Rapid Experimentation: How to achieve agility

    Strategos

    I have an idea, now what?

    Pop quiz: you have a brilliant new idea, well outside the core of your current business. Where should you spend the most time?

    a)      Writing a detailed business plan

    b)      Deploying a survey to ascertain customer interest

    c)      Hiring resources to build an accurate prototype

    d)      Testing and iterating your business model

    No doubt, each of these are important, requiring appropriate time, sequencing, and resources.  During initial development, however, investing the most time to answer “d” (test and iterate) enables you to validate customer need before committing unnecessary resources, and can have the greatest impact to a successful outcome.

    Value Proposition comes first

    The question is: how can you truly iterate on the business model without building an expensive prototype?  Remember, your initial business model is simply a set of hypotheses.  And for any business idea that is striking uncharted territory, it is critically important to test the intended benefit for the customer.  Often, this can be done through creative testing of the value proposition rather than the end product.

    Let’s look at an example.  Say a telecom company wants to introduce an app that connects users to local events, e.g. pop-up stores, live music, flash sales.  In this case, the benefit for retailers is ready access to a self-selected group of users. For consumers, they get instant information on sought after events.  Does the telecom need to design, test, and launch an app in order to test this idea?

    Imagine all the ways that this value proposition could be tested before committing resources to an app launch.  One way might be to partner with an upcoming event, and ask users to submit an email if they’d like further information on an app.  Or to test variations of an email blast on flash sales and monitor its virality.  Another way might be to ask event participants to vote on their favorite type of event.  Each of these demonstrates interest and engagement in the intended value proposition itself, rather than a focus on the end product.

    Experimentation, the lean way

    Through a concept we call Benefit Disaggregation, we work with clients to drive toward clarity around their value proposition.  Then we begin to design creative ways to test the customer benefit without having to launch a product.  Here are the key steps in the process:

    1.  Disaggregate the benefit from the offering – What is the customer really getting out of this?  Remember the use of technology does not count as a benefit.  Make crystal clear the primary customer benefit that should be tested.

    2.  Ideate around benefit testing – Think of as many ways to test the benefit as possible.  How would you design an experiment with as few materials as possible?

    3.  Deploy your experiment with minimal materials – Get in front of customers and test the basic premise as quickly as possible.  Focus on the primary benefit to verify its value.

    If you build it they will will they come?

    In my experiences with the humblest startups to the largest corporations, I’ve noticed a tendency to zero in on the end product with the belief that the technology will make it irresistible to end users.  Let’s call it the “If you build it, they will come” syndrome.  This leads to the common mistake of over-committing time and resources to create a perfect “beta” version during the early stages of an idea. I have yet to see or hear of an offering that was perfect on the first go-round, but I have witnessed the crushing disappointment of a launch that fails miserably in first contact with customers.

    Through the principle of Benefit Disaggregation, entrepreneurs can avoid this trap and rapidly iterate their business model in order to progress with increasing confidence.  Follow up experiments should test other aspects of the business model such as product features, operations, distribution, logistics, revenue generation.  However, initial testing of the intended customer benefit will be most effective in turning an early idea into a viable business.