Transforming a Passion Into a Successful Company

Chris Curran: Growth Igniters Radio, episode 16, Transforming a Passion Into a Successful Company.

This episode is brought to you by Business Advancement Incorporated − enabling successful leaders and companies to accelerate to their next level of growth. On the web at businessadvance.com. Now here’s Pam and Scott.

Pam Harper: Thanks, Chris. I’m Pam Harper, founding partner and CEO of Business Advancement Incorporated, and across from me is Scott Harper, my business partner and husband. Hey, Scott.

Scott Harper: Hi, Pam. As always, it’s wonderful to be here with you today. We’d like to let our first-time listeners know that the purpose of Growth Igniters Radio is to spark new insights, inspiration and immediately useful ideas for leaders to take themselves and their companies to the next level of success. So Pam, what’s the story for today?

Pam Harper: It’s a story about taking a passion, putting it together with the ability to sense an emerging market opportunity, and turning it into a highly successful company.

Scott Harper: I love hearing stories like that, and learning from CEOs who actually have the ability to transform the face of business and put that into practice.

Pam Harper: Exactly. Today we’re speaking with Tim Berry, Chairman and Founder of Palo Alto Software, a leader in business plan software for small businesses. We’re going to talk about his journey from vice president of a Silicon Valley high-tech planning and research firm to a highly successful entrepreneur, and how his vision and passion for business planning guided him through his own business journey. Welcome, Tim.

Tim Berry: Thank you, Scott and Pam. Thank you very much, happy to be with you.

Pam Harper: We are delighted to have you here. Now let’s set the stage. Years ago, you saw and built on a very unique opportunity to transform the approach to business planning for small businesses. Software was in a really different place; we’re talking about 1988.

Scott Harper: PCs where all the thing and, and Apple II Plus …

Pam Harper: Right, so just setting that stage − how did you determine that CEOs of small businesses were ready to take a computer-based approach to business planning?

Tim Berry: Actually, it took a long time for the technology to catch up with what I wanted to do, which was focused on the productizable part of the business plan. I was there doing that as a consultant to some small startups, some big computer companies − divisions and so on. I was doing business planning, which to me was always exciting because it was unifying concepts with numbers. It was to me like telling a story, and then taking the steps to make it come true, so I loved it.

I saw in the late ’80s that there were parts of it that could be productizable. And I always saw also that there are parts that will never be productizable − the thinking part of a business plan is not something that a computer will ever do. But the productizable financials, outlines, some illustrations and so on is. So there I was in the late ’80s, and the truth is that it took until the middle ’90s for this to really become a product company. In the interim − like 8 years − I had products; I was marketing products, but I was supporting business with my consulting, waiting for the technology to get to the point where you could actually build a real product to do a business plan.

Scott Harper: You had your consulting business and planning, but let’s face it, Tim − a business plan… back in the day it was something that gathered dust, and now it’s just electrons sitting somewhere on a hard drive… but It’s not a term that always gets a lot of respect and enthusiasm. So how was your approach to business planning − that you started in consulting and then moved into software − how is that different from the traditional business plan?

Tim Berry: Scott, the traditional business plan was never the right way to do it. As I got involved in this, I was working with real people in real companies doing real business planning − which is managing your business, optimizing the alignment between strategy and tactics and specific concrete details, and the forecast − the essential numbers − and always keeping that moving, alive, flexible, so that you never let a business plan go static. That’s more true than ever now, but it was also true back in the ’80s when I became immersed in business planning as a consultant, helping clients with it.

The myth was − and it’s a dangerous and really damaging myth − that somehow the plan is something that is this huge daunting task that you do, and it’s about as much fun as a Master’s Degree thesis. Then you heave a huge sigh-of-relief, saying “Thank God, I’m done with that,” and somehow the world has changed because you’ve completed a business plan − which you then put somewhere where you never have to see is again, because you don’t want to be reminded of what a difficult job it was. Life goes on, except that now when somebody asks “do you have a business plan,” you say “yes.”

Pam Harper: Oftentimes people talk about it, and they have a lot of misconceptions about the purpose of a business plan. A lot of times it’s something that you have to do to satisfy the bank, or if you’re thinking about a merger or acquisition deal, you have to have a business plan in place. It’s those “critical times,” as they will call it. We don’t agree with that. It sounds like you don’t agree with that either.

Tim Berry: Oh, I so don’t agree with that − I’m so with you. That’s completely a myth that’s damaging, because then people don’t get the benefit of what business planning really is, which is a way to get what you want from your business.

Pam Harper: Sounds amazing.

