Discovery-Driven Planning

Disrupt Yourself: Putting the Power of Disruptive Innovation to Work by Whitney Johnson is a book about personal development. We are living in an era of disruption. Are you using disruptive innovation to your competitive advantage? Below is an excerpt from the book.

Disrupt Yourself.jpgDiscovery-Driven Planning

With discovery-driven planning, you begin with the premise that little is known and much is assumed. That is not to say that you don’t have a plan: you do. lt’s just a different kind of plan. Instead of declaring, “These are the results that I expect,” you ask, “What has to prove true for my plan to work?” According to McGrath and MacMillan, this type of plan includes four steps:

  1. Create a reverse income statement. If you are launching a new product, rather than forecasting how much revenue you will generate and what your costs will be and then solving for the profit, you build the income statement in reverse. You decide on your required income, and then solve for how much revenue will deliver those profits, and how much cost can be allowed. With personal disruption, the question you ask is: To achieve my baseline level of happiness, what do I need to accomplish and what am I willing to give up in order to make this happen?
  2. Calculate the cost. With this step, you estimate what the cost will be to produce, sell, and deliver the product or service to a customer. Combined, these are the allowable costs that permit the business model to hold together. As an individual, the question is what kind of time, expertise, money, and buy-in will you need to make your plan operational? Is the personal cost of being on this curve one you can afford and want to incur?
  3. Compile an assumption checklist. This checklist allows you to flag and discuss each assumption as the venture unfolds. For example, what assumptions are you making about how much you will sell and at what price? How many sales calls will you need to make to get a single order? How many salespeople will you need to make that many calls, etc? As an individual, if you decide you want to earn $100,000 a year consulting, and last year you earned $100,000 consulting, then conventional planning works. If you’ve never consulted, then you’d want to think about the assumptions behind your ability to earn that $100,000. How many clients will you need? How many hours per day will you need to bill, and at what price point? Do you enjoy the work, and will it be emotionally satisfying?
  4. Prepare a milestone chart. This chart specifies which assumptions need to be tested and what you are going to learn by each milestone. In discovery- driven planning, learning is the essential unit of progress, so a course correction isn’t equivalent to failure, as it would be in conventional planning. Rather, it’s an opportunity to recalibrate so you can move more effectively up the curve.

 

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