The difficulty is that good ideas can be few and far between, and it can be challenging at first to distinguish a good idea from a bad one. Moreover, it’s easy to accumulate sunk costs from pursuing a bad idea for too long. That’s why, when developing an idea as a startup or product team, we need to test, test and test some more.
Ideas can come from anywhere, and generating ideas is easy.
The purpose of testing business ideas is to validate an idea at a minimal expense of effort, time and, importantly, cost. This provides an early assessment of whether your idea meets one of three criteria of good product ideas. These are sometimes called the three lenses; they are that customers find your idea desirable (desirability), that you can build and deliver your idea (feasibility) and, lastly, that you can ensure your idea produces a profit (viability). Strong product teams know that ideas must be tested; after all, building, measuring and learning are key aspects of the lean startup process.
However, many teams go straight to building. Why measure or learn when you can build more and even more?
Get evidence first.
Please don’t make the mistake of executing business ideas without evidence. This can lead to a concept of false starts, whereby the team has to revert back to an earlier phase in the product cycle to learn more about the ideas they are pursuing, which greatly increases the risk of failure as teams burn through cash quickly — with some startups never recovering from this.
There are many theories of testing business ideas that a product team can use. Some are famous, such as the lean startup method, which uses a series of sprints to test hypotheses from initial conception to full-on build of a product using evidence at its core. There are other practitioners, as well, such as David Bland, who co-wrote the excellent book Testing Business Ideas. He covers this topic in vast amounts of detail but approaches it in a practical format that is easy to use and apply when testing ideas.
Most of the content is based around the lean startup stages of build, measure and learn. This is something we are passionate about. As an early-stage business, we have seen both product teams and startups make the mistake of just going out into the market without any customer discovery work and no evidence to inform their products ideas. Failure to use evidence leads to false starts; it also kills momentum within the product environment, impacting broader aspects, such as culture and employee motivation.
The collection of evidence using a testing process early in an idea helps teams break their personal biases toward an idea. Personal biases contain assumptions, which are just opinions and worthless. As Alberto Savoia, the creator of the early-stage testing method called “pretotying,” states,
Data beats opinion.
Only when you run experiments can you make a quantitative assessment if the idea meets a customer’s needs to inform your next steps. The purpose is to gather information quickly, and all data should be collected in primary form. When we say primary, we mean that it should be your data and collected by you and your team.
It’s important to understand that testing business ideas is only part of a wider product process. When used in conjunction with a business model canvas or lean canvas, it becomes a robust tool kit for the product team. As a starting point, all business ideas should be drafted onto one of these canvases, and all assumptions should be identified and ranked. The ranking of assumptions should be based on how important the assumption is, should it be incorrect, and how much evidence the team has behind the assumption. Following this is when we would start running testing sprints to validate an idea with real customers and users.
In essence, the testing of business ideas allows the product team to determine if the idea meets the criteria set out in the initial brief. When used as part of a process, it becomes a powerful format to test early-stage ideas, whether you are a startup or a product team within the larger organization.