Discovery-Driven Planning Method
A Discovery-Driven Planning Method is a venture planning method that ameliorates project risk by testing key assumptions.
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- Counter-Example(s):
- See: Harvard Business Review, Rita Gunther McGrath, Harvard Business Publishing, Harvard Business School Press, Journal of Marketing, Steve Blank, Lean Startup.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/discovery-driven_planning Retrieved:2015-7-19.
- Discovery-driven planning is a planning technique first introduced in a Harvard Business Review article by Rita Gunther McGrath and Ian C. MacMillan in 1995 [1] and subsequently referenced in a number of books and articles. [2] [3] Its main thesis is that when one is operating in arenas with significant amounts of uncertainty, that a different approach applies than is normally used in conventional planning. In conventional planning, the correctness of a plan is generally judged by how close outcomes come to projections. In discovery-driven planning, it is assumed that plan parameters may change as new information is revealed. With conventional planning, it is considered appropriate to fund the entire project, as the expectation is that one can predict a positive outcome. In discovery-driven planning, funds are released based on the accomplishment of key milestones or checkpoints, at which point additional funding can be made available predicated on reasonable expectations for future success. [4] Conventional project management tools, such as stage-gate models or the use of financial tools to assess innovation, have been found to be flawed in that they are not well suited for the uncertainty of innovation-oriented projects [5] [6] Discovery-driven planning has been widely used in entrepreneurship curricula and has recently been cited by Steve Blank as a foundational idea in the lean startup methodology [7]
- ↑ McGrath, R. G. & MacMillan, I. C. 1995. Discovery driven planning. Harvard Business Review, 73(4): 44–54.
- ↑ McGrath, R. G. & MacMillan, I. C. 2009. Discovery driven growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Publishing.
- ↑ Christensen, C. M. 1997. The innovator's dilemma: When new technologies cause great firms to fail. Boston: Harvard Business School Press.
- ↑ Block, Z. & MacMillan, I. C. 1985. Milestones for successful venture planning. Harvard Business Review, 63(5): 84–90.
- ↑ Rajesh, S. & Zafar, I. 2008. Stage-gate controls, learning failure, and adverse effect on novel new products. Journal of Marketing, 72(1): 118.
- ↑ Christensen, C., Kaufman, S., & Shih, W. 2008. Innovation killers: how financial tools destroy your capacity to do new things. Harvard Business Review, 86(1): 98–105, 137.
- ↑ Blank, S. 2013. Why the lean start-up changes everything. Harvard Business Review, 91(5): 63–72.
2012
- (Christensen et al., 2012) ⇒ Clayton M. Christensen, J. Allworth, and K. Dillon. (2012). “How Will You Measure Your Life?." HarperCollins. ISBN:9780062102423
- QUOTE: … There's a tool that can help you test whether your deliberate strategy or a new emergent one will be a fruitful approach. It forces you to articulate what assumptions need to be proved true in order for the strategy to succeed. The academics who created this process, Ian MacMillan and Rita McCrath, called it “discovery-driven planning," but it might be easier to think about it as “What has to prove true for this to work?”
As simple as it sounds, companies seldom think about whether to purse new opportunities by asking this question. Instead, they often unintentionally stack the deck for failure from the beginning. They make decision to go ahead with an investment based on what initial projections suggest will happen, but then they never actually test whether those initial projection are accurate. So, they can find themselves for down the line, adjusting projections and assumptions to fit what is actually happening, rather than making and testing thoughtful choices before they get too far in. p.53
- QUOTE: … There's a tool that can help you test whether your deliberate strategy or a new emergent one will be a fruitful approach. It forces you to articulate what assumptions need to be proved true in order for the strategy to succeed. The academics who created this process, Ian MacMillan and Rita McCrath, called it “discovery-driven planning," but it might be easier to think about it as “What has to prove true for this to work?”
1995
- https://hbr.org/1995/07/discovery-driven-planning
- QUOTE: Business lore is full of stories about smart companies that incur huge losses when they enter unknown territory — new alliances, new markets, new products, new technologies. The Walt Disney Company’s 1992 foray into Europe with its theme park had accumulated losses of more than $1 billion by 1994. Zap-mail, a fax product, cost Federal Express Corporation $600 million before it was dropped. Polaroid lost $200 million when it ventured into instant movies. Why do such efforts often defeat even experienced, smart companies? One obvious answer is that strategic ventures are inherently risky: The probability of failure simply comes with the territory. But many failures could be prevented or their cost contained if senior managers approached innovative ventures with the right planning and control tools.
Discovery-driven planning is a practical tool that acknowledges the difference between planning for a new venture and planning for a more conventional line of business. Conventional planning operates on the premise that managers can extrapolate future results from a well-understood and predictable platform of past experience. One expects predictions to be accurate because they are based on solid knowledge rather than on assumptions. In platform-based planning, a venture’s deviations from plan are a bad thing.
- QUOTE: Business lore is full of stories about smart companies that incur huge losses when they enter unknown territory — new alliances, new markets, new products, new technologies. The Walt Disney Company’s 1992 foray into Europe with its theme park had accumulated losses of more than $1 billion by 1994. Zap-mail, a fax product, cost Federal Express Corporation $600 million before it was dropped. Polaroid lost $200 million when it ventured into instant movies. Why do such efforts often defeat even experienced, smart companies? One obvious answer is that strategic ventures are inherently risky: The probability of failure simply comes with the territory. But many failures could be prevented or their cost contained if senior managers approached innovative ventures with the right planning and control tools.