Check the Downside to Be Sure You Enjoy the Upside
66226
Business
Mar 1, 2008
donmitch
Check the Downside to Be Sure You Enjoy the Upside
Is a strategy good for you if you might double your business but have a high risk of going out of business? People will differ on the answer to the question, but all would agree that it would be desirable to know what the risk is and to see what can be done about it before starting such a strategy. Here are three key questions you need to start with if you want to avoid harmful risks while pursuing your opportunities: 1. What are the worst consequences that can occur if you follow the path you are considering? 2. Is there some way to offset those negative consequences? 3. If you cannot offset all the negative consequences, are there other ways to generate additional solutions? Check and Recheck Answering the preceding questions will give you some ideas about how to proceed that should, regardless of the results, at least leave you as well off as you would be by not taking any action at all. But you may have made a mistake in your analysis or forgotten something important, like opportunity cost. Have others who are independent observers check your thinking. 1. Who is both competent enough and objective enough to give you an accurate assessment of your thinking? Often the answer will point to someone outside of your business, but usually someone with some knowledge of your general business environment, and experience with addressing similar issues. You can find these people by calling experts in the area and asking them who fits the bill. Such experts may include authors, executives at other companies, magazine editors, and professors who are active in research or consulting. Usually, they can tell you who the right person is or at least put you in touch with "someone who might know." Keep following that string until you find the experts you need. 2. What market tests of your new direction can be put in place that will give you "real world" feedback on what you are planning? In technology businesses, new products are often provided on a limited basis for free to so-called Beta test sites (customers who are willing to experiment with your product while it is under development) to help the manufacturer work out the bugs and get a sense of how well the product performs before large investments are made in production and marketing. In consumer products, home trials supplemented with focus groups among the users can play a similar role. For stock-price improvement, Demand Measurement Interviews are used to test the waters with shareholders, potential investors, and analysts for actions you might take. Find out if you have a similar opportunity in your situation.
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at http://www.2000percentsolution.com .
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