Market Risk vs. Execution Risk
From NW Venture Voice:
"We talk alot about market risk vs. execution risk when looking at companies.
What we mean by market risk is that you are betting on some change (often in consumer behavior) that will bring a big market along with it (e.g. betting on e-commerce in 1995 meant belief in a trend). By execution risk, we mean that a big market already exits but that you are betting on the ability to out execute others in capturing the pot of gold the market already represents (e.g. betting on e-Commerce today means finding some in or advantage that others don't).
There is always execution risk in every company but each will have more or less market risk depending on the situation. There really is no statement of which primary bet is better just that you need to be conscious of which and how best to mitigate.
Emergic recently highlighted a very intersting view of this from Fast Company:
'Never is execution more important than when innovation is at the heart of a strategy."
