704: Crafting the Modern Business Plan, with Seth Godin

Dave Stachowiak [00:00:00]:
Seth Godin writes this, “It’s not clear to me why business plans are the way they are, but they’re often misused to obfuscate, bore, and show an ability to comply with expectations.” In this episode, Seth and I explore the components of a modern business plan. Production Credit: This is Coaching for Leaders episode 704. Produced by Innovate Learning. Maximizing human potential.

Dave Stachowiak [00:00:39]:
Greetings to you from Orange County, California. This is Coaching for Leaders, and I’m your host, Dave Stachowiak. Leaders aren’t born, they’re made. And this weekly show helps you discover leadership wisdom through insightful conversations. The word strategy, something that we all know is important, and yet, how often? We skip it. Maybe don’t even recognize what it is today. How we can do a better job with strategy, in our planning, in the big picture, and in the spirit of not just helping ourselves, helping our organizations, helping people, helping make the world a better place. I’m so glad to welcome back to the show Seth Godin. He’s published 21 best selling books that have changed the way people think about work.

Dave Stachowiak [00:01:18]:
He writes one of the most popular blogs in the world, and 2 of his TED Talks are among the most popular of all time. His blog is at seths.blog, and his newest book is titled, This is Strategy. Seth, always a pleasure to have you on. Welcome back.

Seth Godin [00:01:33]:
What a treat. You keep making a difference. More than 10 years. Well done.

Dave Stachowiak [00:01:37]:
And you serve more than I don’t know how long the blog’s been going 20, but you are part of my thinking every week because I’m looking at the blog and what you’re thinking about. Thank you for your generosity and your work. I appreciate it a ton.

Seth Godin [00:01:48]:
Well, here we go.

Dave Stachowiak [00:01:49]:
Here we go. So speaking of starting things, at the start of the book, there are several lines. One of them, you write, “big problems require small solutions.” That seems a little counterintuitive. What do you mean by that?

Seth Godin [00:02:06]:
Oh, it’s definitely counterintuitive. People think that if there’s an emergency, it can get everyone on board and we better deal with it right away. But everything that we think of is a big problem, not everything, but almost everything happened over time. It happened slowly. It was corrosion, not an asteroid. And when a system starts to fall apart or has side effects that lead to a big problem, the solution is almost always a systems solution, which means we have to have a strategy for how to get from here to where we hope to go to solve the problem. So you might need TL fire to get people to pay attention, but yelling fire doesn’t solve the problem. What solves the problem is building a fireproof building in the first place.

Dave Stachowiak [00:02:56]:
There’s a header in a section of the book that says “tactics are not strategies.” And you write, “strategy is easy to skip because we’ve trained our whole life for tactics.” I was thinking about that. And thinking about that, well, we tend to confuse them. But as I thought about that more and reflecting on what you wrote, I don’t even think a lot of times we see the strategy part. Like, people miss it entirely.

Seth Godin [00:03:22]:
That’s on purpose. From the time we’re little, we’re indoctrinated to do what we’re told, to fit in, to not make change happen. That when we’re in school, not one day in 12 or 16 years, do they ask you a question? They don’t know the answer to. And so all of our life is in training for doing our job, not for figuring out what our job is. And in this moment of profound and real change, we have the opportunity to decide what our job is to decide what the arc of our project or our company is to become a leader, not a manager and managers are fine, but they’re not the same as leaders.

Dave Stachowiak [00:04:03]:
What’s the distinction for you when you think about management and leadership?

Seth Godin [00:04:07]:
Managers use power and authority to get other people to do proven tasks slightly better. You can’t have a fast food restaurant without a manager or else no one will show up for their shift. Leaders don’t have to have any direct reports. They are doing something voluntary, which is encouraging people to follow them, to do something that might not work. So managers like plans because the promise is, if you follow the steps of the plan, you will get what you want. But leaders prefer a strategy, an arc, something resilient, because the job is to figure out the path.

Dave Stachowiak [00:04:47]:
And strategy comes down to truth as one of the key components. And you write that the importance of thinking about strategy is also getting really clear with truth. And you say, if you’re not talking about systems and the status quo in your truth section, it’s incomplete. Tell me what you mean by that.

