The Heart of the Plan

The previous chapter suggests building a plan like an artichoke, with its heart in the center and the rest of the plan wrapping up and around it. It also suggests starting anywhere you like, which is a bit of a contradiction, or perhaps just another paradox. You can start anywhere you like, but build your plan around the heart, which implies that the heart comes first. And usually it does.Heart of the Plan

The heart of the plan, which is also the heart of the business, is made up of a group of three core concepts that can't be separated: market, identity, and focus. Don't pull them apart. It's the interrelationship between them that drives your business.

So let's look at what I call the heart of the plan-as-you-go business plan, the core strategy, which is this enmeshed combination of the business identity, the target market element, and the strategic focus. I'm going to go through each of these in more detail in the rest of this section, but let's first establish that they are completely interrelated, and that you never separate any one of them from the other two.

Item

Description

Your Business Identity This element is about you and your business, what I call your identity. How are you different from others? What are your strengths and weaknesses? What is your core competence? What are your goals?
Your Market Telling the market story is about knowing and understanding your customers. Understand why they buy from you, what their wants and needs are, what business you are really in.
Strategic Focus You can't do everything. In restaurants, you can't credibly offer great food at bargain prices with great atmosphere. If you say you do, nobody believes you anyhow. So you have to focus. Make this focus intertwined and enmeshed with your choice of key target customer and your own business identity. All three concepts have to work together.

These three things are the heart of your business. Don't pull them apart. Don't take them one at a time. Don't ever stop thinking about them. Remember, in planning as well as in all of business, things change. Keep watching for change in assumptions, in the environment, in your own team, or any changes that might affect your core or heart of the plan.

Your Business Identity

Although these three concepts are inseparable, we have to start somewhere, so let's look first at your business identity. This is what makes your business different from all others. What you want, what you do well, how you do things, what makes you unique.

What you want to do with your core strategy is establish that identity for yourself, your team, and out there in the market, for your customers.

Before You Write a Business Plan

Validating the idea and understanding the business model are pretty important steps that should come before writing a business plan. That's hardly a novel idea.

Still, novel idea or not, successful entrepreneur Vivek Wadhwa spells out the early stages very well in a BusinessWeek special report published in early 2008, "Before You Write a Business Plan."

He starts with a short list for validating the idea:

  1. Write down your thoughts on the product you want to build and the needs you want to solve. You'll be detailing your hypotheses.
  2. Validate these hypotheses with as many potential customers as you can. Ask them if they will buy your product or service if you build it. Learn about what features they need and what they will pay for, ask them for more ideas, and be sure that there is a large enough market.
  3. Build a prototype of your product or offer a test run of your service and again ask potential customers what they think about it. You'll find that customers usually provide much better input when they can actually try out a product.

Then Wadhwa also suggests a slightly longer list for developing the business model, by answering s a series of questions:

  1. How are you going to find customers or have them find you? Are you going to advertise, cold-call or rely on word of mouth?
  2. How will you differentiate your product or service? There is always competition, so how are you going to set yourself apart?
  3. What can you charge for your product or service that's profitable for you and provides value to the customer?
  4. How are you going to persuade potential customers to buy from you? Even great products or services don't sell themselves; you have to develop a process for closing deals (BusinessWeek, 7/12/05).
  5. How will you deliver your products or services to your customers? Are you going to have a direct sales force, sell through distributors or over the Internet? Can you do this cost-effectively?
  6. How are you going to support your customers if your product breaks? Are you going to provide a telephone hotline, on-site support or answer e-mails?
  7. How are you going to ensure customer satisfaction and turn customers into loyal fans? Your success will ultimately depend on how happy your customers are.

These are good lists to go over as you consider your plan.

Look At the Mirror

You have to understand what you do and who you are if you are going to be able to set your business apart from its competition. The exercise is something like looking at a mirror. Gather your team together, if you have a team ready, because this makes for a good discussion. Ask some of these questions: MIrror

  • What do we like to do? How are we different? What is there about us that sets us apart? What excites us? What are we good at?
  • What do we do that other people (or companies) want to have done? What do we like to do that people want to pay for? What do we like to do that we do better or differently from others who do it?
  • What value can we add? What’s missing? How can we do something better than what’s now available? What can we see about the future that others can’t see?
  • Where can we give value that isn’t there right now?

Presumably, in whatever business you have or whatever business you're starting, you do something you want to do and believe in. Your team members have to want to do it and believe in it too. That restaurant that is somebody's lifetime dream, or skiing equipment, or a newsletter … success isn’t based on the idea, it is based on how hard you've worked at it, how much value you deliver.

