1.
Begin with the end in mind
Exploring the viability of
a new venture, product or service
A guide to Discovery Driven Planning
for startups, corporates and
everything in-between

2.
So you want to
launch a new venture,
product or service?
Allow us to ask you a question or four...
Do you know how viable your new venture is?
Do you really know? Is this based on fact or fiction?
Have you examined and tested your plans?
What about before you’ve even started?

3.
Somehow we
need to move
from...
Things I don’t know
Things I know
(and have proven
to be correct)
Things I
don’t
know
Things
I know
to

4.
Somehow we
need to move
from...
Things I don’t know
Things I know
(and have proven
to be correct)
Things I
don’t
know
Things
I know
to
...without investing thousands,
betting your house or
risking failing big!

5.
are easyIdeas
‣ The MBA and Executive Education
students of Tim Kastelle,
UQ Business School, have analysed
the innovation capability of more
than 300 organisations: less than 4%
—only 10 or so firms—were
idea poor.
Sources: Kastelle, T. 2013. Why your innovation contest won’t work. Harvard
Business Review [online] https://hbr.org/2013/11/why-your-innovation-contest-
wont-work/ (accessed 10 April 2015); Startup Britain, 2015. New figures reveal
record breaking year for startups [online] http://www.startupbritain.org/what-s-
new/?option=com_sub&view=onenews&id=14 (accessed 10 April 2015); Startup
Britain, 2017. Startup Tracker [online] http://startupbritain.org/startup-tracker/
(accessed 23 October 2017).
In 2016, 657,790 businesses were
registered with Companies House.
i

6.
Even in established businesses, research shows that
between one third and half of all new product launches fail.
Reality is tough100
50
0
Years
Percentageofbusinessesstillalive
0 105
‣ An analysis conducted by Scott Shane, a
professor of entrepreneurship in the US,
showed that only half of those businesses
started between 1977 and 2000 were
still alive after 5 years.
‣ Trends are similar in the UK: failure rates
have dropped recently but it is estimated
that in small and medium enterprises,
only half survive more than 5 years and
graduating between size bands is difficult.
Sources: Shane, S.A. 2008. Startup failure rates - the real numbers. Small Business Trends [online] http://smallbiztrends.com/2008/04/startup-failure-rates.html (accessed 10 April 2015); Shane, S.A.
2009. Failure is a constant in entrepreneurship. The New York Times [online] http://boss.blogs.nytimes.com/2009/07/15/failure-is-a-constant-in-entrepreneurship/?_r=0 (accessed 10 April 2015);
Whitelock, C. 2014. Growing pains: majority of SMEs don’t survive five years. RSA [online] https://news.rsagroup.com/pressrelease/view/1675 (accessed 10 April 2015); RSA, 2014. Growing pains:
how the UK became a nation of ‘micropreneurs’ {PDF] http://www.rsabroker.com/sites/default/files/SME%20Growing%20Pains%20White%20paper.pdf (accessed 10 April 2015); Castellion, G. &
Markham, S. 2013. Perspective: new product failure rates: influence of argumentum ad populum and self-interest. Journal of Product Innovation & Management 30:976-979.
reality
Reality is tough!
‣ Survival patterns of new businesses are remarkably consistent: typically, fewer
than half of all startups are still ‘alive’ (in business and in existence) after 5 years.

7.
‘New’ is inherently uncertain
‣ When you’re creating a new product, service or venture, there is a
lot you don’t yet know—and plenty of unknown unknowns!
‣ You perfect the idea, build it, launch it and then wait for the money to
role in—but what if it doesn’t?
‣ Organisations invest huge quantities of time, effort and financial
resource based upon unproven assumptions without stopping to
check that their assumptions are correct.
‣ This results in only finding out those assumptions are wrong
once it’s too late.
‣ So you end up having to go back to the drawing
board to reassess all the assumptions you made
in the first place, starting over with all the
time and money this entails.
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8.
what if there was a
different way
?

