An application of Discovery Driven Planning by one of Mac’s students

Mac teaches Discovery Driven Planning in his entrepreneurship classes at Wharton, and received the following story about how one of his students applied DDP:

Mac,

I took your MGMT 802 class earlier this year.  I'm working for a start-up in D.C. this summer, and I wanted to share with you how incredibly helpful the DDP process has been.

The founders are in the process of raising money and had built a very rough, top-down financial model to show to the VCs.  As you can imagine, it got ripped to shreds, and the founders couldn't explain how changing certain variables affected the financial results.  I showed up shortly after and built what I think is a pretty in-depth, bottom-up DDP model for just about everything.  The founders were blown away when they saw it - especially after seeing the Monte Carlo/sensitivity analysis on the main input variables.  I also introduced them to the assumption/milestone planning concept and they loved it.   As a result, we're now in the process of formulating ways to test every single assumption in our DDP.  The VCs won't know what hit them.

So, in brief, thank you so much for teaching such a great concept.  It is, by far, the most worthwhile and practical tool/skill I have learned so far at Wharton.  And learning about DDP is exactly why I chose to go to business school (specifically Wharton) in the first place.

Thanks again and take care,

 

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• Posted Rita McGrath on August 24, 2010
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Fascinating application of discovery driven planning to social ventures

My dear colleagues Jim Thompson and Ian MacMillan have just published a fascinating description of their work on social entrepreneurship, entitled "Making Social Ventures Work".  It's a neat usage of discovery driven planning in an entrepreneurial setting.  Here's how it starts:

 

In recent years, we’ve all experienced considerable volatility—financial breakdowns, natural disasters, wars, and other disruptions. It’s clear we need new approaches to the world’s toughest economic challenges and social problems. Entrepreneurs can play a central role in finding the solutions, driving economic growth (building infrastructure, developing local talent, infusing struggling regions with investment capital) and helping hundreds of millions of people worldwide. If successful, socially minded entrepreneurial efforts create a virtuous cycle: The greater the profits these ventures make, the greater the incentives for them to grow their businesses. And the more societal problems they help alleviate, the more people who can join the mainstream of global consumers.

The failure rates for new companies and markets, however, are high. That is true anywhere in the world, including emerging economies. The management challenges associated with producing and marketing goods and services at the base of the economic pyramid include imperfect markets, uncertain prices and costs, nonexistent or unreliable infrastructure, weak or totally absent formal governance, untested applications of technology, and unpredictable competitive responses. Given this daunting uncertainty, entrepreneurs need a framework for “unfolding” success from a perceived or an emergent opportunity.

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• Posted Rita McGrath on August 18, 2010
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Sagantia Innovation Boot Camp - Kick Starting Innovation

Sagantia is a UK based technology and product development company that I've been studying as part of the research for a new project.  Among the many interesting things they do is run an innovation boot camp (click on the link to download a case description), which has many characteristics in common with other innovation sessions that I have organized myself.  It's got a lot of similarities to the driving organic growth and innovation program that Bob Cooper led for some time at DuPont and for other companies.  Among the salient features:

• Rock-ribbed senior level commitment from the top to provide resources once an idea is endorsed
• Time to focus on ideas that could lead to possible business, rather than shoring up existing businesses
• Facilitation by experts with a process architecture (in the Sagantia case, it's a three week intensive process; in the Market Driven Growth case it involves several iterations over a few months)
• Input from external experts and customers as well as insiders
• Clear decision points and clear decision criteria
• Generation of lots of ideas to get to a few that might be worthwhile
• A process of true engagement, not just an 'event' or lip service

We've all been part of those horrible 'no idea is a bad idea' brainstorming sessions where everyone has a good time and nothing ever happens.  Case studies such as the Sagantia example can help us from getting off on the wrong track.

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• Posted Rita McGrath on August 13, 2010
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Discovery Driven Growth - Mistakes Companies Make

CIO Magazine's recent blog post features a summary of some of the principles of Discovery Driven Growth, and links the idea to concepts of IT agility.  Wouldn't it be great if CIO's and CFO's could embrace discovery-driven principles?

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• Posted Rita McGrath on August 03, 2010
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BareBones NPV calculator file in Excel 2003 format

Many of you have expressed an interest in using the “BareBones” NPV calculator that we describe in the book.  We’re in the process of getting this tool loaded on the Discovery Driven Growth web site, but in the meantime, you can download the file from here by clicking on the filename below.  This is the version that sets up a spreadsheet which you can simulate by using Crystal Ball software. 

BareBones NPV Calculator file

Let me know if you have any problems with this download. 

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• Posted Rita McGrath on January 04, 2010
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