Three Types Of Risks That Should Be Evaluated Early In A New Venture’s Life
Author: Clark G. Gilbert and Matthew J. Eyring
Once upon a time in innovation, there was a general rule: get to market as quickly as you can, meaning you should start on your “long-pole” development activities as soon as possible. But there’s a growing consensus in the innovation community that the best way to succeed isn’t to start developing quickly, but instead to do as much work as possible on paper, to validate assumptions cheaply and quickly, and defer more expensive, riskier (and even long-pole) activities until after some of the basic assumptions are validated.
Part of this thinking encourages innovators to rank their risks – to work on critical assumptions first. In case those assumptions don’t pan out, the entire venture might fall apart: all the better to look at them early. That’s the premise behind the article “Beating the Odds When You Launch a New Venture” by Clark Gilbert and Matthew Eyring in the May Harvard Business Review.Three types of risks that should be evaluated early in a new venture’s life: 1) Deal-killer risks – risks that can sink the venture. Often these seem to be marketing and sales related risks: will anyone buy the product we want to build? Given that engineers often start with a product idea, it’s easy to see why market testing is often left to last. However, prototyping and beta launches (common with internet products today) can provide cheap and quick data about a product’s attractiveness to the market.
