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 2 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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 3 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 4. R IS K MANAGEME N T: “ D E - R IS K IN G ” YO U R N E W 4
- 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: 6 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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) 7 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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, 8 Cleantech Open Confidential Information – All Rights Reserved 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? 9 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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? 10 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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? 11 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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. 17 Cleantech Open Academy 2011 | San Jose | California Cleantech Open Confidential Information – All Rights Reserved
- 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!!!
- 20. TH A N K YO U !!! 20
- 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!
Editor's Notes
- #3: Not sure if you want “and bBenefits” on the 6 th tab