Book review: Getting to Plan B
John Mullins and Randy Komisar argue that the start-up process, largely driven by poorly conceived business plans, is seriously flawed
If the founders of Google, PayPal, or Starbucks had stuck to their original business plans, we're unlikely ever to have heard of them. Instead, they made radical changes to their initial models, became household names and delivered huge returns for investors. How did they get from their Plan A to a business models that worked?
John Mullins and Randy Komisar argue that the start-up process, largely driven by poorly conceived business plans based on untested assumptions, is seriously flawed. But there is a better way to launch new ideas – without wasting years of your time and a lot of investors’ money.
In Getting to Plan B, Mullins and Komisar present a field-tested process for putting your initial business idea to a rigorous trial and using the evidence you uncover to make swift corrections that tip the business equation in your favour. Focusing on five elements that determine any business model’s economic viability – its revenue, gross margin, operating capital, working capital, and investment models – the authors’ approach significantly reduces your risk of failure by:
- Comparing your idea with existing models to steal what works, avoid what doesn’t, and add improvements
- Identifying leaps of faith: the as-yet untested questions you are banking your business on
- Conducting fast, inexpensive, data-driven experiments to support or refute those questions
- Using this data to make smart strategic changes and mid-course pivots or corrections before it is too late
Through examples from their first-hand experience and research in businesses around the world, Mullins and Komisar reveal how companies have used such systematic experimentation to transform their current business model into a viable Plan B. For PayPal, as Mullins and Komisar recount, it wasn’t Plan B (or Plans C, D, E, or F) that did the trick, however. What became the PayPal we know today was Max Levchin’s Plan G, his seventh iteration toward putting his world-class cryptography skills to good use. Whether launching a new venture in the marketplace or inside your company, Getting to Plan B will help you replace assumptions with evidence – and vastly improve your odds of success.
For more information, email innovation@london.edu
