Getting to a viable product stage where you have just the right ingredients to go to market can be fraught with dangers, particularly for young companies that have great ideas but haven’t taken the time to really think things through. Getting the initial development and marketing strategy right means all the difference between success and catastrophic failure.
Building a business without first validating your market assumptions is as ill-advised as sailing through a hurricane on a water ski. You may well have the perfect product for someone, but if you haven’t thought carefully about who that person is and how it helps then, then things can and will go wrong.
Here’s the point: Most of your initial assumptions, guesses, hopes and hypotheses about your product and your market’s reaction to it are going to turn out wrong. At the very least they can be fundamentally flawed, based as they are on your subjective view of things.
Leaps of faith are brilliant things if you are the religious type. But they’re not great for business. Okay, you might get lucky. In real life, maybe one in twenty hunches will come true – leave those kind of odds to TV cop shows and the good looking lead.
In business, if you continually rely on faith or hunches you’re going to skid off the road, tumble down a hillside and crash into a ravine, never to be seen again. The most important question you need to ask yourself first is this:
What are my riskiest assumptions?
In other words, which do you think are true? And which are actually true. We could delve into the philosophy of Donald Rumsfeld here with all the known knowns, and unknown knowns, but the point is this is not a thing you should be taking a chance on. The more you actually know and can really, truly demonstrate about your market, the less likely you are to end up with a business that flounders in the first couple of months or years.
You need to identify all your assumptions (particularly your riskiest ones) and do one important thing:
Test the hell out of them
· It clearly and scientifically defines your market and who you are going to sell to.
· It clearly and scientifically defines how you are going to sell it to your market.
· It’s clear and scientific, see.
It’s no longer an assumption because you have tested it, probed it, cut it open and had a good rummage around inside. You know how the market is going to react when you inject it with X, Y and Z and you know that it is either going to succeed or fail.
Undoubtedly, this is a painful process, not least because that damned good idea you had after a quart of bourbon and Chinese take away is suddenly going to turn to bunkum. This is where you have to show a little inner steal, a touch of ruthlessness. You want this business to work right?
The key to great assumption busting
You need to develop a strategy that will get you to where you want to go, based on an iterative process, that is as flexible as it is methodical. You don’t want to be spending hours sifting data and scratching your head trying to figure out what it all means.
There’s a wonderful phrase and that’s: Keep it simple stupid.
By identifying and quickly and inexpensively testing assumptions, especially the riskiest, you will be able to exchange your original Plan A for a much more viable Plan B (or C or G). Not only will this cut out most of the things that won’t, and probably never will work, it presents your business with a significantly higher chance of success.
Sounds easy, doesn’t it? The Holy Grail is what is known as the product/market fit. You’ll know you have it when you present your product (MVP – minimal viable product stage) to the market and they excitedly respond: where can I buy it? Take an order! If you’ve done your assumption busting well, then this is going to happen sooner rather than later.
This initial stage of business development does several essentials thing to solve a single painful problem well. It allows you to learn from real-market evidence and look for patterns. It helps to uncover new challenges and even better opportunities to market well. It puts you ahead of the game and with a more legible road map to success.
For each assumption you should be following the same process, namely:
What is your assumption? It’s useful to mind map this in the first instance and list everything you think about your market and how you expect it to react to your product or service.
What question do you need to ask? The clearer and simpler the question, the easier it is test. One question per assumption works wonders.
How will you test this assumption/get an answer to your question? There are various ways to carry out market research, pick the one that has a better chance of producing an accurate result (and not just the one you want to see).
How will you measure results? Measurement is equally important. In other words, don’t use a sledgehammer to slice an onion. Get the right tool and the right gauge for the job.
What is your pass/fail metric? Set you pass rate suitably high. It might be tempting to aim a little lower but this just produces a false positive that doesn’t help.
What were the results? View the results in the cold light of day and be honest with yourself.
What insights did you discover? This is probably the biggest challenge for any business or marketer when the results come in. Be objective, be calm, be clinical.
What will you change? If some or all of your assumptions turn out to be wrong, and many of them will, you can change your market approach and give yourself an odds on chance for success.
Finally, as the saying goes, rinse and repeat, till all your risky assumptions are either hailed as great ideas or sent to sleep with the fishes.
A word of warning: If, after testing, you are still finding it difficult to part company with that great idea which had seemed so good when the drink was flowing and your brain was working overtime, by all means repeat the process above. If you still think your hunch is telling you that’s the way to go, and if you can’t bring yourself to at least put it on the back burner for a later date – it might be time you sought professional help.
Asking the question that will rocket your business is one thing. Implementing is an altogether different thing.
Most startups struggle and fail. Valery Satterwhite specializes in the success of fast growing startup businesses. She helps startup entrepreneurs get, keep and grow customers and excite investors. Startup entrepreneurs and founders. avoid the big and costly mistakes that derail a lot of startups, even those with great ideas. For more information please visit http://www.NailMyStartup.com.