Discovery-driven planning is a planning technique first introduced in a ''
Harvard Business Review
''Harvard Business Review'' (''HBR'') is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. ''HBR'' is published six times a year and is headquartered in Brighton, Massach ...
'' article by
Rita Gunther McGrath
Rita Gunther McGrath (born July 28, 1959 in New Haven, Connecticut) is an American strategic management scholar and professor of management at the Columbia Business School. She is known for her work on strategy, innovation, and entrepreneurship, in ...
and Ian C. MacMillan in 1995 and subsequently referenced in a number of books and articles. 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. 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
Discovery-driven planning has been widely used in entrepreneurship curricula and has recently been cited by
Steve Blank
Steve Blank (born 1953) is an American entrepreneur, educator, author and speaker based in Pescadero, California.
Blank created the customer development method that launched the lean startup movement, a methodology that recognized that startups ...
as a foundational idea in the
lean startup
Lean startup is a methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-dri ...
methodology
Five disciplines
A discovery-driven plan incorporates five disciplines or plan elements:
# Definition of success for the plan or initiative, including a "reverse" income statement
# Benchmarking against market and competitive parameters
# Specification of operational requirements
# Documentation of assumptions
# Specification of key checkpoints
Using discovery-driven planning, it is often possible to iterate the ideas in a plan, encouraging experimentation at lowest possible cost. The methodology is consistent with the application of real options reasoning to business planning, in which ventures are considered "real" options. A real option is a small investment made today which buys the right, but not the obligation to make further investments.
[Dixit, A. K. & Pindyck, R. S. 1994. ''Investment under uncertainty''. Princeton: ]Princeton University Press
Princeton University Press is an independent publisher with close connections to Princeton University. Its mission is to disseminate scholarship within academia and society at large.
The press was founded by Whitney Darrow, with the financial su ...
.
See also
*
Assumption-based planning
* ''
The Innovator's Dilemma
''The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail'', first published in 1997, is the best-known work of the Harvard professor and businessman Clayton Christensen. It expands on the concept of disruptive technologies, a te ...
''
External links
Web site with additional reference material
References
{{Reflist
Business planning
Strategic management