back to news

BLOG: Lean or Traditional: Which Strategic Approach is Right for your Business?

31 July 2020

Steve Hobbs is founder of Asking Better Questions and one of the Business Gateway’s webinar speakers. Here Steve examines the lean or traditional approach to strategic planning.

Why do businesses fail?

Before delving into definitions, tools, tips and tricks, it is important to look at the reasons why 75% of start-up businesses fail within the first five years.

Aside from obvious things including ill-conceived ideas, poor execution or questionable business practices, there are some classics reasons why businesses don’t survive:

  • You can’t make accurate predictions about the state of the market in five years’ time
  • You’ve spent your life savings and gone into full production before you have tested the product or service with your target audience
  • You’re trying to execute an established business model, when you haven’t found what model suits you yet

“Everybody has a plan until they get punched in the mouth.” Mike Tyson, World Championship Boxer

This is where the Lean vs Traditional models both might have merit, depending on your type of organisation and your overall objectives.

Let’s look at ‘Lean’

Lean Start-Up is a relatively recent phenomenon in the world of business. Developed in the late 1990s by software companies, it has had a profound impact on how businesses start to scale and succeed. It focuses on being agile, adaptable, constantly learning, developing and improving based on customer feedback. There is a plan, but it’s a fluid one which is built upon through a series iterations and refinements.

Using tools including the Business Model Canvas to develop the building blocks of a business and test ideas, assumptions and hypotheses, before major investment is made can be a valuable resource.

Listening and learning is a key trait of the Lean process. Customer development is core to testing your ideas, innovating and coming up with a Minimum Viable Product which offers the most learning from the least effort and investment.

When it comes to product development, the Lean approach operates in short quick cycles, developing the product in parallel with customer learning to constantly rework thinking, test ideas and validate concepts.

The ability to be agile and innovate is more important than ever at the moment as many business owners are uncertain and looking for insight, direction, holding back from investments and potentially pivoting in a whole new direction.

However, some businesses are not set up in this way and can struggle to be reactive, but is it their plan that is holding them back?

Taking ‘Traditional’ into account

Early business thinking from the 1950s onwards emphasises the need for a full Business Plan which maps out the company direction for, say, three to five years into the future and includes:

  • Executive Summary
  • Company Description
  • Industry Analysis
  • Market Analysis
  • Marketing Plan
  • Management Team and
  • Company Structure
  • Operations Plan
  • Product (or Service) Design and
  • Development Plan
  • Financial Projections

There is one main reason for developing a business plan and ultimately that is to communicate what your business is to both your internal team and also external partners such as investors, financiers, partners and suppliers.

A business plan is beneficial, particularly to larger more established organisations, as it sets out focus and direction, provides accountability and sets targets and measurements. Using tools including SWOT and PEST you can create a picture of your organisations in relation to market conditions, spot opportunities and make predictions for changes.

What many business plans fail to do though is be adaptable and once the plan is in place it’s full steam ahead with that, rather than regularly reviewing, reacting and adapting to market conditions and customer feedback.

Which one is right for you?

There’s something we should acknowledge, now we’ve been through an analysis of both approaches. Each approach, done effectively, forces businesses to ask questions of itself, to have conversations with internal and external stakeholders. The value of each approach is in the questions and their answers.

The business model canvas, for instance, demands a really intimate understanding of your customers and their behaviours through ongoing conversation. The traditional business plan demands the thrashing out of ideas, roles, preferences by founders as they plan their way to success. Both are deep investigations of people and their wishes and move a business from the theoretical into the human.

In the spirit of asking better questions, which approach is right for your business? Are you agile, customer focussed and constantly seeking input to adapt and innovate? Or, are you flitting from one idea to another without a clear plan and dedicated direction? Do you need to focus more on your future trajectory? Can you communicate your aims and ambitions to your team, potential investors and your clients?

Free Webinar

Steve will run a free webinar for the Business Gateway on 20th August – Getting started with strategy – lean or traditional. View details and how to book here.