Discovery Driven Planning: Different from conventional planning
Discovery Driven Planning was developed because years of research showed that companies using conventional planning methods to invest in new opportunities were systematically failing. When we researched the reasons, we found that conventional planning leads to systematically poor decision-making in a new venture, or other uncertain situation. With a conventional plan, projections are made based on whatever is known at the time, and the metric for the worth of the plan is how close actual outcomes came to projections. When you think about it, this is crazy, because when you have very little knowledge about a situation, the primary objective should be to learn. Instead, conventional plans lead people to blind themselves to emerging realities, desperately trying to make a flawed plan happen as they had anticipated.
The fundamental thing to remember when you are venturing into uncertain territory is that your ratio of assumptions that you have to make to knowledge that you have is quite high. Human beings are terrible processors of assumptions! First, we tend to forget them. Indeed, research conducted by Russ Ackoff, who was at the University of Pennsylvania at the time, found that in an average company the length of time required to forget half the assumptions underlying an important decision was about 6 weeks.
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- Posted Rita McGrath on February 06, 2008
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The Despair of Entrepreneurship Professors are perennially popular but doomed business ideas
One of the most dreaded aspects of being an entrepreneurship professor are the hundreds of times that students will come up with the same - bad - business concept when tasked with building businesses of their own. A perennial favorite is dog-walking services. Comes up every semester! Now, I don’t have a problem with dogs or dog walkers, just with a Columbia MBA deciding to put the degree to use in that occupation - doesn’t make much sense.
Of course, every so often a bright idea comes along that defies the common wisdom of the entrepreneurship professor. Just such an inspiration appears to have visited our colleagues over at the Kellogg School, as I read the following story from Business Week.
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- Posted Rita McGrath on January 30, 2008
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Discovery Driven Planning alive and well and living on Wikipedia
Well, it’s been said that you can find out a lot about just about anything on Wikipedia (although you should always double-check what you’ve found!). It was gratifying therefore to see that Discovery Driven Planning has made it into a Wikipedia article (together with some direct quotes from our original Harvard Business Review article). The heading for the piece is assumption based planning and it covers a couple of other useful techniques for planning under uncertainty.
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- Posted Rita McGrath on January 10, 2008
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Is your company unintentionally creating executive blind spots?
One of the nice things about being a very senior executive with a multinational company is that the job comes with perks. Sometimes, however, these perks can have the unintended effect of isolating key decision-makers from the very information they need most.
Example: For decades, the top executives at America’s leading automobile manufacturers always drove the latest models—washed, maintained, and looked after by in-company employees. How on earth could they possibly know about quality, maintenance, service or other issues faced by ordinary customers when they never encounter them?
Example: One of our telecommunications manufacturing clients used to routinely give the latest handsets and toys to its key executives. As a result, these folks never had to go into a phone store, never had to deal with inefficient or even hostile distributors, and never had to compare their offerings with competing products. It was only when the company radically changed this policy and forced its folks to go directly through the same channels customers had to use that they realized that their once-unassailable advantages with customers were starting to erode.
Example: A mobile telecommunications operator routinely had its operations staff make sure that the cellular signals in the headquarters office and even key residential areas inhabited by senior executives were strong, reliable and consistent. Imagine the surprise these executives felt when friends and relations expressed their infuriation with spotty coverage, dropped calls or weak signals—after all, this never happened to them!
The message? Sometimes, buffering senior people from exposure to ordinary experiences unintentionally gives them a false sense of security with respect to the quality, reliability or convenience of your offerings. This in turn can breed dangerous complacency and a lack of urgency with respect to underlying problems. In best-practice companies, in contrast, there are mechanisms to make sure that direct contact with customers is a part of every executives’ normal job. At Amazon.com, for instance, executives routinely spend time on the phones with customers. At Ikea, a few times a year executives and line-level staff work together. At Continental and Southwest airlines, it would not be unusual for executives to spend time at the ticket counter or handling baggage. We’ve found that there is no substitute for first-hand experience when it comes to creating the impetus for improvement.
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- Posted Rita McGrath on November 28, 2007
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