HBR Brief—Key ideas from the article by Rita Gunther McGrath and Ian C. MacMillan
Excerpt from HBR Brief: “You are weighing a major strategic venture–a first-time alliance, a new market, an innovative product. Beware: business history is littered with stories about smart companies that hemorrhaged multiple millions from ventures gone bad.
Why such massive losses? Too many firms use conventional planning to manage their ventures, say McGrath and MacMillan. They make predictions about a venture’s potential based on their established businesses. And they treat the assumptions underlying those predictions– “The product will sell itself,” “We’ll have no competitors”–as facts. By the time they realize a key assumption was flawed, it’s too late to stanch the bleeding.
How to avoid this scenario? As your venture unfolds, use a disciplined process to systematically uncover, test, and (if necessary) revise the assumptions behind your venture’s plan. You’ll expose the make-or-break uncertainties common to ventures. And you’ll address those uncertainties at the lowest possible cost–so you don’t set your venture on the path to ruin.”
Read the entire article here.
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