JOHN W. MULLINS: Building Better B Plans

 

INTERVIEW: JOHN W. MULLINS: Building Better B Plans

John W. Mullins is Associate Professor of Management Practice at the London Business School. His latest book, Getting to Plan B: Breaking Through to a Better Business Model, shows how thriving businesses can be built by stress-testing business plans. NEN caught up with him for a brief interview.

How do business plans differ from business models?

A business plan is typically a sales-oriented summary of an opportunity, along with the strategy to pursue it. The business model is a piece of that plan, focusing on the economics and the pattern of cash that goes in to and out of the business, and whether that pattern, in terms of revenue, gross margin and operating costs, works out.

Does passion prevent entrepreneurs from building effective business plans?

It's helpful if entrepreneurs are passionate about solving a customer problem that's real. But when they get passionate about their own solution to that problem, which may not be the best one, that's when they get into trouble.

How can businesses learn from precedents in the market?

Businesses can learn from 'analogs' and 'antilogs' – what they can copy and what they should not. The idea is that somebody has already done something like what you are going to do, and you can learn from that. Apple offers key lessons. It transitioned from being a highly innovative but a struggling PC maker to a music-industry phenomenon. It studied analogs in the market: Sony Walkman proved portable music had demand, and Napster showed users download one song at a time. There was an antilog, too: Diamond Media Systems' Rio MP3 player's clunky interface made organizing songs very difficult. All these helped Apple determine what's good for the iPod.

In your book you have discussed why businesses must test their assumptions quickly and inexpensively. How does one do that?

That depends on the assumption. In the case of Pantaloons, Kishore Biyani studied western retailers like Wal-Mart before building his first store. His assumption was that that model would translate into the Indian retail context. Well, it turns out, while the backend worked out well, the front-end model of a neat and orderly store didn't. Indians are accustomed to the chaos and excitement of Bazaars. And he had to put that back into the store!

Are there specific lessons for India's entrepreneurs from your book?

The key lesson is that while you can look to the West for analogs, you must translate them into what's right for the Indian consumer. You can't just pick them from the West and drop them in India.

 

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