9.
There are (at least)
2approaches to planning

10.
As defined by Merriam-Webster Dictionary (2015)
http://www.merriam-webster.com/dictionary/forecast
Forecasting
A prediction or estimate based upon the
information that is available to say that something
will happen in the future

11.
As defined by Rita Gunther McGrath & Ian MacMillan (2009)
Discovery-driven growth: a breakthrough process to reduce risk and seize opportunity.
Boston: Harvard Business Press.
Discovery driven planning
A recognition that bold but uncertain outcomes are
not readily predictable—the data you need to
become more certain must first be discovered

12.
Forecasting is very powerful when
prior information is readily available
“We’ve been doing this for years.”
“We always aim for a 25% margin.”
“We know exactly what our costs will be.”
“We can estimate our future performance
based on past performance.”
“We know our marketing works if we spend £3,000.”
“Our business model is tried and tested.”

13.
New venture truth:
Bold but uncertain outcomes
are not readily predictable

14.
Uncertainty introduces greater risk
in forecasting
‣ When data is not available on past performance, forecasting can
be difficult.
‣ New ventures are inherently risky. You don’t yet know who exactly
your customer will be, what is valuable to them, how much
demand there is, how much you will be able to charge, and so on.
‣ It is possible to assign educated values to these things but until they
are tested in reality, it is difficult to predict the outcome with any
certainty.
‣ Failing to evaluate the viability of a venture and test key
assumptions before it’s too late can result in futile activity and
investment, and may be disastrous.
Sources: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15 September
2017); McGrath, R.G. & MacMillan, I.C. 2009. Discovery-drive growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Press.

15.
The most dangerous assumptions in a business plan
are those that are tacit or unrecognized. As a
result they go unchallenged or untested. For
example, a corporate venture team designed an
innovative new communications product and chose to
use the existing company sales force to sell it.They
assumed that because the existing channel was already
selling other communications products, this route would
be quickest to market. Disappointing sales followed.
Hollister B. Sykes & David Dunham
Sykes, H.B. & Dunham, D. 1995. Critical assumption planning: a practical tool for managing business development risk.
Journal of Business Venturing 10:413-424.

16.
Case study: Disneyland Paris
Despite being Europe’s top tourist destination, Disneyland Paris
has recorded losses in 18 of its 25 years and faced its first
financial crisis just 2 years after opening in 1992.
Initial projections were too optimistic and were based on
experiences in other parks; (that is,Walt Disney World andTokyo Disney Resort).
‣ Assumed a high ticket price of more than $40 would be
tolerated by market. Forced to make sharp price reduction to
secure target visitor numbers, by which time lost benefits of early-stage
word of mouth.
‣ Assumed people would stay an average of 4 days in the
park’s five hotels. In 1993, average stay was just 2 days.
‣ Assumed park visitors would ‘graze’ all day on food. Long
queues at restaurants have plagued the park throughout its lifetime as
visitors adhere to mealtimes.
‣ Assumed visitors would buy a similar mix of high margin
merchandise. Purchasing behaviour favours low-margin print items.
Sources: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15 September 2017);
Vinocur, N. & Sage, A. 2015. Special report: For French investors, a Euro Disney nightmare. Reuters [online] http://uk.reuters.com/article/2015/02/02/us-eurodisney-shareholders-specialreport-
idUSKBN0L60UU20150202 (accessed 2 July 2015); BBC News, 2017. Disney to buy most of Euro Disney [online] http://www.bbc.co.uk/news/business-38928629 (accessed 15 September 2017).
Image: Blue & Pink by George Grinsted on Flickr
https://flic.kr/p/a6HEVW

17.
The problem with assumptions
—or rather implicit assumptions
‣ When you can’t predict with certainty, you have to
make assumptions—that’s ok.
‣ It’s not ok when implicit assumptions are embedded
into projections from the start where they become
invisible and go unchallenged.
‣ Failure to recognise assumptions can mean that implicit
assumptions are compounded by further implicit
assumptions to arrive at answers upon which you
decide whether to invest millions or years of your life.

