“Everybody’s got a plan – until they are punched in the face,” stated boxer Mike Tyson. My experience personally reviewing over three hundred executive summaries each year, all sent to me unsolicited, seems to bear out the truth in Tyson’s statement. Anyone can build a good – or great – plan. Investors have to look behind the plan and at the entrepreneur and his or her team, knowing that, over time, most of us have come to the conclusion that it is the execution of the ever-changing plan, not the plan itself that makes a company a success.
Tyson’s statement also addresses change. The ‘punch in the face’ is analogous to dealing with the business plan when it intersects with the realities of the market. Wham! I can’t recall any of my companies hanging onto its original plan after some level of consumer feedback.
We built one of our companies upon forecasted metrics for a specific class of retail consumer base, but found that there wasn’t enough money in our universe to pay for marketing to create that much dedicated traffic to our site. So we switched to distribution through partners which already had massive amounts of traffic, and concentrated in providing great content and great offers that more than made up for the sharing of revenues.
[Email readers, continue here...] There is a name for such a change in focus, in this case from retail to wholesale. We call it a “pivot,” a term now used to describe great management dealing with successfully refocusing a company in a new direction.
And most of us who invest in so many companies have come to the conclusion that our greatest profits over time come from investments in great management, groups that we are confident are able to execute even on average plans. Some label this as “Bet on the jockey, not the horse.”