No business plan survives first contact with customers.
Testing is the activity of reducing the risk of pursuing ideas that look good in theory, but won't work in reality.
Design is the activity of turning vague ideas, insights and evidence into concrete value propositions and solid business models.
We test business ideas to reduce risk and uncertainty. You break a big idea into smaller chunks of testable hypotheses covering three types of risk.
First, that customers or users are not interested in your idea (desirability).
Second, that you can't build and deliver your idea (feasibility).
Third, that your business can't earn enough money from your idea (viability).
A well-formed business hypothesis describes a testable, precise and discrete thing you want to investigate.
But testing ideas costs money. So then you just ask for millions in the big bang annual funding process and spend it all to avoid decreased budget next year?
No. Think like a venture capitalist instead. Invest and incrementally fund the teams and a series of business ideas and double down on the ones that are successful.
Set up a small investment committee that consists of leadership with decision-making authority when it comes to budget, because they will be helping the teams navigate from seed, launch and growth stages. Funding decisions typically take place at 3-6 months intervals.
Testing is the activity of reducing the risk of pursuing ideas that look good in theory, but won't work in reality.
Design is the activity of turning vague ideas, insights and evidence into concrete value propositions and solid business models.
We test business ideas to reduce risk and uncertainty. You break a big idea into smaller chunks of testable hypotheses covering three types of risk.
First, that customers or users are not interested in your idea (desirability).
Second, that you can't build and deliver your idea (feasibility).
Third, that your business can't earn enough money from your idea (viability).
A well-formed business hypothesis describes a testable, precise and discrete thing you want to investigate.
- Your hypothesis is testable when it can be shown true (validated) or false (invalidated), based on evidence (and guided by experience).
- Your hypothesis is precise when you know what success looks like. It describes the precise what, who, and when of your assumptions.
- Your hypothesis is discrete when it describes only one distinct, testable and precise thing you want to investigate.
- "We believe that ..."
- "To verify that, we will ..."
- "And measure ..."
- "We are right if ..."
- "We believed that ..."
- "We observed ..."
- "From that we learned that ..."
- "Therefore, we will ..."
But testing ideas costs money. So then you just ask for millions in the big bang annual funding process and spend it all to avoid decreased budget next year?
No. Think like a venture capitalist instead. Invest and incrementally fund the teams and a series of business ideas and double down on the ones that are successful.
Set up a small investment committee that consists of leadership with decision-making authority when it comes to budget, because they will be helping the teams navigate from seed, launch and growth stages. Funding decisions typically take place at 3-6 months intervals.
To summarize: Key Hypotheses + Experiments + Key Insights = Reducing uncertainty and risks.
"Testing business ideas" by David J. Bland and Alexander Osterwalder
