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Risk aversion

Start-Up Secrets

Posted by on 14 May 2014
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One of Daniel Choi's main points was that an individual or a corporation's mere existence is risky. It's not that an individual or corporation needs to do anything to incur risk, but the surprising fact is that there are risk factors all around us that we don't even recognize on a day-to-day business. So following that logic, the status quo is risky.

There are three traps that keep companies bound in the status quo including the:

  1. Physical Trap - tied to structural inertia (i.e. with a multi-million dollar IT investment, it is harder to move away from what you already have. An example of a physical trap is Blockbuster)
  2. Psychological Trap - is when companies get so trapped in what made them great that they can't move beyond it (i.e. Research in Motion)
  3. Strategic Trap - this is a plain failure to move forward (i.e. Kodak)

So, it is evident we need to change. But, most people think change is more risky than the status quo. Here are some things to consider about change:

  • Just because there's more perceived uncertainty about a particular change, it doesn't mean that the uncertainty is actually there
  • Finding the right people to foster intelligent change is important. Change then needs to be supported by a culture of innovation, directed by a unified company vision, and validated in quick iteration cycles

This led to a Q&A (all paraphrased):

Q: As a start-up how do you work with large entities like banks and credit card companies?
A: Find a champion who is bought into your vision at the company. And, if they're new in their position (hungry) or in business development (interested in talking to people), it's even better.

Q: Can you pay for health care with Plastiq?
A: Yes, it is in the works.

Q: How did you validate quickly?
A: Daniel setup a website and conducted a multivariate test. But, as stakes were raised, he focused on the "unit economics" to prove out the acquisition and re-use numbers were right

Alicia Arnold holds
a Master of Science in Creativity, Innovation and Change Leadership
from the International Center for Studies in Creativity at Buffalo State
College and an M.B.A in Marketing from Bentley University. She enjoys
writing about creativity and innovation and is published with Bloomberg
Businessweek, the Huffington Post, The National Association of Gifted
Children, and iMedia Connection. In her role as an award winning,
digital marketer, she uses her passion for creativity and innovation to
develop breakthrough digital and social experiences. You can connect
with Alicia on Twitter @alicarnold.
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