improving, growing and strengthening your organization – something that shouldn’t be done only once or twice per year. A traditional business plan usually is needed for a specific occasion – a bank loan, investment, strategic partnership, new hire or board member. You prepare that type of business plan for a specific event, not for continual planning and adjusting for success.