In the Art of the Start, Guy Kawasaki offers a list of ways to generate new business ideas. Kawasaki talks about getting going, about ideas being generated by impulses like “I want one” and “I can do this better” or “My employer wouldn’t (or couldn’t) do this.” There too, it doesn’t come out of the blue, it starts with you.

In Growing a Business, Paul Hawken shows how a business grows naturally out of the owners and founders doing something they want to do, filling a need they believe should be filled. I recommend reading that book also.

To be fair, there are exceptions. Franchise businesses, for example, when they work, are a business formula you pay for and implement, while being guided and taken by the hand every step of the way. Being a McDonald’s franchisee means you’re a millionaire; it doesn’t mean you like eating or preparing what McDonald’s restaurants serve. You buy a business to run. The franchisor tells you how to run it. If it isn’t a set formula and if the franchisor doesn’t give you all you need to know, then it’s a bad deal.

Identify Your Core Competencies

To determine your core competencies, take another look at the mirror. Take a step away from the business, and get a new fresh look at it. What things do you do best? Let's consider a few companies most people know: We might reasonably think a core competency of Apple Computer is design, a core competency of Nordstrom is customer service, and a core competency of Volvo is vehicle safety. The picture here illustrates this idea: you have to recognize what you're good at. It can't be everything. You aren't credible if you try to do everything right.

Core Competency

You do have to understand your core competence as you develop your core strategy. Don't pretend you can be the best at service and have the lowest prices and the highest quality products; that isn't credible and it will just get in the way. Be honest with yourself or with your team.

Don't think that core competency depend on the industry, or that they are the same for all players in any given industry. Look at the difference between economy cars, reliability cars, safety cars, and performance cars, for example. Or consider the different possibilities for a management consultant, whose core competencies might be any of these:

  • Facilitation of discussions and brainstorming for the management team
  • Cost cutting and firing
  • Finding new growth opportunities in contiguous markets
  • Finding people with money who can finance new ventures from the consultant's clients
  • Developing documents that are easy to read and cover the bases well

And then consider the variations on food services and restaurants. To name just a few:

  • Quick, fast, drive-through
  • Excellent cuisine
  • Ambiance; good place for a date
  • Sports bar
  • Healthy fast foods

So this is not a difficult concept to understand. It usually leads to good discussion and a better sense of core strategy.

Mantra, Mission Statement, or Vision

People seem to like getting into the mission statement, but I'm not sure it's always such a good idea. There's also the possibility of doing your mantra instead, and people talk about a vision statement, and of course there are also business objectives.

The underlying idea is sound. Let's think about who we are, what we want, what we want to do for customers, employees, and so forth. Let's use these words to define ourselves.

Before I go on, let's distinguish between these different items:

  • A mission statement should define what the business wants to do for at least three sets of people: customers, employees, and owners. It should not be just meaningless hype.
  • A mantra is a single phrase that defines a business. Guy Kawasaki, author of The Art of the Start, recommends mantra instead of mission.
  • A vision statement projects forward into time three or five years and presents a picture, like a dream, of how things should be. Usually a vision statement works best as a story about the future, with your business as the key element in the story. Where it is, what it is doing, how big it is, what's special about it. This works for some businesses, but not all.
  • Business objectives should be hard-baked, concrete, specific, and, above all, measurable. Objectives are like sales growth rates, employee head counts, customers in the database, percentages of gross margin or profitability, units sold, and so on.

Your mission statement is both opportunity and threat at the same time. It's an opportunity to define your business at the most basic level. It should tell your company story and ideals in less than 30 seconds: who your company is, what you do, what you stand for, and why you do it. It's a threat, however, because it can be a complete waste of time.

A mission statement is a complete waste of time when it's just meaningless phrases, hype that nobody can remember and wouldn't matter even if they could remember.

Most mission statements are essentially full of interchangeable, nice-sounding phrases like "excellence" and "leadership" that make all of them sound exactly the same. If you have a mission statement in your company, test it by asking yourself, honestly, whether your competitors could use exactly the same statement. Does it distinguish you from all other businesses? If you gave an employee or customer a blind screening test, asking her to read your mission statement and four others without identifying which is which, would she be able to tell which mission statement was yours?

Consider the new trend, the idea of the Mantra. Guy Kawasaki writes an eloquent argument for the mantra instead of the mission in his book The Art of the Start (see sidebar, Mantras vs. Missions). At the very least, think about it.

Before you do the mission statement, make sure you're going to use it. Will it actually set the underlying goals of the company? Will you refer to it as you develop and implement strategy? Will your team members know it, believe it, and use it in practice?