18.
Dangerous implicit assumptions
As suggested by Rita Gunther McGrath & Ian MacMillan
‣ Customers will buy our products
because we think it is a good product.
‣ Customers will buy our product
because it’s technically superior.
‣ Customers will agree with our
perception that the product is “great.”
‣ Customers run no risk in buying from
us instead of continuing to buy from
their past suppliers.
‣ The product will sell itself.
‣ Distributors are desperate to stock
and service the product.
‣ We can develop the product on time
and on budget.
‣ We will have no trouble attracting the
right staff.
‣ Competitors will respond rationally.
‣ We can insulate our product from
competition.
‣ We will be able to hold down prices
while gaining share rapidly.
‣ The rest of our company will gladly
support our strategy and provide help
as needed.
Source: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning.
Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15 September 2017).

19.
Tracing the source of assumptions
‣ Profit forecasts, revenue forecasts, cash flow
forecasts and predicted return on investment are all
derivative assumptions.
‣ Figures and calculations are all derived from other
assumptions, such as who the customer really is,
what they really want or need, what value they will
place on your product or service, what margin can
be achieved, percentage of customers who will buy,
density of prospects in a given region, and so on.
Source: Sykes, H.B. & Dunham, D. 1995. Critical assumption planning: a practical tool for managing business development risk. Journal of Business Venturing 10:413-424.

20.
Discovery Driven Planning
Begin with the end in mind
£

21.
A word on its creators
‣ Developed by
Rita Gunther McGrath &
Ian MacMillan.
‣ Rita Gunther McGrath is a Professor at Columbia
Business School and is a globally recognised expert
on strategy in uncertain and volatile environments.
‣ Ian MacMillan is the Dhirubhai Ambani Professor
of Innovation and Entrepreneurship at Wharton; he
has been a director of several companies and has
extensive consulting experience.

22.
5 key steps in
Discovery Driven Planning
Bake profitability in from the start with a
reverse income statement
Benchmark competitive achievement and
market reality
Define operational requirements and
allowable costs
Document, test and revisit assumptions
Plan to learn at key checkpoints
1
3
2
4
5
Sources: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15 September 2017);
McGrath, R.G. & MacMillan, I.C. 1999. Discovery driven planning: turning conventional planning on its head. DeepCanyon [PDF] http://www.fast-bridge.net/wp-content/uploads/resources/
Discovery_Driven_Planning.pdf (accessed 15 September 2017). Gallo, A. 2017. A refresher on discovery-driven planning. Harvard Business Review [online] https://hbr.org/2017/02/a-refresher-
on-discovery-driven-planning (accessed 23 October 2017).

23.
In other words...
What return does this venture need to deliver and is it
capable of doing so?
What do we know about the market reality and is the
venture actually competitive?
What activities are involved in running this venture and
how much will these cost? Do we have a buffer
available in our allowable costs?
What assumptions have we made in our plans?
How can we test these assumptions to become more
certain about the viability of our plans?
1
3
2
4
5

24.
Discovery Driven Planning
Bake profitability in from the start with a
reverse income statement
1

25.
Bake profitability in from the start
‣ Right at the outset you should be looking to ensure an
attractive outcome when the business reaches maturity.
‣ If you’re going to put all of this effort and investment into
a new venture, you need to ensure it’s going to be
worthwhile.
‣ Instead of estimating revenue and assuming profit will
follow, determine what level of profit is acceptable and
required.
‣ There is an opportunity cost to starting a new venture
(especially if it’s doomed)—if you’re not doing this, you
could be doing something else.
Sources: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15
September 2017); McGrath, R.G. & MacMillan, I.C. 1999. Discovery driven planning: turning conventional planning on its head. DeepCanyon [PDF] http://www.fast-bridge.net/wp-
content/uploads/resources/Discovery_Driven_Planning.pdf (accessed 15 September 2017).

