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  • Top-Down Planning
  • Bottom-Up Planning
  • The W Method

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  1. Growth Modeling
  2. Building a Growth Model

Growth Model Approaches

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Last updated 6 months ago

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We will cover three main approaches: top-down planning, bottom-up planning, and the W method. Each approach has its own advantages and disadvantages, and the best choice for a particular startup will depend on its specific circumstances.

Top-Down Planning

Top-down planning starts with the highest level company direction and strategy. The executive leadership team or board sets high-level strategic initiatives and targets, such as marching towards an acquisition, an IPO, or raising money. These targets are then trickled down to the functional teams, who develop operating plans that support the overall top-down goals.

Advantages:

  • Provides a clear direction and focus for the entire company

  • Ensures that all teams are aligned with the company's strategic objectives

  • Facilitates resource allocation and prioritization

Disadvantages:

  • Can be inflexible and slow to adapt to changing circumstances

  • May not take into account the unique perspectives and insights of functional teams

  • Can lead to a lack of ownership and buy-in from functional teams

Bottom-Up Planning

Bottom-up planning starts with the functional teams analyzing historical data and identifying opportunities for growth and efficiency improvements. Each team develops a detailed plan based on their analysis, and these plans are then consolidated into a comprehensive plan for the entire company.

Advantages:

  • Allows functional teams to identify and leverage their unique expertise

  • Provides a more realistic and achievable plan based on historical data

  • Fosters a sense of ownership and buy-in from functional teams

Disadvantages:

  • Can be time-consuming and complex to coordinate

  • May not align well with the company's overall strategic direction

  • Can lead to a lack of consistency and standardization across teams

The W Method

The W method combines the benefits of top-down and bottom-up planning. It starts with top-down guidance from the executive leadership team, but then allows functional teams to develop detailed bottom-up plans that are aligned with the company's strategic objectives. The executive leadership team reviews these plans and provides feedback, which may lead to adjustments to the top-down guidance. This iterative process continues until a final comprehensive plan is developed and approved.

Advantages:

  • Combines the benefits of top-down and bottom-up planning

  • Provides a clear direction and focus for the entire company

  • Allows functional teams to identify and leverage their unique expertise

  • Fosters a sense of ownership and buy-in from functional teams

  • Is flexible and adaptable to changing circumstances

Disadvantages:

  • Can be time-consuming and complex to implement

  • Requires a high level of collaboration and communication between teams

Conclusion

The choice of planning and growth modeling method depends on the specific circumstances of the startup. Top-down planning is best suited for startups that need a clear and focused direction, while bottom-up planning is best suited for startups that want to leverage the expertise of their functional teams. The W method is a good choice for startups that want to combine the benefits of both top-down and bottom-up planning.