Extract Your Hypotheses: What Needs to Be True for Your Idea to Work?
Use the Value Proposition and Business Model Canvases to identify what to test before you “get out of the building.” Define the most important things that must be true for your idea to work.
Do the exercise online
To succeed, ask yourself what needs to be true about…
… your business model?
… your value proposition?
… your customer?
Prioritize Your Hypotheses: What Could Kill Your Business
Not all hypotheses are equally critical. Some can kill your business, whereas others matter only once you get the most important hypotheses right. Start prioritizing what’s critical to survival.
Identify the business killers. These are the hypotheses that are critical to the survival of your idea. Test them first!
Rank all your hypotheses in order of how critical they are for your idea to survive and thrive:
What priorities matter most?
duplicate hypothesis— eliminate one sticky note
Design Your Experiments with the Test Card
Structure all of your experiments with this simple Test Card. Start by testing the most critical hypotheses.
Move on to test your next important hypothesis when you are satisfied with your insights and the data reliability.
For example, when you have validated customer interest for a product, follow up with experiments that validate the willingness of channel partners to stock and promote your product.
Execute.
When you are satisfied with the quality of your insights and the reliability of the data, you may directly start executing based on your findings.
For example, when you have learned and validated exactly what it takes to get channel partners interested in reselling your value proposition, start scaling up sales efforts by hiring salespeople or designing dedicated marketing material.
How Quickly Are You Learning?
The only thing standing between you and finding out what customers and partners really want is the consistency and speed with which you and your team can propel yourself through the design/build, measure, learn cycle. This is called cycle time.
The speed at which you learn is crucial, especially during the early phases of value proposition design. When you start out, uncertainty is at its maximum. You don’t know if customers care about the jobs, pains, and gains you intend to address, let alone if they’re interested in your value proposition.
Therefore, it is critical that your early experiments be extremely fast and produce a maximum of learning so you can adapt rapidly. This is why writing a business plan or conducting a large third-party market study is the wrong thing to start with, although it can make sense later in the process.
Learning Instruments
Quickly shape your ideas to share, challenge, or iterate them and to generate hypotheses to test.
Quickly gain first market insights. Keep the effort in-house so learnings remain fresh and relevant and so you can move fast and act upon insights.
Use the whole range of experiments from the experiment library p. 214. Start with quick ones when uncertainty is high. Continue with more reliable, slower ones, when you have evidence about the right direction.
Business plans are more refined documents and usually more static. Write one only when you have clear evidence and are approaching the execution phase.
Market studies are often costly and slow. They are not an optimal search tool because they don’t allow you to adapt to circumstances rapidly. They make most sense in the context of incremental changes to a value proposition.
A pilot study is often the default way to test an idea inside a corporation. However, they should be preceded by quicker and cheaper learning tools, because most pilots are based on relatively refined value propositions that involve substantial time and cost.
Five Data Traps to Avoid
Avoid failure by thinking critically about your data. Experiments produce valuable evidence that can be used to reduce risk and uncertainty, but they can’t predict future success with 100 percent accuracy. Also, you might simply draw the wrong conclusions from your data. Avoid the following five traps to ensure you successfully test your ideas.
Do the exercise online
… your business model?
