Where did the idea that startups write business plans come from?
In the early days of venture capital, investors and entrepreneurs were familiar with the format of business plans from large companies and adopted it for startups. Without much thought it has been used ever since.
A business plan is the execution document that existing companies write when planning product-line extensions where customer, market and product features are known. The plan is an operating document describes the execution strategy for addressing these “knowns.”
A startup is not about executing a series of knowns. Most startups are facing a series of unknowns – unknown customer segments, unknown customer needs, unknown product feature set, etc.
That means that writing a static business plan first adds no value to starting a company, as the plan does not represent the iterative nature of the search for the model.
From the Wall Street Journal article intro: "A retired eight-time serial entrepreneur, Steve’s insight that startups are not small versions of large companies is reshaping the way startups are built and how entrepreneurship is taught. His observation that large companies execute business models, but startups search for them, led him to realize that startups need their own tools, different than those used to manage existing companies."