Business Plans: useful or not?

Over the past few years, we have heard a great deal of conversation about the inadequacy of traditional business plans.   The lean start-up movement has argued that we should focus on developing a basic business model, testing out our ideas, and then refining them through a process of enlightened trial and error.  We should not over-emphasize a lengthy, drawn-out planning process.   The lean start-up movement emphasizes the notion rapid prototyping.   This approach has many merits.

Source: getaliff.blogspot.com

On the other hand, I think we can go too far in diminishing the importance of a business plan.   Dwight Eisenhower once said, "Plans are useless, but planning is indispensable."  In other words, the process of thinking through an issue and developing a strategy can be very useful. 

The mistake that many people make though is becoming too wedded to that original business plan.   A process of research and analysis can be productive, but it must lead quickly to a rapid prototyping phase.  We have to take action, and learn from that action.  However, we can't just leap without any spade work. 

For the Wall Street Journal, London Business School Professor John Mullins has written a great column exposing some of the many problems with traditional business plans.  For those interested in learning more about this topic, I strongly suggest reading his essay.