Seth Godin [00:05:10]:
So we’re going to riff a little bit about the section of the book where I talk about the modern business plan. And the traditional business plan is a mess. It’s pattern matching. It is reassurance. It is a proforma document that shows you understand a couple of things, but it ignores mostly strategy. So I’m going to argue that there are 5 or 6 things we can put into a modern business plan that show we have a strategy. And the first one, as you said, is truth, which is please list all of the things that are clearly true. What is it about the system that we’re trying to work in? What is it about the world as it is that I’m going to state and you can challenge me if you want, but we can agree after a discussion that it’s true.

Seth Godin [00:06:01]:
So Levi Strauss could argue that there is a portion of the population that isn’t going to wear a suit and tie to work. They need something else to wear. That is true. So come up with your truths about how the world is and how the systems are before you tell me anything about the change you seek to make.

Dave Stachowiak [00:06:22]:
I think the word system and systems appears in the book perhaps more than any other word. This is so central to strategy. What is it about systems that we just don’t appreciate and don’t understand?

Seth Godin [00:06:38]:
Okay. So when I say systems, I don’t mean that a craftsperson has a system for how they do their job every day. That’s a system, but that’s not what I’m talking about. This system I am talking about is always present when more than one human being come together to do anything. It’s about it begins with interoperability. So English is a system. If I speak to you in Swahili, you won’t understand me because we don’t have an interoperable system. If you’re to Japan and insist on driving on the right side of the road, you’re gonna die because the system is that we drive on the left side of the road here in Japan.

Seth Godin [00:07:16]:
And systems can get pretty complicated. The medical industrial complex system, and we can look at who’s in it and what it treasures and what it produces. And we need to be able to name those things if we want to make them better.

Dave Stachowiak [00:07:32]:
You also make a distinction between nodes and connections and systems. What’s critical about that distinction?

Seth Godin [00:07:39]:
So people are nodes that the person who is at the front desk at the hotel or the desk at the rental car place, they are not Avis. They just work for Avis in that spot. And arguing with somebody in a system about something the system does, doesn’t help you because they’re just doing their job. Connections are how people, the nodes in a system engage with one another. So if you’re in the admissions office at Harvard, you have a boss that connection between you and your boss is going to change how you do your job and who you admit. It’s not up to you, the node, but the system creates the conditions around you, where you decide what your job is.

Dave Stachowiak [00:08:25]:
You write that “people deserve our empathy and systems demand it.” What do you mean by that?

Seth Godin [00:08:32]:
Okay. So it’s easy to believe that empathy is a soft term and it just means kindness and I’m in favor of kindness, but that’s not what I’m talking about. What I’m saying is other people have agency. They don’t have to say yes to you. They don’t have to buy what you’re selling and systems have lots of power. They definitely don’t have to buy from you and they can just ignore you. Empathy says, I understand that. I respect that.

Seth Godin [00:09:00]:
I’m going to come to you with something you want to do, not come to you with something I want you to do. So creating the conditions for change as a leader is different than a manager saying, do this, or you’re fired.

Dave Stachowiak [00:09:15]:
One of the things you point out in getting real with truth and thinking about a more modern business plan is that when you set out to change the system, the way about that is not fighting the system directly, but instead using the system as a tool to change the system, to influence the system. What does that look like? Like, who have you seen that’s done that that so we can get our heads around that?

Seth Godin [00:09:42]:
Okay. So if we think about well, I’ll start with the typical corporation. Hugger chemical, which created the 1st Superfund site in the US down the street from where I grew up in Buffalo, harming thousands of people didn’t want to be in the pollution business. They just polluted because they were in the profit business. The system wanted to make a profit and pollution was one way they did that. Community action created a boundary so that the typical US chemical company couldn’t shortcut that the way they used to. And they many of them discovered the best way to make a profit was not to try to skirt the rules, but instead to use those boundaries to help them get what they did want, which is profit. Or in September of 2024, Britain shut down its last coal plant.

