By Cheryl Hall

cherylhall@dallasnews.com

Published 10 May 2011 07:20 PM

Entrepreneurship expert John Mullins warns that having a solid game plan before you launch a business isn’t all that it’s cracked up to be.

Things rarely work out according to plan, so you’d better be prepared to quickly shift gears and move to a Plan B, the London Business School professor says.

“The business-plan-driven culture that’s been built over the past couple of decades in the entrepreneurship world is simply wrong,” says Mullins, who spoke at SMU recently for Engineering & Humanity Week 2011. “If the founders of Google , PayPal or Starbucks had stuck to their original business plans and not made radical changes, they likely wouldn’t be household brands that have delivered huge returns for investors.”

Although Mullins urges caution, his message is also one of encouragement. Yes, your first plan is likely to falter. But if you pay close attention and make quick adjustments as real-world flaws crop up, you might just create that next can’t-live-without product or service.

“Visionaries often try to translate their passion into a business plan — one that typically teeters on a pile of untested assumptions,” Mullins says. “Blindly executing a plan without the benefit of real-life experience straps the visionary into a straightjacket. They ignore the facts in order to try to achieve the plan.”

Outside the lectern

Mullins, who has an MBA from the Stanford Graduate School of Business and a doctorate in marketing from the University of Minnesota, isn’t just a professor speaking from a lectern. He founded two high-growth companies and took one of them public.

The world has plenty of innovators, Mullins says. But true entrepreneurs, those who apply invention in the marketplace and produce significant impact, are in short supply. Innovators have to get smarter about how they bring their innovations to market. Otherwise they squander money, time and entrepreneurial talent.

So ask yourself these questions: Why are you doing this? What problem are you solving? What can you learn from others before you take your first step?

There’s no way to completely sidestep the learning pains of your first plan. Initial assumptions are leaps of faith. And to prove or disprove them you have to, well, leap.

Mullins suggests creating a “dashboard” of measurable results and data. “When those leaps are shown to be lacking by empirical data, the innovator can course-correct before it is too late.”

His book, Getting to Plan B: Breaking Through to a Better Business Model (Harvard Business Press, 2009), co-authored with Randy Komisar, uses case studies to turn abstract concepts into real-life understanding.

For Starbucks, the original concept was to create stores that sold freshly ground coffee by the pound to take home, Mullins says. “Howard Schultz took a vacation in Italy, saw the coffee bar culture there and the rest is history.”

Beyond Plan B

Frankly, Plan B isn’t likely to be your answer either. You might have to work your way down the alphabet.

“Google had no business model at all for Plan A, just a Ph.D. project,” Mullins says. “Plan B was to license their better search technology to the likes of Yahoo , AOL and others, which did not work. Plan C, the idea of paid listings on one side of the page alongside objective search results on the other side [copied from another search company called Overture], was what worked.”

For PayPal, safely exchanging money on the web was Max Levchin’s seventh application for his cryptography skills, Mullins says. “His initial idea, encrypting wireless transmissions from PDAs to wired devices, did not work, nor did plans B through F. Plan G is what worked.”

As for the quintessential transformational company, think of Apple in the early 2000s. “Innovative, yes. Design-conscious, yes. Profitable, no.”

Now think iPod, iTunes , iPad, Apple Stores and iTune Apps Stores.

“Steve Jobs revolutionized his company and made it the most valuable company in the world in terms of market cap,” Mullins says. “No one has delivered such results by reinventing the company before.”

Mullins’ tips

John Mullins says you can significantly reduce your risk of failure, save years of wasted time and loads of investors’ money if you:

1. Compare your idea with existing businesses to steal what works, avoid what doesn’t and add improvements.

2. Identify “leaps of faith,” the untested questions you are banking your business on.

3. Conduct fast, inexpensive, data-driven experiments to support or refute those questions.

4. Use this data to make smart strategic changes and course-correct before it’s too late.