STRESS BUSINESS MODELS · Stress Test.pptx Author: Terry Winograd Created Date: 5/15/2014 5:33:51 PM ...

STRESS TESTING BUSINESS MODELS

TESTS COMPREHENSIVENESS VIABLILITY STARTABILITY SKILLS & RESOURCES METRICS & LEARNING

TESTS COMPREHENSIVENESS Simple!?!?

Have you thought of everything? Money? People? Facilities? Resources? Actions? Timing? Targets? Milestones? Contingencies? ….

Does your model take the solution from A (end of Extreme) → Z (market entry) ?

TESTS VIABLILITY Is this really going to work?

Have you identified an incentivized execution team?

Have you really got a good idea?

Is there really a market or audience?

Will you convince partners to play their part?

TESTS STARTABILITY Have you recruited and can you name the starting team?

Where is the initial support coming from?

Have you prepared for initial pitches or presentations?

Is there a detailed plan for the first few weeks?

TESTS SKILLS & RESOURCES Who and What is needed to get this done? How much is already committed? What is the plan for how to get the rest? Is it realistic to expect the skills and resources that your model requires to be available?

TESTS METRICS & LEARNING What is going to be measured? Does that metric really align with the impact? What will the execution team do with the results? Have you anticipated a range of outcomes and planned for what directions to take in each case?

TESTS COMPREHENSIVENESS VIABLILITY STARTABILITY SKILLS & RESOURCES METRICS & LEARNING

TOOLS TALK IT OUT ACT IT OUT CHECK IT OUT ASSUMPTIONS vs FACTS SENSITIVITY ANALYSIS

TOOLS TALK IT OUT Present plan from start to finish to: - Teammates - Coaches - Practitioners - Domain Experts

Prime your audience to look for: - Gaps and Inconsistencies - Dangerous or Invalid Assumptions - Pure and Simple Dumbness

Give Permission for strong open criticism

TOOLS ACT IT OUT Play the part of all the actors (Individual Positions and/or Organizations) Are they (i.e. you): - Available? - Incentivized? - Numerous? - Rewarded? - Capable? - Reliable? - Equipped? - Timely?

TOOLS CHECK IT OUT Play Scenarios to Partners for feedback and insight Confirm discrete parts of plan with Experiments and Analogies Compare strategies with existing Competitors

TOOLS ASSUMPTIONS vs FACTS Identify your biggest (scariest) assumption(s). Can you qualify better. Rinse, Wash, Repeat! Will your execution team know where the assumptions are, and how to qualify them later? Does the plan say what to do if (when) an assumption is wrong?

TOOLS SENSITIVITY ANALYSIS (Usually applied to financials…but not always)

Identify your plan’s key impact metric(s). Net Profits? Units Sold? Customers Served?

What are the primary factor(s) affecting impact? COGS? Sales performance? Service availability?

“What if” your factor guestimates are off by ±10%? ±20%? ±50%? Does your plan still work?

Full Customers

Suppliers

Pilot Customer

V.C.

Employees

Founders Chairman

Irish Government

End Users

Ultimate Value

Work Risk

Capital Equity

Connections Reputation

Exit Value

Capital

Work

Salary Benefits ESOP

Cash

Product Service Revenue

Revenue

Discounted Product

Feedback Testing

Some Cash

Employment Grants

Product Services Cash

ACT IT OUT Identify all the Actors (Individual Positions and/or Organizations)

- Available? - Incentivized? - Numerous? - Rewarded? - Capable? - Reliable? - Equipped? - Timely?

ACT IT OUT

- Gaps - Inconsistencies - Dangerous or Invalid Assumptions - Pure and Simple Dumbness

TESTS COMPREHENSIVENESS VIABLILITY STARTABILITY SKILLS & RESOURCES METRICS & LEARNING

TALK IT OUT ACT IT OUT CHECK IT OUT ASSUMPTIONS vs FACTS SENSITIVITY ANALYSIS

TOOLS