Risk analysis tom kosnik_cleantech_open_academy_2012
1. Risk Analysis: “De-Risking” your New Venture
Tom Kosnik, Fenwick and West Consulting Professor
Stanford Technology Ventures Program
Stanford School of Engineering
2. Risk Management Agenda
Gear Up: A System to Create New Markets or Disrupt Existing Markets
Five Sources of Risk that May Threaten any New Venture
How to Identify the Risks
Risk Mitigation: How to Prevent the Risks
Contingency Planning: What’s your Plan B if the S&!# Hits the Fan?
How to Prioritize the Risks
How to Build and Validate your Risk Management Dashboard
Exercise
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3. G E A R U P : Yo u r B e s t Id e a
E ve r
LENA RAMFELT
J ONAS KJ ELLB ERG
T O M K O S N IK
B A S E D O N T H E B E T A V E R S IO N O F T H E B O O K
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5. YOUR RISK MANAGEMENT DASHBOARD
YOUR OBJECTIVE IS FOR YOUR TEAM TO FILL IN THIS MATRIX. THEN VALIDATE
YOUR “BEST GUESSES” WITH CUSTOMERS AND CHANNEL PARTNERS.
The Risk How to What to do if Probability? S e ve ri
avoid it? it happens? ty?
6. Five Sources of Risk that May Threaten
Any New Venture
• Technology/Product Risk:
• Market Risk:
• Team Risk:
• Financial Risk:
• Legal/IP Risk:
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7. Technology/Product Risk
• Is it a “pain killer?” Are customers actively
seeking a pill for this pain?
• Has it been validated by a credible third
party? Or field tested?
• What are the existing or new alternative
technologies that address the same pain?
• Can it be manufactured in volume at a
competitive cost?
• Is completion of development
questionable? Will it slip? (of course it will)
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8. Market Risk:
• Have you credibly identified the right first market/customer
segment (“bowling pin”)
• Are there market structure issues that will prevent or seriously
slow your market penetration?
• Does that segment together with subsequent customer
segments amount to an attractive market size?
• Have you realistically assessed the costs of getting to the market
and acquiring customers? Main Street
Tornado
Early
Market
Chasm
Bowling Alley
Sources: Moore (1991, 2002), Crossing the Chasm,
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Cleantech Open Academy 2011 | San Jose | California
Moore (1995, 2002), Inside the Tornado.
9. Team Risk:
• What “talent gaps” in the founding
team must be filled to reach critical
milestones in the next 18 months?
• How do you intend to cost
effectively fill them (hiring may not
be the answer).
• Are the founders coachable? Will
they listen to those more seasoned
than they?
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10. Financial Risk:
• Have you based your cost model on cost
estimates from suppliers in your value
chain?
• Have you validated your estimates for
customer acquisition costs by talking with
potential customers and channel partners?
• Have you made credible estimates of the
funds required to complete development
and other milestones?
• Are your assumptions about your sources
of capital realistic, given your projected
growth?
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11. Legal/IP Risk:
• Can we create, defend
and leverage intellectual
capital?
• Have you searched for
prior art? How reliably?
• Are there laws or
government policies that
threaten sales?
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12. R IS K S –
T E C H N O L O G Y /P R O D U C T
Define the RISK:
How to avoid it? What to do if it happens?
Probability? Low 1 2 3 4 5 6 7 8 9 10 High
Severity? Low 1 2 3 4 5 6 7 8 9 10 High
13. R IS K S – M A R K E T
Define the RISK:
How to avoid it? What to do if it happens?
Probability? Low 1 2 3 4 5 6 7 8 9 10 High
Severity? Low 1 2 3 4 5 6 7 8 9 10 High
14. R IS K S – T E A M
Define the RISK:
How to avoid it? What to do if it happens?
Probability? Low 1 2 3 4 5 6 7 8 9 10 High
Severity? Low 1 2 3 4 5 6 7 8 9 10 High
15. R IS K S – F IN A N C IA L
Define the RISK:
How to avoid it? What to do if it happens?
Probability? Low 1 2 3 4 5 6 7 8 9 10 High
Severity? Low 1 2 3 4 5 6 7 8 9 10 High
16. R I S K S – L E G A L /I N T E L L E C T U A L
P R O P E R TY
Define the RISK:
How to avoid it? What to do if it happens?
Probability? Low 1 2 3 4 5 6 7 8 9 10 High
Severity? Low 1 2 3 4 5 6 7 8 9 10 High
17. How to Prioritize the Risks
• Gather your new venture team and any mentors/advisors
• Review the five sources of Risk
• Ask if there is a “Sixth Source” of Risk for your venture
• Using the forms, have each person write down the major risks in
each source of risk.
• Have each person identify how to prevent the risk, and what to
do if the S@#!T hits the fan.
• Using a 10 point scale, rate the likelihood each risk will occur
• Using a 10 point Scale, rate the severity of each risk’s impact
• Have your entire team compare the results of their individual risk
brainstorms. Identify the highest priority risks.
• Fill out Risk Management Dashboard for highest priority risks.
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18. YO U R R IS K M A N A G E M E N T
DAS HB OARD
LIST YOUR RISKS IN PRIORITY ORDER BASED ON YOUR TEAM BRAINSTORM.
VALIDATE YOUR “BEST GUESSES” WITH CUSTOMERS & CHANNEL PARTNERS!
The Risk How to What to do if Probability? S e ve ri
avoid it? it happens? ty?
19. E x e r c is e
• Founders huddle with any mentors/advisors
• Ask if there is a “Sixth Source” of Risk for your venture
• Using the forms write down the major risks from each source.
• Identify how to prevent the risk, and what to do if the S@#!T
hits the fan.
• Using a 10 point scale, rate the likelihood each risk will occur
• Using a 10 point Scale, rate the severity of each risk’s impact
• Limit the time for individual brainstorm to 10 minutes. Spend
much more time later…
• Compare the results of your individual risk brainstorms.
Identify the highest priority risks.
• Fill out Risk Management Dashboard for highest priority risks.
• Prepare to validate with customers/partners and iterate!!!
21. Tom Kosnik
Fenwick and West Consulting Professor, Stanford Technology Ventures Program
iPhone: +1-650-450-3330
Skype: thomas.j.kosnik
PLEASE DON’T SEND ME EMAIL!
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