Seth Godin [00:10:34]:
After a 147 years, they invented coal power plants. Now they have none. They were able to do that because their customers don’t want coal power. They just want cheap power. And if it was a better alternative, the system changed what it created or how it created what people wanted to buy. So when you think about what does my boss or the shareholder or the consumer or the middleman or the merchant that I’m selling to, what do they want? It’s easy to get confused. Right? Nobody wants a drill bit. They want a hole.

Dave Stachowiak [00:11:09]:
This is where it comes back to empathy. Like you said, it’s not the kindness. It’s I mean, yes, kindness. And also, what does the system really want and need and, like, what is better? The you you mentioned that the heart of a modern business plan is an assertion about getting clear about what is better. And you write, when we lack the empathy to imagine someone else’s better, we’re on the road to frustration. What’s the missing piece that people just don’t see in this?

Seth Godin [00:11:48]:
Okay. So there let me first explain what we mean by assertions, and then we can talk about how empathy keys into this. An assertion is I’m going to do X and then Y will happen. So Yahoo had almost complete market share dominance of search in the 19 nineties. And 2 guys in California said, we’re gonna build the search engine. It’s gonna look totally different. And we assert that if we build a search engine that sends people into the open web, as opposed to forcing them back onto our own site, people will talk about it and we will grow. That’s an assertion.

Seth Godin [00:12:23]:
It might not be true, but you can look at the assertion and you can make another assertion. If we spend this much money and this much time, it’s likely to happen. Okay, great. That’s key. If you, as a leader need approval and buy in from the people who are going to say, yes, you can do this. And then when we add an empathy, we have to say the people I’m offering this change to, they’re never going to do it because it’s important to me. And this is what most b2b salespeople and used car salespeople don’t understand. They’re like, I worked really hard to make this sales call.

Seth Godin [00:12:58]:
I need you to buy this from me. That doesn’t work. What works is helping the person who you’re calling on see that they would miss you if you were gone, and the best thing they could do is to buy from you.

Dave Stachowiak [00:13:10]:
The shift here is what’s important to us versus what’s important to them. And it’s like in a way that’s obvious, and yet, how often it’s missed in organizations and when we’re thinking about asserting that something should be better?

Seth Godin [00:13:26]:
Correct. And that’s why you need a book so you can talk about it.

Dave Stachowiak [00:13:30]:
Indeed. You, you point out, of course, your assertions will be incorrect, and so you also write about alternatives. You say “the secret of successful product development isn’t an innovation that bursts forth as a polished and finished product. Instead, it’s sticking with something that is almost useless and nurturing, sharing, and improving it until we can’t imagine living without it. The goal at the start is traction with a few, not perfection for the masses.” Speaking of things none of us were trained for, we were not trained for this, were we?

Seth Godin [00:14:05]:
Yeah. Most innovations barely work. Everything from the first iterations of baseball and basketball, which almost no one wanted to watch, to the 1st 3 to 6 months of the iPhone, which almost no one used. They’re held together with paperclips and glue. And then over time they evolve because we’re paying attention to how they work and we’re using time to make them more acceptable. And so alternatives has 2 parts to it. One part is what are my degrees of freedom to evolve this after I launch it? And second, I might be totally wrong or something really surprising might happen. If that happens, what’s our plan B? And an example, if you look at startups is Slack was started as a games company.

Seth Godin [00:14:55]:
And the software that is Slack was actually software they built to help the programmers develop the game. And when the game didn’t work out, Stuart realized he could shift and use the assets he had to do something

Dave Stachowiak [00:15:09]:
else. Part of this too is mindset. And I think about empathy as you were talking about earlier, that a respect and understanding that I’m not gonna get it right we are not going to get it right we are going to need to evolve we are going to need to take feedback we are going to need to try things differently and have the empathy This is a a big part of this is just by writing this down. Yes. It’s the planning, but also it’s like the mindset of, like, I’m not gonna have this figured out on day 1.