26.
Bake profitability in from the start
Source: YouTube, 2015. Jerry Maguire Show Me The Money! [online] https://www.youtube.com/watch?v=1-mOKMq19zU (accessed 30 June 2015).

27.
Understanding profit
PROFIT = REVENUE - COST
Volume x Price
Fixed costs +Variable costs

28.
Let’s look at an example
‣ I’m a freelance photographer.
‣ I want to make £15,000 per
year in profit.
‣ I believe a profit margin of
30% is realistic.
‣ In line with market rates, I
will be charging £675 per
one-day photo shoot.
‣ Is this a viable venture?
Image: Canon AE-1 by 55Laney69 on Flickr https://flic.kr/p/dgrdGg
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

29.
The reverse income statement
Total figuresTotal figures Source of figures
Profits required £15,000 Decision by photographer
Desired profit margin 30% Guideline industry benchmark
Revenues required £50,000 15,000/0.3=50,000
Allowable costs £35,000 50,000-15,000=35,000
Required revenue per year = £50,000
Allowable costs = £35,000Profit = £15,000
Per unit figuresPer unit figures Source of figures
Price per photo shoot £675 Decision by photographer
Number of shoots to be sold 74 50,000/675=74.07
Average number of shoots bought per client 1 Assumption
Number of clients required 74 74/1=74
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

30.
A more corporate example
‣ An engineering company with an
existing product range are looking to
launch an innovative new electric
motor in a developing market.
‣ Historically, products in developed
markets have each generated an
average 10% net profit margin and
contributed at least £500,000 in profit
to the bottom line each year.
‣ The board are looking for the new
motor to match or exceed this
contribution.
‣ Target price for the motor is £500.
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

31.
The reverse income statement
Total figuresTotal figures Source of figures
Profits required £500,000 Decision by board
Desired profit margin 10% Assumption
Revenues required £5,000,000 500,000/0.1=5,000,000
Allowable costs £4,500,000 5,000,000-500,000=4,500,000
Required revenue per year = £5,000,000
Allowable costs = £4,500,000Profit = £500,000
Per unit figuresPer unit figures Source of figures
Price of new product (per unit) £500 Internal decision
Number of widgets required to be sold 10,000 5,000,000/500=10,000
Average number of products bought per customer 2 Historical benchmark
Number of paying customers required 5,000 10,000/2=5,000
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

32.
As a new venture, what if I don’t
have a required profit figure in mind?
‣ Do you have a required turnover in mind? If so, you can
start with that.
‣ Do you know what your cost base will be? If so, you can
start with that.
‣ Do you know how much you would like to earn? If so,
this forms part of either your costs or your profit.
‣ In addition to one of these figures, you also need to have
a profit margin but it is usually possible to estimate this
with a little market research on industry benchmarks.

33.
With just a few figures...
‣ We now know approximately what the future business needs
to look like to be a success.
‣ We know approximately how big the business will be and what
sales volume will be required.We can also see how much can
realistically be spent to achieve this outcome.
‣ For both the photographer and the engineering company, it
seems as though their ventures might be viable (subject to
further testing of assumptions).
‣ Other ventures will however fall at the first hurdle.
For example, it may become immediately apparent that the
number of customers required for success simply isn’t
achievable (due to either market size or past performance).
‣ You’ll have a sense of whether your venture is realistic for you.

34.
Discovery Driven Planning
Benchmarking competitive achievement
and market reality
2

35.
The discipline of competitive
achievement and market reality
‣ Realism is critical in planning for a new venture.
‣ As humans—and especially entrepreneurs!—we are
prone to being overly optimistic. We overestimate market
size and profitability. We don’t take account of the
competition. We assume our technologies will perform
better than they do in reality. We presume operations and
sales will be easy.
‣ We need to challenge these tendencies and to build a
realistic picture of what the business must look like for it
to be competitive.
Sources: McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online] https://hbr.org/1995/07/discovery-driven-planning (accessed 15
September 2017); McGrath, R.G. & MacMillan, I.C. 1999. Discovery driven planning: turning conventional planning on its head. DeepCanyon [PDF] http://www.fast-bridge.net/wp-
content/uploads/resources/Discovery_Driven_Planning.pdf (accessed 15 September 2017).

