The article provides examples from Air Products & Chemicals, Innosight and other firms who have been applying the technique. 

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,

 

For those not familiar with executive programs, these are typically short, non-degree granting programs that can be a major turning point in your professional life.  They are great for content, for networking and for gaining time to think, that most rare of commodities. 

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.

• 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.

Well that thinking is alive and well, and reflected in a neat short post by George Colony, Forrester Research's CEO.  In it, he shows how Apple's obsession with design beats out Nokia's engineering focus (much to my chagrin, as Nokia is one of my favorite companies and a dear client).  Well worth some reflection. 

My bet is that it is a move that simply buys Amazon what I call "positioning" options -- something to have in your arsenal in case the main strategies go off the rails and that keeps you from getting locked out of the game.  Positioning options are part of a larger strategy of managing an entire portfolio of opportunities.  When the core is under threat, or there is significant uncertainty in the face of demonstrated demand, positioning options can help a company to keep its options open.  In addition, by investing in some hardware savvy, Amazon will be in a position to slow down or de-fang competitors who would have an open field in the hardware space otherwise.  Perhaps the Amazon play is to create an entirely new platform for shopping.  I could see, for example, transporting the 'one click' feature to a dedicated device which would make interacting with the Internet for shopping infinitely easier.  Consider, for instance, people who can't relate to a mouse and don't like to click around.  They might be intrigued.

It reminds me a little of the time that Motorola allied with Apple to introduce the now-little-remembered "Rockr" phone.  I said at the time (circa 2005) that I thought it was simply a feint - a product to stave off rapid development of the phone/music market which bought Apple time to introduce its own phone.  Sure enough, come 2007 Apple introduced the iPhone and the rest is history.