Tim Berry: It’s a way to do your business better, and it’s about what you want − whether that’s growth and spectacular profit, or whether that’s stability, whether that’s “let’s diversify into a new product.” It takes a simple method of aligning strategy and tactics and concrete specifics and numbers to really do it right. It so hurts me that people don’t get the benefit of that, because when you or I say “business plan,” we get this like Pavlovian dog-type thing. “Oh my god, I wouldn’t want that.”

It gets worse too, because − we were talking about this − there’s [the feeling that planning is] this horrible job that you do, and then you put it away because you never want to remember it. And then time passes, and trends come up, and now the most fashionable thing for the business owner/entrepreneur is to say, “No, I didn’t do a business plan because I am cool. I just shot from the hip.” It reminds me of when I go to my college reunions and everybody is talking about how they never studied − and I know damn well that those of us who got really good grades and did well − of course we were studying. But it’s not cool to say it later.

Business plans suffer from that too, and meanwhile business owners sadly don’t get the benefits. A business plan should be easy to do, quick and flexible, and you revise it every month − and that only takes a couple of hours, and you always have a business plan that’s fresh and that’s helping you move forward to get what you want from your business. It has to be easy and quick.

Pam Harper: It does have to be easy. Tim, we’re going to talk about that in the next section.

We’re going to take a quick break, and when we come back, we’ll talk more with Tim Berry, chairman and founder of Palo Alto Software, about his unique approach to business planning and how to use planning as a nimble and useful process for guiding your company’s everyday success. Stay with us.

Scott Harper: You’re listening to Growth Igniters Radio with Pam Harper and Scott Harper, brought to you by Business Advancement Incorporated − enabling companies to accelerate to their next level of innovation and growth for success. If you like what you’re hearing, spread the good word. Go to growthignitersradio.com, click on episode 16, and use the share links for Facebook, LinkedIn, and Twitter at the top right of the page, to tell your social media communities all about us. Use hashtag growth igniters. And do us a favor − rate and review this show on iTunes to extend our reach to all of the people who can benefit from this series.

Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper − that’s me − and Scott Harper. We’re talking with Tim Berry, chairman and founder of Palo Alto Software, about how he turned his passion for making business planning actually useful into a successful company that helps businesses all over the world keep at the top of their game.

Tim, how can people find your company?

Tim Berry: Oh thank you, Pam. It’s www.Bplans.com; it’s the best place to go first. Bplans is a collection. It’s − gosh − 20 years old now, but changing every day. It’s a collection of free information, blog post articles, et cetera, about how to start and run a business, particularly focusing on the business planning element, but not exclusively.

Pam Harper: That sounds like a very valuable resource.

Scott Harper: Tim, as we are talking in the last segment, you were saying how people have this draconian view of business plans. I’m reminded of an old Broadway play where one of the lines was, “facts are the enemy of truth.” Some people think that “planning is the enemy of agility,” but it doesn’t have to be. You’ve talked about something you call lean business planning. It’s very practical. It’s a useful tool for guiding business every day, not just episodically. I used something called lean business development practices in my corporate life, back before I joined Pam, to cut R&D costs and the process down to its essential elements. Does this minimalist philosophy translate to business planning in a similar way?

Tim Berry: Yes, that’s the intention, Scott. The idea of “lean” that started back in the ’30s and ’40s with lean manufacturing − mostly in Japan − is you take small steps, and you turn around and review results to redirect where you’re going and do course corrections. Constant small steps with review and revision. I’ve always thought − before I was aware that people were calling that “lean” − that this was the way I was recommending people do business planning 30 years ago. And it is more so now, with what I’m calling” the lean business plan.” Small steps; review, revise − and it’s always fresh, and it’s easy to do.

Scott Harper: Can you give us the elements of the concepts of lean business plan, and maybe tie it to example in Palo Alto Software? I assume you’re a product of your product, that you’ve used this approach in your own company.

Tim Berry: Yes. Scott. Let me explain first the relationship where you have the lean plan that’s always there, always fresh, and when you need in business to show a plan to outsiders, it’s only at that point that you dress it up, almost like dressing the teenager for the junior prom. The plan is the same, but you dress it up with an executive summary and market analysis if you need it, and so on so that now it can represent your company to outsiders appropriately. But that dressed-up document is not your plan. Your lean plan is constantly moving forward with a very short essential summary of strategy as bullet points, reminders. Tactics as bullet points and reminders.

In doing strategy and tactics, you look for the alignments, so that what you’re doing in tactics matches the strategy with priorities and focus. Then you have concrete specifics that include review schedule − presumably monthly − milestones, assumptions, performance metrics, task responsibilities and owners of those tasks. So that’s the third.

The fourth part of it is the essential business numbers. You can’t run a business right without managing a sales forecast and spending budget, and using plan versus actual on those. And of course, cash flow.