Then, start to ask yourself the most important questions. Do you want to make a profit, or is it enough to just make a living? What markets are you serving, and what benefits do you offer them? Do you solve a problem for your customers? What kind of internal work environment do you want for your employees? All of these issues may be addressed in a mission statement.

Basic guidelines in writing a mission statement

Your mission statement is about you, your company, and your ideals. Read other companies' mission statements, but write a statement that is about you and not some other company. Make sure you actually believe in what you're writing; your customers and your employees will soon spot a lie. I suggest addressing three key components:

  1. What are you doing for your customers?  Let's hope this is something that sets you apart, that makes you different, and that your customers will recognize.
  2. What are you doing for your employees?  Fair compensation, good tools, professional development, encouragement, or whatever. If you're serious about it, put it in the mission statement. If it's in the mission statement, get serious about it.
  3. What does the company do for its owners?  Don't apologize for needing profits to stay in business, or for generating return on investment for those who invested. Say it as part of your mission statement.

A few more tips:

  • Don't "box" yourself in.Your mission statement should be able to withstand the changes that come up over time in your product or service offerings, or customer base. A cardboard box company isn't in the business of making cardboard boxes; it's in the business of providing protection for items that need to be stored or shipped. The broader understanding helps them see the big picture.
  • Keep it short. The best mission statements tend to be three to four sentences long.
  • Ask for input. Run your mission statement draft by your employees. Is it clear and easily understood, or does it sound like something from a Dilbert comic strip?
  • Aim for substance, not superlatives. Avoid saying how great you are, what great quality and what great service you provide.

Guy Kawasaki on Mission Statements

The fundamental shortcoming of most mission statements is that everyone expects them to be highfalutin and all-encompassing. The result is a long, boring, commonplace, and pointless joke.

In The Mission Statement Book, Jeffrey Abrams provides 301 examples of mission statements that demonstrate that companies are all writing the same mediocre stuff. To wit, this is a partial list of the frequency with which mission statements in Abrams's sample contained the same words:

  • best - 94
  • communities - 97
  • customers - 211
  • excellence - 77
  • leader - 106
  • quality - 169

Fortune (or Forbes, in my case) favors the bold, so I'll give you some advice that will make life easy for you: Postpone writing your mission statement. You can come up with it later when you're successful and have lots of time and money to waste. (If you're not successful, it won't matter that you didn't develop one.)

Make Meaning : The Art of the Start
[see-also]How to Write a Mission Statement (Video) »[/see-also]

Mantras Versus Missions

We focus too much attention on mission statements. Too often they distract us from the real business of bearing down on why and how we're different, particularly when taken from the customers' point of view. The mission tends to be meaningless fluffy words.

Here's a good test: take your mission statement and ask yourself, honestly, if your competitions' mission statements couldn't be exactly the same? Could one of your own team members guess which company is yours if they read five mission statements including yours plus those of four competitors. Most companies' missions are full of promises about excellence and customer experience and leading-edge technology and such. They don't mean very much. Words like "excellence," for example, mean nothing. Define excellence. How would you even know?

Everybody writing a mission statement or even thinking about one ought to spend a few minutes with the  Dilbert comic strip. Then read Guy Kawasaki's post How to Change the World: Mantras Versus Missions. Pay special attention to how he suggests mantras might be more useful. This is from that post:

However, you should also create a mantra for your organization. A mantra is three or four words long. Tops. Its purpose is to help employees truly understand why the organization exists.

If I were the CEO of Wendy's, I would establish a corporate mantra of "healthy fast food." End of story. Here are more examples of corporate mantras to inspire you:

Federal Express: "Peace of mind"

Nike: "Authentic athletic performance"

Target: "Democratize design"

Mary Kay "Enriching women's lives"

The ultimate test for a mantra (or mission statement) is if your telephone operators (Trixie and Biff) can tell you what it is. If they can, then you're onto something meaningful and memorable. If they can't, then, well, it sucks.

So why bother? Good question. Maybe the mantra is enough, as Guy suggests. But some companies use their mission statements well, they do become part of the background of day-to-day work and long-term strategy development. For those cases, if you're really going to use a mission statement, then I say you should also remember at three points a good mission statement should cover.

  1. What are you doing for your customers? Let's hope this is something that sets you apart, makes you different, and that your customers will recognize.
  2. What are you doing for your employees? Fair compensation, good tools, professional development, encouragement, or whatever. If you're serious about it, put it in the mission statement. If it's in the mission statement, get serious about it.
  3. What does the company do for its owners? Don't apologize for needing profits to stay in business, or for generating return on investment for those who invested. Say it as part of your mission statement.

If at this point you're still looking at developing a mission statement, then I recommend reftk.