Entrepreneurs hate business planning

Most entrepreneurship programs are organized around the development of a business plan. This is understandable because the first thing entrepreneurs are asked for when they apply for a bank credit or venture capital is a business plan. Although many entrepreneurs have made a business plan one could question their attitude towards this ‘obligation’. Albert Shapiro concluded that “companies that plan do better than companies that don’t but they never follow their plan” and Mc Kinsey stated that “it is not so that winning businesses don’t make plans but they refuse to let planning become an end itself”.

Why business planning?

The added value of business planning is not to predict the future but to think about possible futures for today’s decision making. Of all the business plans made by the entrepreneurs that I supported, I found none realized exactly according to this plan. “In fact, business planning and market research do not fit to the natural behavior of successful entrepreneurs”, is one of the conclusions of Saras Sarasvathy, a key trainer in VentureLab International. In her research among around 30 expert entrepreneurs in the world, she found that these entrepreneurs follow another approach. They hate systematic market research and planning and prefer to discover in practice how they can be successful.

If not what then?

They make use of opportunities which arise and adapt their approach continues to the market responses. Sarasvathy called this the “Effectuation” approach as opposed to the usual “Causation” approach in which business planning plays an important role. Her findings are more and more recognized at entrepreneurship support centers, educational and research institutions. One of these is the Dutch Institute for Knowledge Intensive Entrepreneurship (Nikos) which applied this approach in the
VentureLab program.

So: Get inspired by Saras Sarasvathy! In an interview at VentureLab, she explains her approach. For me and many other Venturelab participants, it was a ‘party of recognition’.