36.
The point is not to demand the
highest degree of accuracy but to
build a reasonable model of the
economics and logistics of the
venture and to assess the order of
magnitude of the challenges.
Rita Gunther McGrath & Ian MacMillan
McGrath, R.G. & MacMillan, I.C. 1995. Discovery-Driven Planning. Harvard Business Review [online]
https://hbr.org/1995/07/discovery-driven-planning (accessed 15 September 2017)

37.
Benchmarking against existing
knowledge
‣ With a little market research, it is possible to benchmark against
existing data and to make educated judgements about a market to
determine whether a given venture is really competitive.
‣ Essentially, you are looking to establish what is already known about
the market, your customers, your product/service/technology, and
any existing competition (including substitutes). Upon this basis, you
can then begin to evaluate your venture.
‣ Key tools include benchmarking against your nearest competitive
offer, analysing your consumption chain (awareness; selection;
purchase; usage; service; and disposal or discontinuation of
relationship); and benchmarking against key metrics.
Sources: McGrath, R.G. & MacMillan, I.C. 2009. Discovery-driven growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Review; Sykes, H.B. &
Dunham, D. 1995. Critical assumption planning: a practical tool for managing business development risk. Journal of Business Venturing 10:413-424.

38.
‣ Nearest competitive offers include other
freelance photographers, stock photography,
and DIY. To be competitive, it will therefore be
necessary to differentiate on quality,
individuality of style, price or some other
dimension.
‣ Is is possible for me to add value anywhere in
the consumption chain (when people become
aware of me; when customers select my
service; when customers purchase my service;
during delivery of the service itself; in
aftercare)? Is there anything I need to be
mindful of when people discontinue their
relationship with me—can I make it more
positive in any way?
Let’s consider our photographer
Image: Canon AE-1 by 55Laney69 on Flickr https://flic.kr/p/dgrdGg
Qualitative benchmarking
Why would a prospective customer choose
me as a photographer? Am I competitive?
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

39.
‣ Let’s assume that of the people who are aware
of my service, 1 in 5 people ask for a quote. Of
these quotes, 50% go on to purchase.
‣ For my venture to be viable, I need to sell
74 one-day shoots per year.Therefore, I need
740 people (that is, 74x5x2=740) to become
aware of my service each year (although this
doesn’t take account of repeat business).
‣ For each one-day shoot, I will also need to do
approximately one day of editing. I will
therefore be spending 148 days on client
projects per year.This leaves me approximately
100 working days for other activities.
Let’s consider our photographer
Image: Canon AE-1 by 55Laney69 on Flickr https://flic.kr/p/dgrdGg
Quantitative benchmarking
Can I match or exceed the established
practices and units of business within my
industry? Is my venture realistic?
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

40.
TAM, SAM and Target Market
Target
Market
Served
Available
Market
Total
Addressable
Market
TAM for makers of a new
smartphone app might be the
1.9 billion smartphone users
worldwide
If your app only works on
Android in English, the SAM
will be much smaller.
Of those, only a certain
percentage of those users might
consider buying your app—
these are your
target market

41.
Discovery Driven Planning
Specification of organisational deliverables
and allowable costs
3

42.
Specification of organisational
deliverables and allowable costs
‣ By now you’ve calculated the revenue and sales that need
to be achieved and benchmarked against your existing
knowledge, but how are you actually going to run the
venture and how much will this cost?
‣ Is there a buffer between your cost base
and your allowable costs or are you already
making a loss before you’ve even started?
‣ List in full everything that will be needed to run the
business (what you will need to deliver in operational
terms) and intelligently estimate the associated costs.
Source: McGrath, R.G. & MacMillan, I.C. 2009. Discovery-driven growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Press; Gallo, A. 2017.
A refresher on discovery-driven planning. Harvard Business Review [online] https://hbr.org/2017/02/a-refresher-on-discovery-driven-planning (accessed 23 October 2017).
Allowable
costs Actual
costs

