In our risk assessment, we also want to talk about uncertainty and stakeholder participation. In this context, we want to think about the perception of risk, and the role that uncertainty plays in that, because it is also linked to stakeholder engagement.
So we're going to talk about stakeholders, and talk about how to hear the voice of those stakeholders as you make decisions, and you're planning a new venture.
Identifying entrepreneurial opportunities through significant risks
Will electric cars take hold? Or will mobile devices be the perfect way for us to communicate and use computers? There are alternative sources of energy, wind turbines and solar panels something that will be a reality on a mass market scale.
And when we consider these elements, entrepreneurs differ from corporate managers in how they make these decisions. We do the analysis but there is more intuition. We get other people's opinions but we still need to make individual decisions. We need this tolerance for ambiguity.
We need to trust our skills, knowledge and experience. And when we look at opportunities, we want to realize that understanding how entrepreneurs make informed decisions depends in part on how we view risk, perceived uncertainty, and perceived risk.
Now what we mean by perception, is what we think versus what the reality may be. The truth we will call objective risk. Even realization is faith. The goal is reality. Perceived risks often drive entrepreneurs and entrepreneurial decisions, because we're making decisions now about something that will hopefully become a reality in the future.
So when we look at the success of new ventures, we want to think about the choices we make. It changes rapidly, it is a requirement to quickly interpret information, diagnose strengths and weaknesses, opportunities and threats. It is an element of working with incomplete information, being comfortable with it, and making decisions in the face of uncertainty.
Uncertainty
So, when we look at such a good question, is launching a startup into the alternative energy market a good idea? Well, we can't answer that yet, alternative energy can mean a lot of things. It can mean wind, it can mean the sun, it can mean water, or other resources.
We can look at the data, and we can see information on wind energy, electric vehicles. We can look at items that are connected to pollution-free electricity sources.
We can look at the beginning of solar energy use in the United States and beyond. We can look at the use of plastic bags. We can look at independence from fossil fuels.
So, we can collect data, and we can collect a lot of data as entrepreneurs if alternative energy is something that interests us. But there is a question again, what are we going to do with it?
Well, we can do a lot of things. We can look at home automation. We can look at home improvement efficiencies. Do we want to build hardware, software, add-ons, original equipment? Different companies do a variety of different things in this space, it's a big space with a lot of uncertainty.
We can choose a subset of that. Suppose we choose to answer the question, Is an alternative energy project a good idea and we want to focus on the home. And we want to focus on solar energy. And we want to focus on solar panels.
Well, this is a market, it is still a relatively expensive market and we have to do the math to see if this is something we want to get involved in. Do we want to participate in it somehow? And if it's not solar, could it be wind?
And what is the future of that? Is there a chance for us? Isn't it wind but is that what you see in the upper right corner of tankless water heaters? Instead of keeping 50 gallons of water hot all the time, let's have hot water when we need it and only when we need it on demand In the shower, like we do laundry, we use the dishwasher or whatever we do we need hot water Let's not pay for the energy to keep it Hot 24/7, let's pay for that energy only when we need it.
So, there are a variety of different ways, which can make your head spin as far as you go or what you do. But its context is that we want to understand how to mitigate this risk, do our homework, and do our research. Understand what is there, understand how we can distinguish. Understand what competitors are doing, and how we can then be sustainably competitive.
Intuition from your past experiences will play a role. This is another reason to think about new projects you can create that enhance your experience. This brings some knowledge that you have tried on your own, rather than having experience in one area and trying to start in a completely different field in which you have no advantage.
This individual view is useful, and your team complements, but it still puts you in the driver's seat to be comfortable making the final decision, to make difficult choices for incomplete information. Confidence in your skills, knowledge and experience.
Stakeholder participation
Now, stakeholders play a big role. Stakeholders can be a variety of things. It is basically anyone who has an influence or is affected by your project or activities.
It could be customers, maybe the first thing you might think of is suppliers, investors, and so on. We want to hear from them, and we want to hear from them early. And want to understand what their experience and desires are? What do they not want?
We want to learn this information as soon as possible. We want to have a greater awareness of their needs and we want to reduce our uncertainty by hearing their voices early.
Now, who to focus on well, with limited resources, it's hard to do everything. But we want to choose the stakeholders they represent, who have some degree of power, legitimacy or urgency.
We want to hear them through the interviews. We want to talk to them face to face. We may want to do some focus groups. We may want to run some surveys.
There are a variety of mechanisms you can use, including some online and some free tools, to do some of this as well.
So make sure when you do this that you consider the impact of being aware of risk and uncertainty, getting some valuable input from stakeholders, and managing risk.
Think of these assets we talked about that you can develop internally, that are informed by stakeholder interviews, focus groups, and surveys you might be doing.
Summary
As you understand these components of entrepreneurial behavior, you can understand where you stand. Can you understand your own elements, how high are the risks you are willing to take? What are the rewards and consequences? And what decision elements can you incorporate to include hearing the voice of the customer and the voice of stakeholders so early in the planning of your project?
See: Entrepreneurial Motivations