And that is a lean business plan: strategy, tactics, concrete specifics and essential business numbers, and nothing else − until you need it.

Pam Harper: It sounds like a great way to deal with the dilemma that I’ve seen so many times, where successful CEOs are running all over place. They have things in their head; they don’t want to take the time to write it out. But here, with the bullet points that you’re talking about, you can actually just put it down where somebody else can see it, because so often there are miscommunications. We all think that we’re saying the same thing, but we don’t always have that. Is that right? Is that really what we’re talking about?

Tim Berry: Absolutely. I build into lean business planning the idea that there is a monthly refresh meeting with the key people on the team. What we did in Palo Alto Software as we grew it, was on the third Thursday of every month gave us time to close the books first. We would bring in lunch and invite 6, 8, 9 people who were involved with it, and eat the lunch, talk about plan versus actual, review things coming up, review results of things that just happened, and [talk about] that crucial question that comes up over and over again that the plan can’t answer − only the people can answer. The crucial question is: do we stick to the plan because we are executing and it’s a good plan, or do we modify the plan because assumptions have changed? And you re-make that decision every month.

Pam Harper: That’s true. It’s funny, because I was just thinking about that as you were talking. So much of what we’ve talked about in our firm is the importance to keep adjusting. In fact, I mentioned it in my book, Preventing Strategic Gridlock, the importance to keep adjusting to the [changing] realities − and that seems like a fundamental piece of what you’re talking about; that you have that same philosophy incorporated into what you do.

Tim Berry: Yes, Pam, absolutely. Because one of my principles of lean business planning is that planning is to manage change. Change doesn’t void planning. Planning helps you manage change, because you’ve got this regular flowing plan, so your plan is connecting the dots. And when there’s sudden change − if you have a plan, you have essentially a dashboard where you can see the controls, and see what you have to change quickly. And if you didn’t have a plan, you’d have to reconnect all those dots.

The world has constant change, and planning helps to manage that. It’s as if you have not just your route in your navigation, not just your map, but you also have your GPS that’s real time refreshing on traffic and weather and such, so that you move and change your plan, knowing what the route was, but also knowing developments, so that knowing what it was makes it quicker and easier to change it, and keep it fresh, and keep it in the right direction.

Scott Harper: That sounds a lot how we tell our clients that in order to address the change, you have 2 essential things. You have to be able to detect what the change is. You have to have your feelers out as many perspectives as possible and then you have to be able to translate what’s changing into a response that’s meaningful and with your approach to planning you have that flexibility. Real quick before our next break, can you give an example in Palo Alto Software of how you actually had the plan and then you had to adjust it using your philosophy?

Tim Berry: It became very important with the recent; not that recent anymore, but the 2008 great recession our sales just tumbled in the fall of that year. August, September, October our sales went way down, way below the plan all at once, completely unforeseen the famous blocks won. In that moment because we had the plan, we were able to quickly adjust going straight to the plan.

If our revenues were that in the plan but it turned out to be this lower amount, let’s quickly look at our expenses and what part of them were tied into revenue because some are and went down automatically and what part of them weren’t and how do we adjust quickly so that we can keep our people and cut other spending so we don’t end up having to re-recruit people 6 months later because we weren’t reacting well to this sudden crisis.

Pam Harper: Planning done right the way you’re talking about it really is something that can take you into a much better place than anything you could ever envisioned without it, without winging it. I think that’s a wonderful place for us to stop for a moment. We’re going to take a quick break and when we come back, we’ll continue our conversation with Tim Berry, chairman and founder of Palo Alto Software, about how to use principles of lean business planning to accelerate success for your own company. Stay with us.

Scott Harper: You’re listening to Growth Igniters Radio, giving you new insights, inspiration and immediately useful ideas to take your company to its next level of growth and success. Imagine how much more you and your company could get with a live highly customized in-person Growth Igniters’ event as part of you next company off-site. Go to growthignitersradio.com, click contact us at the bottom of the page for more information. We’ll get back to you to explore the possibilities.

Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last 2 segments, we’ve been talking with Tim Berry, Chairman and Founder of Palo Alto Software, about how he had the vision to transform his passion into a highly successful business and about lean business planning and what a dynamic and useful tool it is for guiding and tracking business success.

Tim, can you let us know one more time how can people find out about your company?

Tim Berry: Bplans.com is the quickest and best; there are other websites.

Pam Harper: We will have a link to that in “resources” on this episode page.

Let’s get actionable now. What are 2 or 3 doable things that our listeners can start to do as soon as they’re done with this program that could guide their own passions into business success using lean business planning process?

