There is nothing a company wants more than to cultivate a love affair with customers. Now what’s wrong with that sentence? Well nothing really, besides the fact that its usually a LIE, and a pretty brazen one at that.

Sadly, most corporations only preach this without actually practicing it. They prefer to behave like detached creatures that loathe closeness and recoil at the slightest twinge of customer affection. They prefer “customer adoption” and “customer retention” to customer affection. They shrink back from the warm embrace of their most ardent fans.

Case in point, whenever customers become so enamored with some product or service that they are willing to contribute to its well being and development by devoting copious amounts of their own free time to improving upon it, they get sued. Think Scrabulous here. Two brothers who are fans of the classic Scrabble board game create a Facebook application based on it. It becomes popular, really popular. So popular in fact that Hasbro & Mattel, the owners of the rights to the game decided to take legal action against brothers who are now pulling in about $25 000 a month on something they did on a whim based on their enjoyment of the game. What they intuitively recognized as fans of the game of Scrabble is that playing the game is a social act. It is best enjoyed when playing against family and friends and even better when you have a wide variety of opponents to challenge. What better place to connect to friends and family and huge number of possible opponents than a social network? Furthermore, they realized that it is not necessarily possible to finish a game of Scrabble in one sitting so they designed it in such a way that games could be played over long periods of time at the leisure of the players.

This really illustrates the heightened insight of the most devout customers. I mean who is really in better position to understand the customer psyche? Is it the guys sitting in the “Ivory Tower Boardroom” trying to figure out what makes people buy or the customers themselves, the people actually acting out the consumption behaviors; the individuals who feel the itch created by an unfulfilled need and spend countless hours seeking out a solution.

Connecting with customers is hard, I get that; but companies should not fool themselves either by thinking that going the easy way of dealing with “market segments”, “psycho-graphic profiles”, targeting customers, and “cardboard cutouts” is equivalent to engaging and connecting with customers . The consequence of this is that consumption becomes abstracted from real human experience, then categorized and finally objectified. The customer becomes a mere data-point in a maze of interconnected databases.

All this misses the fundamental idea that the best customers are also the best innovators because they are the most acutely attuned to the needs that are fulfilled by the various products and services they buy. So why don’t companies make it easy on themselves and simply let the customers tell them what they want? When I say this I don’t mean focus groups either.

I mean co-creation, genuine partnerships between those who consume and those work to produce such that when consumers come up with innovations they are embraced instead of slapped down with cease-and desist letters. They are given the tools, access to resources and the ability to be a part of the process that creates the things that make our lives easier, better and more enjoyable. Think of what might have happened for instance, if RIAA had worked with Napster to create a digital distribution platform for the music industry. Would there still have been an Itunes?

Once you objectify your customers, you’ve completely lost touch and it’s only a matter of time before they find someone who makes them feel like they matter. It’s high time companies learned to embrace their customers and profit from Customer Affection.

It’s such a meaningless exercise in terms of the depth bankers and investors want from these plans. There’s no crystal ball to assure the future, but they want you to make it look that way. Not to say that there is no value to a business plan, because that would be overstating the case. A business plan is a good exercise in strategic planning that is useful in bringing important considerations to the forefront, which might otherwise become nasty future surprises.

However, it’s definitely high time that we had second-generation business plans, business plan 2.0 if you will. Above all, the most important thing is the conceptual framework and the strategy that results from that concept and whether a real or perceived need in the market is being addressed. People generally dislike risk and look to the business plan to assuage their fears but the reality is that risk is where the money is. If something were obvious, everybody would be doing it and obviously that doesn’t make anyone rich.

Really, the single biggest thing is the concept. Does the concept get it right, does it resonate with a real need out there in the marketplace? The rest is details. There is no knowing when something will reach a tipping point (mass acceptance). Doing a 5-year plan, which ispretty standard strikes me as rather ludicrous. How exactly is one supposed to figure out when they will reach a tipping point? Should a magic 8-ball be standard issue for all entrepreneurs?

For your traditional brick and mortar, capital/resource intensive businesses I can see how 5 year projections could be a reasonable request, but new and engaging concepts that are pushing a blue ocean strategy (creating entirely new markets) rely on tipping points. Five-year projections are entirely worthless in such a case. What would a 5-year projection for Google or for Crocs have looked like? I’m sure it would have look patently ridiculous today. The whole concept of some kind of master plan conceived in the vacuum of one’s own mind without any way to account for what’s going to happen strikes me as something my local tarot card reader would try to sell me. Realistically, anything other than an emergent strategy is entirely nonsensical.

Fundamentally, it seems no one seems to want to come to terms with the fact that they are giving you their money, which they may or may not get back. That’s why I really like the way Paul Graham set things up with YCombinator. He just looks for bright and motivated people with a good idea, puts them into a very nurturing environment and throws some money at them. No business plans, no projections and no prognostication.

This model recognizes the fact that an entrepreneurial venture is a learning process which requires flexibility and adaptability. Whether you’re talking about launching a hot new web web concept or a revolutionary consumer product, there’s just no telling when the tipping point will come, none at all. So don’t even try and answer that question. Otherwise, you’ll just be lying to and that’s no way to begin a relationship.

I mean if it’s a baseball bat company then it’s a little easier, it’s a mature industry with stable demand patterns and well-entrenched competitors. Everything can be predicated on a purely microeconomic model. Given such and such a market size, at x price, we should be able to sell y number of bats. But who wants to start a baseball bat company? That’s about as exciting as the newest version of Microsoft Word. When is a baseball bat company going to be the next Heelys? Even if this new baseball company were to take off, China will eat your lunch.

There need to be new classifications for quantifying the  risk associated with different types of ventures; starting a baseball bat company.. .. Its a different kind of risk. There needs to be a new formula because the old way just doesn’t account for the types of businesses which are emerging, and how quickly they are reaching maturity and how fast the market is changes today. For entrants into mature industries there is a lot of data to manipulate and more certainty related to market factors. Not so with new products or concepts that are in effect creating new markets.

You’re left to go on perceived need (or want), and the possibility of achieving mass acceptance and reaching a tipping point for the concept/product.

It’s not as simple as stating that mavens will propagate the product, connectors will popularize and share with their friends within 3 months, salesmen will then evangelize it…. and we’ll be cash flow positive within 9 months. It doesn’t work like that. Sometimes what is called for is not so much a business plan but a concept plan. If you really must do a business plan then I would recommend reading Guy Kawasaki’s article on the Zen of Business Plans, but really the key is to just get a good concept and run with it.

So having said all that, I’ll be getting back to putting the finishing touches to my business plan, because quite frankly, banks and investors won’t shower me with money without  doing the ritual business plan dance.