Law 7: How Serial Entrepreneurs Increase Their Odds of Success - Lorraine Marchand
“If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.”
We are in conversation with Lorraine Marchand — life sciences consultant, speaker, writer, and professor. Professor Marchand is an expert at showing entrepreneurs how to communicate the value of their innovations to investors. Professor Lorraine Marchand is bringing forth the key to innovation in her upcoming book ‘The Innovation Mindset’.
Each law of innovation covers a different aspect of innovation. Today, Professor Marchand is sharing a sneak-peek into law 7 — How Serial Entrepreneurs Increase Their Odds of Success. This law focuses on the importance of de-risking your business plan.
Lorraine, till now each law has been focused on innovation itself. Law 7, is slightly different as you speak of how to mitigate risk after innovating. Can you tell us a little about it?
“Once you’ve developed your business plan, a critical next step is de-risking the plan, by identifying landmines and neutralizing them. This involves first learning how to assess risk. Risk is different from uncertainty but how? Serial entrepreneurs appreciate the need to de-risk your technology and your business on a few fronts and they share their stories, good, bad, and ugly. In this chapter, you’ll learn a tool for conducting a risk assessment along the dimensions of technical, financial, and market, as well as how to develop a risk mitigation plan — and importantly, how to communicate risks and your mitigation plan to stakeholders.
“Let me share a great example with you. I interviewed Sarah Apgar, founder of FitFigher, a strength and conditioning system based around a patent-pending Steelhose.
“Now that she’s found investment, and earned national media exposure in the process, Sarah’s worries about the risks of developing FitFighter might seem unfounded.
“But when she started the business in January 2019, the uncertainty and the fears were real — just as they are for almost every innovator. Sarah navigated the pitfalls by clearly imagining where she wanted to go. “I think you can hedge your risk upfront by creating a runway in front of you that has clear milestones and goals that you’ll achieve,” she says. “In my case, we raised capital, 20% of it my own money, to get our product development from the garage to the point we were ready to go to market.”
“Part of her presentation and promise to all of the people who invested time or money was her two-year plan, with its sales/profitability benchmarks. “It was important for me to feel that I had hedged the risks a bit,” she said. ‘So, if we didn’t make it through this two-year period, I haven’t ruined my life or the finances of my friends or family members.”
“As it turned out, she needn’t have worried. What started as a tool to help firefighters stay in shape, morphed into something even bigger. “I began to realize we had created something powerful.”
“An important lesson learned is to make sure your supply chain has multiple links. In Sarah’s case, “we’re lining up other manufacturers, and we could envision implementing a parallel manufacturing operation somewhere.” Thinking through potential vulnerabilities in the supply chain, she says, can help a lot of innovators sleep better at night.
Insight for Innovators
“A good innovator needs to be stubbornly and doggedly curious. Day after day. When it comes to your product, you need to be open-minded and you need to ask questions and more questions, until there are no more and then you need to think of one more. I’ve been called ‘exhausting’ and ‘overly tenacious’. I think those are qualities that make you successful as an innovator.”
“You need to have a village that supports you…a circle of people you love and trust. Being an innovator is not always a comfortable place to be. And you’re going to have people that say your innovation sucks. Although I’ve developed a thicker skin, I’m still sensitive to people telling me my idea is stupid. That’s why you need to have this village of people who are unconditionally a call away, to prop you up.”
Thanks for sharing, Lorraine.