Seth Godin [00:15:38]:
Right. And and that some people can look at that and say you did it to take the pressure off, but I think it puts the pressure on. Right? So I think what, when we say I am committing to evolve from a frog to a lemur, and it’s gonna take you a long time, that’s a commitment compared to, I promise you that what I’m gonna ship is absolutely perfect. That’s really fragile. And there’s plenty of places to hide when it doesn’t work.

Dave Stachowiak [00:16:07]:
People a part of this too. And you make the distinction when thinking about the modern business plan. It’s not people’s resume. It’s their attitudes, their abilities, and their track record in shipping. You talk about shipping a lot in your work. What do you mean by shipping?

Seth Godin [00:16:28]:
Well, it’s super simple. It’s here. I made this not, I’m still working on it. Not all these excuses, but here I made this and I know countless people who invented everything you can imagine, but they haven’t shipped it yet. That’s a super safe place to be. If your WHO team includes people who are resilient and positive and supportive and connected, who understand how to manage projects and ship. Well, they can hire as many talented freelancers as they need. Those are the people that you wanna bet on to get you to where you wanna go.

Dave Stachowiak [00:17:04]:
Money and time, of course, part of any solid business plan. What is it that we don’t think about as clearly around money and timeline that we should?

Seth Godin [00:17:17]:
So many things, but I’ll start with this. If you’re a professional, you don’t run out of time. You don’t run out of money. When you’re about to run out of 1 or the other, you have to ship it. And that means perfectionism is not welcome here. Perfectionism is confusion about quality. Quality means meeting spec. So a good business plan has a clear spec.

Seth Godin [00:17:40]:
This is what is good enough to ship. Perfectionism is we can always find something imperfect. Therefore, we never have to ship. And we see organizations. One of my favorite stories is about the sequel to Duke Nukem. Duke Nukem was one of the most popular video games of its time. I think it was the eighties and they had no trouble raising money for the next version. And the next version wasn’t even done until 14 years later when it was about 12 years too late.

Seth Godin [00:18:13]:
But they didn’t have any boundaries and they didn’t have a bias towards shipping and they had too much money and they didn’t understand that the professional doesn’t ship a perfect video game. They ship the next video game.

Dave Stachowiak [00:18:26]:
You say that “a useful business plan gets easier over time.” What what’s key about that being an indicator?

Seth Godin [00:18:34]:
So the elegant strategy is one where the wind is at your back, where you have found an efficient way forward. And an elegant strategy almost always has a network effect in it. It works better when other people are doing it too, which means that, you know, just use the podcasting example. If you have a really popular podcast, it’s much easier to run that than someone who has a struggling podcast. Making the actual recording is exactly the same amount of effort for both of them. But the person with the powerful podcast is more likely to gain new users and is more likely to get sponsors. Every day gets easier because it’s already working. So what we’re looking for is, are you building a flywheel? Are you building something where we’re gonna put energy in at the beginning, and we’re gonna get energy back over time?

Dave Stachowiak [00:19:25]:
And this is perhaps, again, maybe obvious, but obviously not for so many situations out there.

Seth Godin [00:19:33]:
A ridiculous Silicon Valley business was just profiled. They’re taking sulfur dioxide and helium, putting it into weather balloons, and letting them go. So when they get 50,000 feet off the ground, they explode and put sulfur dioxide in the air, which ostensibly will protect the earth from too much warming. And their business model apparently is to sell cooling credits so that businesses who are looking to greenwash their work can pay for the sulfur dioxide delivery. Here’s the problem. A, they have no scientific background. They don’t understand geoengineering and it’s fraught. But B, from a business plan point of view, let’s say it catches on.

Seth Godin [00:20:16]:
Why are their weather balloons going to be better than the weather balloons from their competitor? They won’t, which means there’s gonna be a race. It’s who can make it cheaper weather balloon, which means it will be a commodity business that anyone can enter, which means it’s a bad business. And they’re not thinking of any of those things. They’re just having fun.

Dave Stachowiak [00:20:36]:
Well, and it leads to one of the things you point out that a useful business plan is a welcome contribution to the lives and projects of the people who are paying that it makes things better. I mean, back to better. I mean, again, obvious, but so often missed when we’re thinking about what does the future look like?

