Steve Blank on startup business plan competitions
I stumbled across a post by Steve Blank of the Lean Startup movement and "Four Steps to the Epiphany" fame talking about business plan competitions. Considering I've had my own misgivings about them, I thought it was interesting to read another take on what may be wrong with these kinds of competitions. Steve's argument is that business plan competitions are mapping the success methodology of big companies onto startups: operation and execution on known opportunities.
Almost every university, region and car wash now has a business plan competition; the rules, who can participate, how large the prizes and who are the judges vary by school.
Business plan competitions perpetuate everything that is wrong about trying to make plans that were designed to be used in large companies fit startups. (One of my favorites: “Judging will include such factors as: Market opportunity, reward to risk, strategy, implementation plan, financing plan, etc.”) All of which may be true in large companies. But little of it is relevant to the chaos and uncertainty in the life of a startup.
He proposes an alternative kind of competition: The Business Model Competition. This kind of competition would focus on startups actually building their product or testing their business ideas in some way to learn what their real business model should be. To me, that seems to map much more closely to the actual process of building a startup.
For the first time we’d have a competition that closely resembled the reality that founders face, rather than a creative writing exercise.