This is the first part of a series of articles regarding Steve Blank and Alex Osterwalder's positioning of the business plan as an undesirable document for (lean) startups. This article critiques that position while offering an alternative toolkit to Steve Blank's Customer Development Stack which includes Alex Osterwalder's tool of the Business Model Canvas.

1.
Why
Steve
Blank
&
Alex
Osterwalder’s
Ideas
About
the
Business
Plan
are
Wrong
and
Dangerous
–
Part
1
By
Dr.
Rod
King
(rodkuhnhking@gmail.com
&
@rodkuhnking)
***
“A business plan is a living document that has many forms like in the lifecycle of
a butterfly.” Rod King
***
In case you haven’t noticed, there’s an Entrepreneurial Tsunami (ET) that’s
gathering momentum all around the world. Due to factors such as globalization,
exponential technological innovation, and democratization of
knowledge, entry barriers to launching a business startup are very
low especially on the Internet. Anecdotally, I’d say that in the last decade, there
has been an exponential increase in the number of entrepreneurs and startups in
every corner of the planet. However, every would-be entrepreneur, who wishes to
systematically build a business, faces the “Best Tool Question (BTQ):” What’s
the best tool for generating and translating a business idea into a
sustainably profitable business?”
For analysis in this posting, the Best Tool Question can be considered as a set of
two interrelated questions:
BTQ1) What’s the best tool for generating a business idea or magnetic
value proposition?”
BTQ2) What’s the best tool for translating a business idea into a
sustainably profitable business?”
The answer to the Best Tool Question depends on the paradigm or mental model
of a respondent. Historically and in a stable environment, a “business plan” was

2. largely considered as the best (and perhaps, only) tool for translating a business
idea into a profitable business. In today’s turbulent environment, there’s
an ongoing shift from business planning to business modeling. There's an
ongoing shift from Management by Plans to Management by Business
Models. Nowadays, two polarizing paradigms can be distinguished in the world
of entrepreneurship: Paradigm of “Fat Business Modeling” and Paradigm
of “Lean Business Modeling.” These two polarizing paradigms are visually
summarized below.
The key idea that underlies Fat Business Modeling is that, for today’s
startups, “ideas and plans are worthless.” Consequently, as often proclaimed
by Alex Osterwalder the advice is, “Burn Your Business Plan.” Steve
Blank says, “Startups Model, Companies Plan.” Both Steve Blank and Alex
Osterwalder strongly recommend Osterwalder’s tool of the Business Model
Canvas as a replacement for the tool of the Business Plan. Obviously, Steve
Blank and Alex Osterwalder are strong proponents of Fat Business Modeling

3. which is characterized by the “fat” tool of the Business Model Canvas. Since
the Business Model Canvas is a tessellated block-diagram of a business
model with 9 blocks, the Business Model Canvas is considered “fat” relative to
a simple line diagram of a business model with 4 blocks.
With regard to an alternative to Business Planning, Blank proposes
the Customer Development Stack which involves using the Business Model
Canvas in conjunction with the Customer Development Approach and Lean
Startup Method. The Customer Development Stack is widely used in universities
and incubators. But, is the Customer Development Stack the best toolkit
for generating a business idea or magnetic value proposition? Personally, I think
not. Is the Customer Development Stack the best toolkit for translating a
business idea into a sustainably profitable business? Personally, I think not.
In a blog posting for The Wall Street Journal (Online) on November 26, 2012,
Osterwalder pens a controversial article: “Burn Your Business Plan - Before It
Burns You.” Attention-grabbing the caption “Burn Your Business Plan” may
be, but dangerous are its implications especially for the development of
innovative planning tools for rapidly documenting and managing business
models. Also, entrepreneurs and startups that are not exposed to a variety of
ideas and tools in the business literature risk developing an aversion to business
or project planning. Consequently, spreading the idea that a business plan is
a useless document is a misleading and dangerous proposition. In his
response to Ostwerwalder’s article, James Robert wrote: “The article “Burn the
Business Plan – Before It Burns You” is one of the most damaging articles that I
have had the pleasure of reading.” Stuart Wilson added, “I think that the advice is
a little dangerous.”
Steve Blank’s Customer Development Stack is a useful toolkit. However,
the Customer Development Stack has two weak links. The first is
its “strawman” of or paradigmatic focus on a business plan as if there was only
one type of business plan. This assumption is false as in reality there are various
categories of business plans that range from 1-Page Adaptive and Shaping
Business Plans to more voluminous Visionary and Classic Plans.

