Entrepreneurship and Innovation Education

4From Business Plan to Business Model

No plan ever survives its first encounter with the enemy.

Douglas MacArthur, American general in World War II

Twenty years ago, when students came to an entrepreneurship teacher with a new venture idea, the first thing they would be told was “develop your business plan”. Such a plan would often consist, among other things, of a marketing strategy, an organizational structure, cash flow requirements and (often overestimated) return over investment and break-even point spreadsheets, as seen above.

In the early 2000s, the advent of the World Wide Web, data-driven processes and wider ecosystem interdependence all contributed to increasing the complexity of entrepreneurial decisions. If business plans were hardly adapted as a strategic tool for decision-making before this digital transformation, criticism against static plans only grew with the speed and complexity of the information age. According to Mullins and Komisar (2010, p. 1),

[t]he typical startup process, whether in nascent entrepreneurial ventures or in the innovation units of established businesses, is largely driven by poorly conceived business plans based on untested assumptions. This process is seriously flawed. Most new ventures, even those with venture capital or corporate backing, share one common characteristic: They fail. There is a better way to launch new ideas – without wasting years of time and loads of investors’ money. This better way is about discovering a business ...