Discovery-driven planning
Method for business growth
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Discovery-driven planning is a planning technique first introduced in a Harvard Business Review article by Rita Gunther McGrath and Ian C. MacMillan in 1995[1].
Gunther and Macmillan argue that it is unhelpful to judge a plan's correctness by how close outcomes come to projections when operating in arenas with significant amounts of uncertainty.
Discovery-driven planning assumes that plan parameters may change as new information is revealed. As opposed to conventional planning where projects are funded upfront, discovery-driven planning releases funding based on the accomplishment of key milestones. Additional funding is made available predicated on reasonable expectations for future success.[2]
Gunther and Macmillan also argue that conventional project management tools such as stage-gate models are not well suited for the uncertainty of innovation-oriented projects.[3][4]
Discovery-driven planning has been widely used in entrepreneurship curricula and has been cited by Steve Blank as a foundational idea in the lean startup methodology.[5] While the Lean Startup Method is perhaps more suited for start-up ventures, discovery-driven planning may be better suited to potential innovation in larger corporations, where each innovation must achieve significant profits to be material to the corporation's growth.[6]
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.[7][8][9]