This is a "cheat sheet" for those interested in learning more and/or applying the ROKC method to their business.

1. ROKC™ Cheat Sheet
On separate paper, answer the following questions and save them in a binder or to a “ROKC” folder
on your computer. (Note: This “Cheat Sheet” is generic allowing it be used for the vast majority of
businesses. Nonetheless, you can adapt the approach to the specificities of your industry and/or
sector.)
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1. What is your business’s key component? The key component is the asset the business owns or
controls that gives it a competitive advantage in the market(s) in which it operates.
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2.
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3.
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What is the competitive advantage?
What is/are the market(s)? Markets are geographies and industry sectors.
4. How long do you foresee the company’s key component providing a competitive advantage?
Specify the duration for each market.
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5. What is the process by which the key component is used in a product/service? Remember, we
want processes that maximize the Return On Key Component™.
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6. What part of the transformative process - production must the business keep in-house and what
can be externalized?
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7. How does the business communicate the value and benefits of the product/service to
customers? Remember, we want processes that maximize the Return On Key Component™.
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8. What part of the transformative process - consumption must the business keep in-house and
what can be externalized?
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9. Now that you have the key component, its competitive advantage in certain markets, the
processes by which the business creates value for itself and its customers, describe the business
model.
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10. What assumptions are you making? Be explicit and write them down.
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11. Examine each assumption and revise every response up to this point until you are convinced you
have a robust business.
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12. Leave your work alone for a week.
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13. After a week, review and revise your work.
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14. (Optional) Write the company’s mission statement.
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15. Identify the 3 - 5 most significant risks to each part of the business: the key component, its
competitive advantage and the transformative processes. Risk can be good or bad. Risks can be
found in every aspect of the business: people, places, things, financing, … Remember, we are
only interested in managing risks that affect the Return On Key Component™.
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16. For each risk identified above use your favorite method to evaluate their impact on the business
and how to mitigate them. For example, a SWOT analysis.
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2. ROKC™ Cheat Sheet
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17. Which risk management activities must be kept in-house and which are to be externalized?
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18. What assumptions are you making? Be explicit and write them down.
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19. Examine each assumption and revise every response up to this point until you are convinced you
have a robust business.
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20. Leave your work alone for a week.
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21. After a week, review and revise until satisfied.
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22. Is leadership committed to the course of action proposed by the ROKC method?
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23. Based on duration of the key component’s competitive advantage in each market (item 4. above)
or for a shorter period, write an action plan for each market.
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24. Using the action plans, create cash bases financial projections for the business. Make and
explicitly state the assumptions made about working capital needs and investments but not
include corporate income taxes (if applicable) and the capital structure.
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25. Review and revise until satisfied.
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26. Develop a capital structure (capital and debt) for the business. Make and explicitly state the
assumptions pertaining to the cost of capital.
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27. Revise the financial projection to include interest expense and corporate income taxes (if
applicable).
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28. Review and revise until satisfied.
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29. (Optional) Calculate the Return On Key Component™ by comparing the amount of cash
generated during a period with the investment made in - or, cost of - the key component.
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30. Determine the exit strategy at the end of the plan.
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31. Value the company at the end of the period and the calculate the return to investors on the
capital they invested. Explicitly state all assumptions pertaining to the valuation.
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32. (Optional) Compare the return on invested capital with the prevailing market conditions.
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33. Review and revise until satisfied.
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34. Formalize the above in a business plan and create a deck for presentation purposes.
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If you need assistance answering these questions, applying the ROKC method, and/or want advice
on strategy, please email us at: contact@returnonkeycomponent.com
Copyright 2014 Chokti Inc. All Rights Reserved.
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