43.
Discovering the costs of
photography
‣ Equipment; as a guide allow a monthly
amount which allows you to buy a new
camera every three or four years, a new
lens each year and an annual camera
service
‣ Digital storage media (e.g. USB)
‣ Props and backdrops
‣ Lighting
‣ Studio rent and rates
‣ Insurance for buildings, contents and
equipment
‣ Public liability insurance
‣ Photographic editing software
‣ Client gallery software
‣ Studio management software/customer
database
‣ Memberships and certifications
‣ Continuing professional development
‣ Website hosting and maintenance
‣ Advertising and marketing
‣ Office stationery
‣ Telephone and broadband
‣ Other utilities
‣ Bookkeeping and accountancy
‣ Legal fees
With a little market research, we find that the following costs can be
associated with running a photographic venture:
Sources: Heather, 2011. Do professional photographers really make money? Life as a Lilly blog [online] http://chrisheatherlilly.com/?p=5318 (accessed 3 July 2015); Baby & Newborn
Photography Association, 2015. The true cost of running a newborn photography business. BANPAS [online] http://www.banpas.co.uk/costofrunninganewbornphotographybusiness
(accessed 3 July 2015). | Example created by Stocker Partnership based upon the Discovery Driven Planning framework.

44.
Outlining all expected costs
‣ By developing a spreadsheet of all the costs and details of where
you found the data, you’ll have a fully transparent audit trail.
‣ If you are working across a team, adding a column that shows
who has found and estimated each figure helps to maintain
transparency and enable more effective testing of assumptions.
‣ It can be helpful to use Google Docs or Zoho Docs for real time
collaboration so you all have access to the same data.
Analysis of expected costsAnalysis of expected costs Source Team member
Liability insurance £1,000 See quote from insurance brokers for
£10m public liability insurance
Jamie
Annual accountant fees £450 Assumption Pete
Etc...

45.
No derivatives allowed!
‣ It’s important not to let derivative numbers creep
into the calculations—otherwise you’ll lose the
transparency of your assumptions.
‣ For example, rent of £23,000 p.a. is actually
composed of...
Description Source
Square footage 1,000 See space requirement document
SR023
Cost per square foot £20 Quote from real estate firm C001
Total cost for 1,000 square foot £20,000 Calculation
Service charge £3,000 Assumption
Time period 1 year Quote from real estate firm C001
Total annual office rent costs £23,000 Calculation

46.
Discovery Driven Planning
Document, test and revisit assumptions
4

47.
Document, test and revisit
assumptions
‣ Looking back over all the work you’ve done so far, now
explicitly document all the assumptions you have made.
‣ If you’ve developed spreadsheets of calculations, you can
include notes of these assumptions as you go along and
assign them reference numbers so that you can keep
track.Always record your sources: whether the data was a
management decision, an assumption, a calculation or a
benchmark.
‣ Begin by focusing on the critical assumptions, so that you
don’t get bogged down in too much detail.
Source: McGrath, R.G. & MacMillan, I.C. 2009. Discovery-driven growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Press.

48.
The assumptions our
photographer has made
No Description
Current best
estimate Source
Date last
checked
Responsible
party
Notes
1 Realistic profit margin 30%
The British
Photographic Council
Industry Survey of
Photographers 2010
July 2015 Photographer
2 Price per photo shoot £675 Decision by
photographer July 2015 Photographer
3 Average number of shoots
purchased per client 1 Assumption July 2015 Photographer
4
Of people aware of
service, proportion who
ask for a quote
1 in 5 Assumption July 2015 Photographer
5 Proportion of people who
purchase following a quote 50% Assumption July 2015 Photographer
6 Unit of delivery that people
will purchase
1 day
photoshoot Assumption July 2015 Photographer
If 0.5 day shoots are more
popular, risk that double the
number of clients will be
needed
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

