Angst. What will go wrong? Anything, anytime, anywhere. Fact is that none of us can predict the future. We do not know the unknown. Traditional risk avoidance and risk mitigation in our companies may not work. What can?
Jim Collins, author of the bestselling book, “Good to Great,” wrote another exceptional book, “Good by Choice.” One key part of that book is the well-researched discovery that the best leaders constantly worry about what can go wrong. But, they transform their worry into productive solutions – well ahead of time. Collins called this behavior, “productive paranoia.” Constructive worry.
“Hope for the best, prepare for the worst.” – Benjamin Disraeli, British Prime Minister
Bill Gates made certain that as many potential challenges as possible be covered with a specific plan to deal with it – should it happen. Whether it be an economic upheaval, governmental regulations, competing technologies, or other, Gates overprepared.
Reasoning is that extreme preparation for unknown future events costs less than losing some or all of Microsoft. From its inception in 1975 until 2002, Microsoft was one of the top ten performing companies in the U.S. Always prepared.
Alternatively, Blockbuster was not prepared for Netflix, virtually all U.S. airlines were not prepared for Southwest Airlines, and both General Motors and Chrysler faced bankruptcy in the Great Recession – if they had not received bailout loans from the U.S. Government. Ford did not need bailout money. Prepared.
What could go wrong?
Here are some proven questions to ask that will help get at the root of risks. With the answer to every question, ask another question, “And here is what we can do about it”:
· Who else is in this business and what percent of the market do they have?
· What are the three most compelling reasons someone will buy this product?
· What are the three must-have uniqueness’s of this business?
· Is there enough market demand to make it worthwhile starting this business?
· What is the breakeven point in terms of units sold and when will that happen?
· How much capital will be needed to launch this business, product, or service?
· Who will be the most likely competitors and why?
· How much production capacity will be needed and when?
· Has valid market research been done?
· What are the follow-on products now in planning that will sustain the business?
· How many employees will be needed and when, what are their skill sets, and will they be available in the necessary geographies?
· If this idea were dependent upon one person, what would happen if they leave?
· Are there any potential problems obtaining enough of the right kinds of materials?
· Are there any single-source vendors that could stop production?
· Is there a single part that would prevent the product from being built?
· Are there any potential legal, compliance, or environmental issues in the way?
At least answer this one question: what are the three worst things that could happen and how can we be overprepared for each of them?
The bottom lines