Innosight Business plans should start with the value to the customer not Microsoft fiction–Scott Anthony's latest in HBR.

Business Plans and Other Works of Fiction

Scott D. Anthony

The purpose of a business, Peter Drucker famously said, is to create a customer. Yet, rather than creating customers, many innovators create a fantastical piece of what you might call Microsoft fiction.

This hit home for me during a recent client project. I was working with a team that had been tasked by the company’s CEO to develop a new venture in a promising market space. Its three members had been working for about six weeks. They’d conducted detailed research, talking both to prospective customers and numerous industry experts. And then they used Microsoft’s most popular products to produce what they thought was a business plan. But it actually was a kind of fiction built in three chapters: an Excel spreadsheet with sophisticated analyses showing breathtaking financial potential, a PowerPoint document blending facts and figures with compelling videos and pictures, and a Word document summarizing all of it in prose so lucid Malcolm Gladwell would shed a tear.

Still, it isn’t a business until you create a customer. After listening to the team describe its work, I asked a simple question: “Who is your first customer?”

The team turned to page 12 of chapter 2 of their Microsoft fiction, proudly displaying a PowerPoint slide citing detailed demographic figures. The slide said that 60% of the target market would be 18-to-34-year-old males with annual incomes within a certain range.

So I asked the question again. Instead of summary facts and figures, I wanted the team to be very precise. What is the customer’s name? Where does he live? What does he look like? What are his hopes, dreams, and aspirations? What does he love? What drives him crazy? How would the team’s idea fit into his life?

Read the rest at Harvard Business Review.

Scott Anthony is the managing partner of Innosight.