Seth Godin [00:20:54]:
That’s right. So better connects right back to the idea of spec. So at first, there’s better for who? Is it better for you and your investors only? And if that’s the case, you’re gonna have to do a lot of hustle to keep people showing up Or is it better for your users and they talk about it because it’s good for them? And if you need better, that’s not about pushing your people to work harder. It’s about writing a better spec.

Dave Stachowiak [00:21:19]:
And you say also resilience is key in this too that the world obviously is gonna change. The model should change. It should even get better, maybe even thrive as the world’s changing around it. Is this different than alternatives in thinking about resilience? And how do you know if you’re going down that road or not?

Seth Godin [00:21:40]:
So resilience is a simple bet that says the world’s gonna get weirder than it is now. And when the world gets weirder, will we be okay? And if you build something, and Stewart Brand has written a beautiful article about this, about the race around the world. And I mentioned it in my book. So the Times of London in the sixties offered £5,000 to the first person who could sail around the world solo. And there were a lot of rules, but basically that was the proposition. And 3 serious people entered. And 1 person built a boat that when it was working, clearly would have won the race. However, he didn’t have any spare parts and it was fragile.

Seth Godin [00:22:25]:
Somebody else had a boat that was made out of wood. He had plenty of spare parts and he knew how to fix it. And he won by a lot because the ocean will surprise you. And so will the real world.

Dave Stachowiak [00:22:38]:
It’s so easy to think you’re resilient and be the person with the perfect boat without the extra parts. Right?

Seth Godin [00:22:46]:
Mhmm.

Dave Stachowiak [00:22:47]:
How do you know at the start that you’re going down the path of resilience versus kidding yourself?

Seth Godin [00:22:54]:
So there’s something called red teaming, and there’s something called adversarial interoperability. I love that word because it has so many syllables in it. Red teaming is the idea that if you’re trying to build a secure facility, you have to be right every time. And the bad guys only have to be right once. And so you create scenarios where bad guys in testing get credit for beating your system and you don’t shy away from that. You eagerly lean into it. So if you come to me with a business plan for X, Y, or Z, and I come up with a list of 10 things that could happen in the world that would disrupt your assertions, you shouldn’t be defensive. You should be grateful because now you’re learning about the kinds of things that could happen, that you better be ready for.

Seth Godin [00:23:45]:
Most people who do certain kinds of creative work don’t want to hear any of that. They just want to assert the world’s going to be like it was yesterday. And they’re really proud of what they built.

Dave Stachowiak [00:23:54]:
So a good place is when you hear that feedback of incorporating your plans, but even better is being the person who’s going out and seeking that feedback, being thoughtful about it, putting it into the alternatives and the assertions and do that thinking in advance so that you’re the person who’s more likely to actually make the world a better place.

Seth Godin [00:24:12]:
Exactly. Well said.

Dave Stachowiak [00:24:14]:
Speaking of making the world better, you are thinking every single day. I know that because you write every single day and you publish and you ship every single day. It also means that you’re inevitably changing your mind on things. I often ask people what they’ve changed their minds on in the last year or 2 as you’ve continued to do your work. What’s one thing you’ve changed your mind on?

Seth Godin [00:24:34]:
I changed my mind about optimism and pessimism about the climate every 15 minutes. I changed my mind about the resilience of communities because sometimes I think we’re all doomed and other times I see what happens if just a few people spread the word. There are things, trends that I see like NFTs that I said, that’s a scam and a dead end. I was right. But then there are also things like the resilience of cryptocurrency where I was wrong. I thought clearly the fad was gonna end. It hasn’t ended yet. And I’m thrilled that I’m still mostly right about human nature, which is that in small groups, people become the best version of themselves and almost always wanna make things better.

Dave Stachowiak [00:25:23]:
Seth Godin is the author of This is Strategy. Seth, thank you so much for your generous work.

Seth Godin [00:25:29]:
What a treat. Thank you for doing it. I’m glad to be able to join you.