Tim Berry: Pam, I’m going to recommend doing a lean business plan. It’s much easier than they think. Start focusing on strategy. You know your strategy − we all know our strategy − but focus, with a few reminders about what’s important, because as business owners, we all want to do everything. Sometimes you have to do the most important thing, which isn’t necessarily the most urgent thing. Write it down: key target markets, key business offerings, what’s different about your company, and that combined is strategy.

Pam Harper: It doesn’t really have to be mysterious is, what you’re saying.

Tim Berry: I can’t resist. The Palo Alto Software product, “Live Plan,” has a strategy pitch [maker]. It’s a single page; it does exactly that: [it presents] market, business offering, key milestones − that’s really your summary in a single page.

Then you do tactics; tactics are what we all know as business owners. There’s sales and marketing tactics like pricing channels, marketing, social media, all of those are tactics. When I say do them, don’t describe them in daunting text for outsiders. Just remind yourself and your team. Tactics: what is our pricing, how are we relative to others, who’s our competition, what are we doing about it. Products: do we have new launches coming. All of those are simple reminders, so it’s easy to do.

Then focus it down to milestone, so you can track it and performance metrics so you can track it − stuff that you can actually manage and you can see the difference, and then your essential business numbers and, ultimately then you’re started with a lean business plan towards refocusing your business and being able to start reviewing progress towards goals again like I think we all did, but we get diffused. We’re trying to do everything. Done right, the lean planning process is just a couple of hours a month, but it’s a time to drop a little bit away from the whole firefighting and so on, and look at where you’re going and bring the long term into the perspective of short term and immediate and refocus that alignment.

Scott Harper: Very interesting, Tim and very useful. One of the things that we sometimes work with folks on is an issue that perhaps you’ve seen. It can be that people at different levels of the company − or even within an executive team if it’s a mid-sized company or bigger − can have different ideas about what the strategy is, or even what the objectives are. Or if they know what the objectives are, difference in how to do it. It sounds having a planning process like this, where it’s actually getting written down − it’s not in my head or in your head − can really help people focus and gain an idea of commonalities. If there’s debate, the debate can come out into the open; it’s not hiding in the corners. Have you seen this?

Tim Berry: Absolutely. And Scott, there’s a built-in process there that’s very powerful from the point of view of the business owner, who is ultimately responsible; it’s not a democracy. The process that works with lean business planning is that debate that you mentioned, this month, will then be followed next month and the month after with a review of results. The advocate during the debate of one point of view is then through a process − it’s not like, “Oh my god, face the music” − it’s just the normal process. Let’s look at the results from the last month, and from the month before, and everybody in that meeting is going to remember who was debating what at what time.

It becomes an automatic, not-off-putting process to focus on here’s what we thought, here’s what happened. And in the background, here’s what you said you were going to do − what did you do; here’s what you said the results were going to be − what were the results. Over time, the process and the actual tracked results gain prominence and it becomes less a matter of politics and opinions and who is good in an argument, and more a matter of how is the business progressing. Everybody wins if that’s done right.

Scott Harper: Let the facts drive what’s actually happening − makes sense.

Tim Berry: Yes, and you have that continuity. In every meeting, the big question is, was it poor execution or did the assumptions change when things go bad and was it great execution or did the assumptions change when things go good. That question, repeated in different contexts, generates ongoing continuity decisions and results.

Pam Harper: What I hear you saying, which we 100 percent agree with, is that continuity and having the communication and making the time for it − it’s not just a nice activity anymore, but it’s actually something that is vital if anybody is going to actually transform their passion into a really successful business as you have.

Is there a last thought you’d like to leave us with in terms of transforming a passion into a highly successful business?

Tim Berry: Yes. Add to that value. Because one problem I have with transforming passion into business is the temptation to lose track of the value that you offer that other people will buy. It’s not just what I want to do; it’s what in the various things that I like to do that offers somebody something that they will pay for − that makes their life better and that they will buy. Passion tempered by value is to me very important whenever we talk about passion. Give value. Think about what people want and need and know they need.

Pam Harper: That applies to every sized business, I will tell you.

Tim, thank you again for being our guest today. If you out there have questions related to today’s episode or any episode, go to “open the conversation with us” at the bottom of the episode 16 page. To find out who our guest will be next Wednesday, go to growthignitersradio.com and look in the sidebar for a schedule of upcoming episodes over the next few weeks.

Scott Harper: Thanks for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To check out resources related to today’s conversation, share on social media and subscribe to the podcast series on iTunes or Stitcher. Go to www.growthignitersradio.com and select episode 16.

Pam Harper: Until next time. This is Pam Harper …

Scott Harper: … and Scott Harper …

Pam Harper: … wishing you continued success, and leaving you with this question to discuss with your team:

Scott Harper: What can we start doing differently to bring business planning to life in our company − today?