Growth Model Approaches
Last updated
Last updated
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 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 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 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.