The New Business Road Test

This is a most useful book for anyone who is contemplating starting their own business.  It is a very good compliment to Business Model Generation.  The book argues that writing a business plan is not an effective way of creating a business because it is a) too formal and rigid, b) produced in isolation and away from the market forces that the business will be exposed to, c) written with a heavy slant towards writing what an investor or lender would want to hear and d) completed with little customer endorsement or consideration of the practicalities involved in building a business.

One interesting argument in the book is also the recommendation to separate the decision of creating a business from that of the product, market or industry to enter.  The book argues that often start-up business fail not because of internal weaknesses, inexperience or capability, but because they have simply entered industries or markets that are not attractive and where the odds are already stacked against them.

The book offers not what I would describe as a business modelling template, but instead a framework for developing a business idea and evaluating the chances of being successful.  This is based on seven factors : macro and micro market forces combining to assess the markets attractiveness, macro and micro industry strengths and weaknesses combining to show how sustainable the industry might be and how attractive it might be to operate in, the internal teams propensity for risk and whether this is in equilibrium with business objectives, the connections and influence that the management team have, and the ability of the total team to execute, or ship as Godin would say!  I think this is a clever balance between conceptual business or marketing appraisal and the more practical but equally relevant considerations.

My key out take was that successful businesses need to be placed in the right place at the right time but most importantly with the right people on the job.  A good enjoyable read!

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