4. The second weak link of the Customer Development Stack is the implication
of Steve Blank’s dictum that “A startup is not a smaller version of a large
company.” Blank’s focus is on size rather than on the unpredictability of
environmental conditions. The appropriateness of an organization’s business
plan or business strategy depends more on the unpredictability of the
environment rather than on the size of the organization. For startups in an
unpredictable environment, adaptive and shaping business plans are
recommended; see below.

5. The above Business Plan Metamorphosis and typology of Business Plans are
tools in the paradigm of Lean Business Modeling. The core tool of Lean
Business Modeling is the 4Q-Business Model Strip, which is “leaner” than the
Business Model Canvas. Also, the 4Q-Business Model Strip can be regarded as
a template for universal problem discovery and solving. The 4Q-Business Model
Strip is scalable and can morph into many business tools including the Business
Model Canvas and Lean Canvas. The leaner and more versatile tool of the 4Q-
Business Model Strip would be discussed in more detail in the next part of this
series. In terms of managing the lifecycle of a startup project, the paradigm of
Lean Business Modeling offers the 3-3-3 Lean Startup Project framework.

6. The above 3-3-3 framework, which is inspired by Michael Schrage’s “5x5 X-
Team Framework,” is compatible with the toolkit of Steve Blank’s Customer
Development Stack. However, by focusing on the outcome of alternative
business models as well as time and money constraints for each project phase,
the 3-3-3 framework simulates real-life situations where innovative models as
well as money and time constraints exist and do matter. It is important to note
that each project phase is associated with milestones in the development of a
scalable lean startup:
• Pre-feasibility Project: Problem-Solution Fit
• Feasibility Project: Product-Market Fit
• Pilot Project: Business Model Fit
• Full-scale Project: Business Model Scalability

7. My objective in this posting is to introduce differing sides of the “Modern Business
Planning Debate.” By outlining the apparently polarizing approaches of Fat and
Lean Business Modeling, we can avoid groupthink and think out of the box
especially of the Business Model Canvas. After all, the Customer
Development Stack does not adequately account for the success of
visionary startups such as by Steve Jobs, Peter Thiel, and Elon Musk.
In my view, Blank and Osterwalder are presenting a false dichotomy between a
business plan and a business model: a business model is an integral part of a
business plan. Nevertheless, the toolkit of the Customer Development Stack
including the Business Model Canvas has some merits. Also, I hope that this
article would help to avoid us being misdirected from the serious deficits of the
Customer Development Stack at paradigmatic, strategic, and operational levels
while we are focusing on inadequacies of an inappropriate business plan or bad
business planning. Presenting an alternative approach such as in Lean Business
Modeling offers entrepreneurs and organizations more choices as they make
rapid, more informed, and smarter decisions about how to build sustainably
profitable businesses.
What do you think?
As always, your feedback is welcome.
P.S.: A free PDF document of the above posting can be obtained here:
http://www.slideshare.net/RodKing/why-steve-blank-alex-osterwalders-ideas-
about-the-business-plan-are-wrong-and-dangerous-part-1
Rod King
June 11, 2015
rodkuhnhking@gmail.com

8. Weblinks
Alex Osterwalder’s blog posting in the Wall Street Journal (Online):
http://blogs.wsj.com/accelerators/2012/11/26/burn-your-business-plan-before-it-
burns-you/
Steve Blank’s dictum:
http://steveblank.com/2010/01/14/a-startup-is-not-a-smaller-version-of-a-large-
company/