Dave Stachowiak [00:25:38]:
If this conversation with Seth was helpful to you, 3 related episodes I’d recommend. One of them episode 491, how leaders build. Guy Raz was my guest on that episode. Guy, the host of the very popular how I built this podcast featuring entrepreneurs who have built incredible organizations from the ground up regularly on his show. And in that conversation, we talked about what are some of the key aspects of building. Of course, a business plan is one of those aspects as are many other things. Kindness and safety among them. Yeah.

Dave Stachowiak [00:26:11]:
Things we don’t often think about with entrepreneurship, but Guy and I talked about those extensively in that conversation along with a bunch of other aspects as well. Episode 491 for that. Also recommended episode 629, how to grow your business. Donald Miller was my guest on that episode. Donald and Seth, both both leaders in the conversation around marketing and tactics and strategies on marketing over the years. In that conversation, Donald and I talked about, okay, how do we actually go through the process of thinking about growing an organization? And where do we have the marketing conversation? And what does that look like? And how do you craft that in the best possible way? Yes. There’s tactical things in that conversation, but probably even more importantly, mindset. So much there that’ll help for you if you’re thinking about marketing right now, and maybe that’s going along with your business plan, episode 629 for that.

Dave Stachowiak [00:27:05]:
And then, of course, no conversation about strategy is complete without Renée Mauborgne’s work. Her and w Chan Kim have done incredible work on, Blue Ocean Strategy over the years and their newest book beyond disruption. In episode 641, we talked about doing better than 0 sum thinking. A lot of times when we get to thinking about a business plan or we think about competitors in the space, we think about we need to win if and the other party needs to lose, and we think about things in those dichotomies. And Renée, through her work, really invites us to look at the bigger picture. How do you do better than 0 sum thinking? So much opportunity if you’re willing to change your mindset that way. Just some of the many episodes we’ve had on strategy over the years and entrepreneurship and, of course, so much more. For more, go over to coachingforleaders.com.

Dave Stachowiak [00:27:57]:
I’m inviting you to set up your free membership. One of the helpful benefits of your free membership is you can find the episode that’s most relevant to you right now. I just got an email in the last day or 2 from one of our listeners who said, he actually doesn’t listen to the episodes in order when they come out. Occasionally does, but more often, he goes to the website, finds what he’s thinking about right now in a context of a current situation or a struggle inside his organization, and then finds the episode that’s relevant, listens to it a couple of times, takes notes, thinks about it for a week or 2, starts to implement it. That’s exactly why the the website is there and the free membership to allow us all to do that well. I do the same thing when I’m searching for information and searching for expert perspective is going right into the free membership on coaching for leaders.com. I use the, search box inside the free membership probably more than anybody. If you haven’t set that up, it’s a great starting point for you to really dive in on the value of the library And, of course, so much more inside the free membership.

Dave Stachowiak [00:29:00]:
All my interview and book notes, I’ve shared my interview notes with Seth and some of the highlights from his book in this conversation. That’s inside the free membership, our audio courses, my own personal library, and a bunch more. Go over to coaching for leaders.com to set that up. And, you know, a business plan often comes at a time of an inflection point. And leadership gets harder at inflection points, whether it is a promotion, a different organization, a new team, a big initiative, the inflection points that come up in a lot of our careers. And they bring a common challenge. What worked yesterday doesn’t work today. That is why the Coaching for Leaders Academy exists.

Dave Stachowiak [00:29:46]:
Yes. You can do it alone, but it’s a lot easier and more successful if you have the support of others. The Coaching for Leaders Academy provides the community and structure to accelerate your movement on the behaviors that are most critical right now. If you’d like to find out more about the academy and get an invitation the next time we open up the Coaching for Leaders Academy for applications. Just go over to coachingforleaders.com/academy to find out more. Coaching for Leaders is edited by Andrew Kroeger. Production support is provided by Sierra Priest. Next Monday, I’m glad to welcome Steve Dennis to the show.

Dave Stachowiak [00:30:25]:
We are gonna be talking about how to stay relevant, a key competency for all of us in our roles. Join me for that conversation with Steve, and I’ll see you back next Monday.