The concept of having a "master plan" is considered conventional wisdom by many business owners. Entrepreneurs are encouraged to have a business plan that maps out every detail of their future vision, with the promise that direction, motivation, and success for their company will soon follow. You can find countless thought leaders extolling the virtues of using a master plan from the startup stage to set immutable corporate goals as well as financial forecasts.

In fact, entire enterprises exist to help other business owners create master plans more effectively, all but guaranteeing that those who capture the relevant details of a strategic vision through advance planning will reap the rewards of greater profitability and performance. "Running a profitable business was never so easy!" assures the home page of one such service.

But no matter how many people try to convince me about the importance of having a master plan, I think it's important not to have one. Having every marching order written in stone quickly becomes an obstacle to learning and innovation--both for people and companies. For one thing, the very idea of a master plan requires fortune-telling in isolation from market realities. Master planning is generally done before a product (or company) even exists. Thus, speculation occurs prior to execution, with unknowns being conjectured in advance of having any tangible data on which to hazard such guesses.

A smarter approach to harnessing the power of future potential is to focus on keeping your business streamlined yet mutable, promoting an environment of ongoing examination and nonstop learning, constant retooling and continual improvement, minimum waste and maximum customer value. Flexibility, rather than strict adherence to static planning, is what ultimately allows a business to shift focus as needed to capitalize on market demands.

Here are three ways to go off-road from your master plan by using the principles of staying lean, agile, and ready for the next big thing:

1. Build a lean culture at your startup.

How you choose to launch your company can set the tone for the type of organization you'll create--much more so than attempting to draft an artificial "master plan" that will lose relevancy as your company grows and evolves in unanticipated directions. When we started Pluralsight in 2004, each of our four founders put in $5,000 for seed money, and this $20K was all we used to build the company. We never borrowed capital or took any investments for nearly a decade, waiting until we didn't really need it anymore before seeking any outside funding.

This lean approach to launching a startup forced us to use our resources very efficiently, in effect creating a refiner's fire for our ideas, strategies, and products. The financial pressure of having to get by on what we had helped keep us focused on what mattered most. Had we followed a predetermined plan, we likely would have been tempted to move faster than our revenue stream warranted, and soon would have lost control of our direction.

Going lean from the start makes revenue and profit king, rather than some arbitrary "wish" goal in a plan that's disconnected from your company's financial realities. As revenues and profitability increase, it green-lights new opportunities, new hires, new products, and increased risk-taking. Once you have a product that works in the marketplace and you've proven revenue can scale, you can slam on the gas to accelerate growth.

2. Start with what you know.

The lean approach can be extended from finances to philosophy. Lean is ultimately about removing waste in all arenas, which typically means starting small and using resources efficiently. While a master plan generally requires exploring every possible angle and offering your company might pursue, going lean means honing in on your core area(s) of expertise and innovating from there. While diversifying business offerings can help to increase reach and revenue potential if timed right, it can also lead to corporate bloat via layers of inefficiencies when taken on too soon.

Our company began by focusing on classroom training because we knew this niche inside and out, and had confidence in our ability to generate revenue to support the business. For the first three years:

  • We reigned in our appetite for expansion beyond this area as we built a solid financial foundation that would allow us to eventually take on more risk.
  • We built relationships, a network of teachers (who would become our future content producers), and a deeper understanding of what our customers really needed.
  • We didn't hire too fast, and were willing to wear multiple hats to get the job done until staff growth was proven warranted. From 2004-2010, we operated with only contractors and no fulltime hires. All founders rolled up their sleeves and built the company's initial website, authored some starter courses, and designed the company's overall business model. As a result, from 2010-2013, Pluralsight grew to about 20 FTEs--and in the last year, the company ramped up to over 200 fulltime staff, buoyed by continued fast-growing revenue and strong margins.

In other words, we learned which direction to grow the business by starting with what we knew best--without the stress of trying to expand into additional areas on a VC's dime with the clock ticking. We found that instead of slavish devotion to a master plan, it's more effective to develop your product and customer base by following your company's own learning curve, thus avoiding the extrinsic financial pressures that tend to block clear thinking and innovation. Using this model, the investments we made in our first few years created the perfect environment to radically pivot our business from classroom training to an online training model.

3. Be the fastest learner.

The only sustainable competitive advantage you can rely on is one you won't learn in any playbook. It's simply to learn faster than anyone else--and along with efficient resource utilization, this is what's at the heart of lean thinking. You need to learn what your customers want as fast as you can, constantly increasing your understanding and improving the "flow" of delivering value to them.

After Pluralsight's initial three-year launch period where we got our feet wet with classroom training, we used the revenue from that training to fund the development of our online business--and over time, transitioned completely over to it. Ultimately, we knew that with a subscription-based business, our customers vote with their wallets. If there's consistent value, they'll keep paying; if there isn't, they'll stop. So we needed to create quickly, iterate quickly, and ultimately learn quickly. We spent the next seven years building out our online training product at Pluralsight--and becoming the fastest learners in the business.

We did so not by following a master plan but by following the Lean Startup principles, which Steve Blank described in Harvard Business Review as favoring "experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional 'big design up front' development." We began with a minimum viable product (MVP) and shipped it out fast. From there, we implemented a build-measure-learn feedback loop, listening to our customers and learning from everything they told us. We became experts at spinning the flywheel of continual improvement in our efforts to build the largest online tech and creative training library on the planet.

It may seem counter-intuitive that working lean leads not to a dwindling effect, but to corporate growth. That's because lean isn't the opposite of expansion. The truth is that lean organizations are more efficient, allowing companies the flexibility to go after opportunities as they arise. Lean organizations eschew master plans, because they hamper the innovative spirit needed to stay on the pulse of changing market conditions and customer preferences.

So don't waste time on the front end penning insular prophecies that likely won't survive your company's first year (or perhaps even first month) of growth. Instead, go lean from the get-go by prioritizing judicious resource allocation, a narrow focus, and the willingness to pursue never-ending experimentation so that you can learn from your company's experience instead of trying to predict it.

Published on: Sep 3, 2014