How to test a new business idea before implementation
Before you start implementing your next great solution, check your most risky assumptions first. This is how you test a new business idea.
1. Capture all assumptions
Sit together with your team and generate a long list of assumptions about your solution. Keep in mind that a great solution ticks 3 boxes;
Can we do it? Is the idea technically feasible?
Should we do it? Does this solution fit our organisation, brand and/or corporate strategy?
Does this problem really exist? Are people familiar with the problem and do they really care about it?
Is our solution better than the existing solutions? Are people willing to pay for our solution?
Try to find assumptions within all 3 categories.
Think of assumptions such as;
- The people who have this problem are…
- Our customers are dissatisfied with…
- Our customers find it a hassle to…
- Our customers’ pain is caused by…
- The biggest benefit of a solution to this problem would be…
- To solve this problem what we need to do is…
- The current solution to this problem is…
- Our customers are willing to pay for…
- Our customers are willing to buy our product, because…
- Our customers are willing to stop their current solution, because of…
2. Select your riskiest assumption
After the first step, you probably find yourself confronted with a long list of assumptions. Most of these assumptions are presumably true, and some might be harmless if they turn out to be false. However, there are also very dangerous assumptions. It’s these assumptions that can break your entire concept. Think about it. What assumptions do you have right now, that if they turn out to be incorrect, would make your entire solution worthless? (These are your ‘Riskiest Assumptions’, the cornerstone assumptions your idea is built upon.) It’s important to identify and verify these assumptions before spending lots of time, money and energy on implementing your solution.
One way of finding your riskiest assumption is by writing all your assumptions on post-it notes and placing them in a 2×2 matrix. With on the axes ‘Known vs unknown’ and ‘important vs unimportant’. Of course, it’s interesting to explore the assumptions that are important and unknown.
3. Design an experiment to falsify your assumption
After you have chosen your most risky assumption it’s time to bring it to the test. In what ways can you falsify your assumption? That’s right, you’ve read it correctly. Your goal should not be to verify your riskiest assumption but to falsify it. It should be your main objective to provide the evidence that proves that your assumption is false. By taking the role of a ‘sceptic detective’ you will be much more open towards facts and findings that prove your assumption wrong.
The goal of the experiment should be to test out your hypothesis. Make sure to describe your hypothesis in detail before you run your experiment. That way you’ll be more objective towards the result of your experiment.
- What is your hypothesis?
- How are you going to test this assumption?
- How are you going to capture and measure the results?
Describe what you want to do to falsify/verify your assumption.
- What we believe is that…
- The assumption is right if…
- The assumption is wrong if…
Some other tips:
- Create a baseline measurement (to compare the situation with)
- Make sure your experiment is not influenced by other matters
4. Run small experiments and collect feedback
Carry out the experiments and test your risky assumptions one by one. Start with your most risky assumption and work your way through the rest. Divide all tasks needed for the experiment amongst your team members and use a scrum board (to do, busy, done) to keep track of progress.
Use preset experiment questions to objectively capture the results.
- During the experiment, we’ve observed that
- During the experiment, we’ve learned that…
- After the experiment, we can apply these learnings by…
5. Use the feedback to improve your solution
Collect all feedback and compare your results with your starting hypotheses. To properly test a new business idea, it’s important to stick to the facts and to avoid jumping to conclusions too easily. What are the results? Was your hypothesis correct? Are you 100% sure? If not, double check by running another experiment.
If you are satisfied with the results, go back to the drawing board and refine your solution. You probably will stumble upon some new insights that you can use to improve your solution.