[Classic] How to Test Your Business Ideas Using Assumptions Mapping
Read time: 4 minutes 23 seconds
Welcome to Future-state Thinking, my weekly newsletter where I give actionable content, insights and tools for business and personal growth from my experience as an innovator and entrepreneur.
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This weeks issue has been top of mind for me. It’s about testing ideas and experimentation.
Experimentation is something I’ll need to do to launch my new book “The DUCTRI Playbook” which I’m co-authoring with Dr. Christian Walsh. More on that below.
I hope you enjoy this classic edition.
Hi Reader,
Test before you invest.
I’ve recently been diving into the work of David J. Bland.
David is an experienced entrepreneur turned corporate innovator. He is also the Co-Author of Testing Business Ideas with Alex Osterwalder.
In recent years, he’s found a niche helping corporates test business ideas using a three-step process:
- Extracting assumptions
- Mapping assumptions
- Running experiments
While David has coined the process ‘Assumptions Mapping’, he is the first to acknowledge that he was inspired by the work of Jeff Gothelf, Josh Seiden, Giff Constable and Larry Keeley.
I’d also suggest that the thinking links back to Rita McGrath’s work on Discovery-Driven Planning.
Either way, inspiration and credit for this article goes to David.
So far, I have found this concept extremely practical, and I am currently testing the process in my work with startups and innovators.
HealthTech Challenge 2023 Cohort
So, what’s Assumptions Mapping about?
Behind every innovative product or service lie hidden assumptions, often called leap-of-faith assumptions.
These assumptions can be critical to the success of your startup if they are not unexamined and proven false.
This section will explore a method designed to systematically deconstruct these assumptions as a team, helping you focus your experimentation efforts effectively.
Assumptions Mapping Worksheet and Template:
To implement this method effectively, consider using Precoil’s Assumptions Mapping Worksheet and Mapping Template. These tools can provide structure and guidance as you work through the assumptions with your team.
A core reason that I like this process is that David has aligned Assumptions Mapping with Desirability, Feasibility and Viability, critical concepts within the DUCTRI Model, Lean Startup and Business Model Design.
Exploring Assumptions:
Assumptions Mapping is a collaborative effort that enables your team to delve into three crucial areas of assumptions:
1. Desirable – Do they want this?
Desirability concerns encompass the possibility that the market you are focusing on is limited in size, there is insufficient demand for the value proposition or solution, and that acquiring and retaining customers may be challenging.
2. Feasible – Can we do this?
What evidence is there that indicates our ability to construct and deliver? Feasibility risks encompass the potential obstacles your business may face in obtaining essential resources (technology, IP, brand, etc.), developing the necessary capabilities for critical activities, and establishing key partnerships for growth and scalability.
3. Viable – Should we do this?
What evidence is available to demonstrate the viability of this business? Viability risks involve the inability to generate sufficient revenue, customer resistance to payment, and excessively high costs that hinder sustainable profitability.
Other Assumptions:
In addition to these three key areas, consider any other assumptions that might impact your project’s success.
Creating Your Assumptions Map:
- Begin by drawing a horizontal axis to map evidence vs. no evidence.
- Draw a vertical axis to map important vs. unimportant.
- This approach helps prevent cognitive bias and ensures a structured analysis.
Mapping Your Assumptions:
With your team, map out the assumptions in a structured conversation. Discuss why certain beliefs have evidence or no evidence and why some are deemed important or unimportant.
Assessing Your Map:
Remember that the value of this exercise lies not just in the map itself but in the shared understanding achieved during the mapping conversation.
Focus on the Top Right Quadrant:
Prioritize assumptions in the top right quadrant for near-term experimentation. These are assumptions that are both important and yet unknown. Create evaluative experiments to validate these critical assumptions.
Review Your Existing Plan:
Check the top left quadrant against your existing plan. Ensure that important and known assumptions are already considered in your strategy.
Defer Commitment:
Known and unimportant assumptions in the bottom left quadrant can be explored later once you’ve validated the top right quadrant.
Exploratory Experiments:
Compile a list of exploratory experiments for future validation. These experiments should stem from the bottom right quadrant, where assumptions are unknown and unimportant. These can be probed later for future growth opportunities.
A Living Document:
Lastly, remember that your assumptions map is a living document, an iterative process. Regularly update it to reflect changes and insights gained over time. Snapshot your progress weekly to document your learnings and adapt your strategy accordingly.
⚡️ The Short of it
Assumptions mapping is a powerful tool to guide experimentation efforts, reduce risks, and pave the way for informed decision-making.
Assumptions Mapping helps to uncover biases and promotes critical thinking moving from opinions to facts.
“Your assumptions are your windows on the world. Scrub them off every once and a while, or the light won’t come in” – Isaac Asimov
That’s all from me today.
Really hope this helps you make a dent in the world!
Catch you next week,
Vaughan
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