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Discovery Driven Planning – A Different & Unconventional Plan

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Discovery-Driven Planning (DDP) is a planning technique that was first published in 1995, in a Harvard Business Review article written by Rita Gunther McGrath and Ian C. MacMillan.

Both McGrath, a professor at Columbia Business School, and MacMillan, of the University of Pennsylvania’s Business School, noticed that the newer, less-predictable ventures of that time required a different planning technique, one which could be applied to more unconventional situations.

In their quest to discover a better way to create innovation, they developed this unconventional type of planning “one better suited to high-potential projects whose prospects are uncertain at the start.”

Their technique “systematically uncovers, tests, and (if necessary) revises the assumptions behind a venture’s plan”, and those lucky enough to be its main beneficiaries are the managers.

All managers face, at one time or another, situations of uncertainty and complexity, and these unconventional times ask for unconventional means. A conventional world is a predictable world, but when uncertainty comes into play that predictability is turned on its head.

Conventional planning preaches linearity, safety and discipline, not taking into account the fact that life is uncertain and that people have to realize that it is OK if things don’t always work out the way they want them to, and that some types of planning can also help you “manage with discipline even in light of uncertainty.”

This is exactly what discovery driven planning attempts to achieve, its main premise being constructed upon the idea that companies should be able to plan ahead, so that their expenses are minimized, while their learning is maximized.

By choosing a discovery-oriented planning process, companies will no longer focus on whether managers meet projections, but on whether they manage expenditures with discipline, whether they properly analyze the assumptions they make, and whether they take into account all the ways in which they can create new knowledge.

In their article, McGrath and MacMillan explained that the discovery driven planning offers a safer way to lead a product during unknown and uncertain times, so that companies can “learn as much as possible as cheaply as possible while pursuing new ventures.”

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This unconventional planning helps business organizations avoid the trap of treating assumptions as if they are facts, through the implementation of five disciplines:

  1. Framing – from the start, the DDP demands a specification of frame. This implies specifying what a well-rounded business should look like at its maturity and revealing to everyone these achievable expectations.
  1. Benchmarking – as managers formulate plans to accomplish great things, it is very easy for these plans to deviate from reality and to receive a tinge of inaccuracy. This second discipline makes sure that one understands “what the benchmark parameters of a project must be to succeed competitively, and what the scope of the market must be to generate the performance that will make it worthwhile.”
  1. Defining operational requirements – refers to specifications of organizational deliverables. These specifications lead to implementable actions. While a conventional plan looks at today’s actions and makes assumptions that project from them, the DDP works “backward from what you have to deliver to get the results that will make it worthwhile”.
  1. Documenting assumptions – the biggest difference between DDPs and conventional plans is that in DDPs the attempt is to transform the maximum number of assumptions into knowledge, without crossing the threshold of the minimum cost.
  1. Planning Key Milestones – usually one has enough knowledge to plan in great detail the next major milestone, but not beyond it. Through milestone planning one can create a detailed plan to test one’s assumptions “at the key foreseeable milestones in the project.”

This discovery-driven approach to planning has proven to be not only realistic, but also motivating. Why motivating? Because it offers people the opportunity to learn, without making them feel bound to justify the differences between plan/assumption and reality.

The success of the discovery driven plan primarily lies with its belief that being wrong is not an admission of failure. The discovery driven approach attempts to consciously identify errors; validate critical assumptions from the get-go, before spending too much on the wrong venture; and to learn from every mistake that gets made.

Ultimately, the one thing that people have to keep in mind is that DDP is a methodology for planning innovation, a new and more ingenious way of decoding and reconstructing today’s unconventional business world.

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