49.
Discovery Driven Planning
Plan to learn at key checkpoints
5

50.
Plan to learn at key checkpoints
‣ Checkpoint planning can be used to monitor the progress of new
ventures by postponing major commitments of resources until the
evidence from the previous checkpoint signals that the risk of taking
the next step is justified.
‣ Outline the key checkpoints of your new venture. For each
checkpoint, it is likely that several key assumptions are likely to be
tested, revealing information that was not available before.
‣ In the early stages, 5 checkpoints should be ample.
‣ The aim is to design your project in a way that maximises the
number of assumptions tested and minimises the amount of time and
money invested.
‣ Some assumptions will be repeatedly tested.
Sources: McGrath, R.G. & MacMillan, I.C. 2009. Discovery-driven growth: a breakthrough process to reduce risk and seize opportunity. Boston: Harvard Business Press; McGrath, R.G.
& MacMillan, I.C. 1999. Discovery driven planning: turning conventional planning on its head. DeepCanyon; McGrath, R.G. & MacMillan, I.C. 1995. Discovery-driven planning.
Harvard Business Review; Gallo, A. 2017. A refresher on discovery-driven planning. Harvard Business Review [online] https://hbr.org/2017/02/a-refresher-on-discovery-driven-planning
(accessed 23 October 2017).

51.
Testing our photographer’s
assumptions
Checkpoint Assumptions being tested
Market research, including conversations with industry
professionals
Realistic profit margin; price per photo shoot; average number of
shoots purchased per client; proportion of people who ask for a
quote; proportion of people who purchase following a quote;
unit of delivery that people will purchase
Costs research, (e.g. studio rent and rates; cost of
software; and so on)
Realistic profit margin; cost figures
Trial marketing campaign (prior to pilot pop-up studio)
Proportion of people who ask for a quote; proportion of people
who purchase following a quote; unit of delivery that people will
purchase; average number of shoots purchased per client
Pilot pop-up studio
Price per photo shoot; average number of shoots purchased per
client; proportion of people who ask for a quote; proportion of
people who purchase following a quote; unit of delivery that
people will purchase
Example created by Stocker Partnership based upon the Discovery Driven Planning Framework.

52.
Discovery Driven Planning
Viable venture... or not?

53.
Having identified what return this venture needs to deliver, you
are confident that the venture is capable of delivering the required
revenue and profit.
Having researched the market reality, you have ascertained that
your venture is competitive within this space.
Having documented what activities are involved in running this
venture and how much these will cost, you have a buffer available
in your allowable costs.
Having identified the assumptions you have made in your plans,
you have a plan to test these assumptions to become more
certain about the viability of your plans, starting with the most
critical first.
You may pass GO if...

54.
Next steps: viability is a process
‣ Establishing viability is an iterative process, not a one time ‘go/no-go’
answer.
‣ Even if your new venture, product or service initially seems to be viable,
you need to keep an open mind as you continue to validate assumptions.
‣ Start by testing the most critical assumptions first—those that are core to
the viability of your venture and about which the least is known. Not all
assumptions are created equal.
‣ Try to maximise your learning whilst minimising the amount of investment
required in order to do so.
‣ You are looking to identify the key points of failure BEFORE you ‘go large’
on investment.
‣ Both the Lean Startup approach and Steve Blank’s Customer
Development Process work really well with Discovery Driven Planning.
!
£
?
✚
♥︎
⟳

55.
What does all this
mean for your new
venture?

56.
STOCKER
PARTNERSHIP
The Stocker Partnership
is a strategy and
innovation consultancy
We help organisations to
create and exploit new
opportunities
024 76 100 193
hello@stockerpartnership.com
Matt Stocker
Debbie Stocker
www.stockerpartnership.com
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Illustrations by Stina Jones (stinajones.co.uk), and Matt Stocker