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👋 Hi Reader,
Today, we delve into a simple cycle to test any business idea.
Any founder, corporate innovator or leader can use the concept to de-risk and gain confidence about whether to pursue an idea.
If you find this helpful, please share it with your network.
Let’s dive in.
Read time: 2.5 minutes
I recently wrote about how 94% of executives are unhappy with their innovation programme.
HBR discuss why in this article, but it comes down to behaviours and blockers.
The five behaviours are:
- Taking the view that there is always a better way to do things – being curious.
- Deeply understanding customers’ stated and unstated needs and desires.
- Collaborating across and beyond the organisation and actively cross-pollinating.
- Using experimentation, rapid iteration, and frequent failure as a way to learn.
- Empowering and enabling people to take intelligent risks, share different opinions, and go after what they need.
We’ll focus on the experimentation side of things. However, all five behaviours must work together to give ourselves the best chance of realising new value.
Click here to go to this social media post.
Step One: Identify Your ‘Leap of Faith Assumptions’
‘Leap of Faith Assumptions’ are the key things that must be true for your business idea.
Use the business model canvas to quickly map out how your idea will create, deliver and capture value.
You can use other inputs, like backlogs, roadmaps and user stories. However, the business model canvas is a ‘must use’ tool that you should utilise to prototype and develop any idea.
Making the idea visual helps with collaboration and understanding how each building block relates to and impacts another.
Learn more about the business model canvas here.
Step Two: Extract, Map and Prioritise
Next, create a two-by-two matrix with ‘important’ and ‘unimportant’ on the vertical axis and ‘evidence’ to ‘no evidence’ on the horizontal axis.
Then, copy each assumption and place each assumption where it sits on the ‘importance’ scale, then move it to the ‘evidence’ scale.
You must critique each assumption rigorously because often, we have more confidence about the evidence for the idea than is reality, and we may consider many assumptions to be necessary.
In reality, there will only be a few assumptions that are really important.
Want to dive deeper? Read this article.
Source: David J Bland
Step Three: Run Rapid Experiments
Experiments intend to de-risk and learn before you go all in on an idea.
But what experiments should you run?
That’s the challenge.
The type of experiments depends on factors like what zone of the business (desirability, feasibility or viability), your budget, the time constraints, what resources you have, etc.
However, if your idea is new, we will likely need to know if people are interested in the idea and will pay you for it.
This is where having a mindset of “what is the minimum I can do to gain insight” comes into play.
Most people think you must make high-fidelity versions of your product or service.
The reality is starting low-fidelity and increasing your investment as you learn more is a more thoughtful way to go.
For example, if I have an idea for a window cleaning business, I could run these experiments:
- Ask my neighbours directly.
- Post on community forums to gauge response.
- Direct people to a simple landing page to see how many sign up.
All before, creating a business plan or investing in equipment.
“A spreadsheet is just a fantasy made explicit until you have evidence” – Alex Osterwalder
Here’s some of my favourite experiments:
And, a link to my free experiment vault. Copy and use them for yourself.
⚡️ Call to Action
The next time you have a business idea, try this:
1) Map out the business idea
2) Extract, map and prioritise your critical assumptions
3) Run rapid experiments to learn
What are you waiting for?
Try it today.
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That’s all for today friends 👋
If you have an idea for a future issue, I’d love to know. Just reply to this email.
Thanks for being here,
Vaughan
PS. See you in next Wednesday 6:45am NZ
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