(Photo by Ante Hamersmit on Unsplash)
Testing assumptions for validated learning
In our previous post, we talked a lot about the example of someone in a car, in a new city, blindfolded. Long story short, that person isn’t going to get very far, and they’re certainly not going to get there safely.
In this scenario, our driver is not only ignorant to the layout of this new city, they also can’t see. It’s a paralyzing situation and forward movement is perilous.
Starting a new business, for many people, isn’t unlike our poor driver. Sure, you’ve got an idea for a product or service, but, unless you’ve done this before, you’re blind and operating in an unfamiliar environment.
(And even if you have done this before, you’re still starting with something new, untested and, as we’ll see, unverified. You’re not much better off than a total newbie to the startup world.)
The problem we need to solve right away, then, is how to remove our blindfold. Forget familiarizing yourself with the “city.” Right now we just need to see clearly.
Making and testing assumptions
We touched on this subject briefly in our previous post, but we’re diving deeper today.
“Removing the blindfold” for a new business owner is best accomplished by making and testing assumptions. Let’s put some definitions in play here:
Assumption: an educated guess about a product or service, market demand for that product or service, and what successful use of that product or service looks like.
Making the assumption is only half the battle, though. You need to test that assumption to know if it’s true or not true. Or maybe even how true or not true it is.
Testing assumptions generates what we call in the startup world Validated Learning.
Validated learning is any learning that can be verified as indicating a truth about a fundamental characteristic or assumption about a thing. In other words, when you test your assumption, regardless of whether the test verifies or denies your assumption, if the test has integrity, the result is validated learning.
These two concepts, assumptions and testing to generate validated learning, belie a deeper, more fundamental truth about what you as the owner of a shiny new startup really need to be focusing on in the earliest stages of your business.
To create the best chance of success for your fledgling concept, you need to accumulate as much validated learning as possible and use that validated learning to build, adjust, pivot, and fine tune your product or service. Indeed, validated learning is (or should be) the primary currency of the start up.
Cash be damned (at least for now).
You don’t know a damn thing. Really.
This is a hard truth for the plucky startup entrepreneur, but it’s the truth I tell you.
You may know your area of expertise. You may know how to build a thing. You may know what your friends and family think of your thing.
But you don’t know a damn thing about the rest of the 7.5 billion people on this planet and how they’ll interact with your product or service.
And that’s perfectly ok. You can’t know anything about them because you haven’t interacted with them.
If friends and family were enough to sustain a business with validated learning and cash, we’d have a lot more successful startups.
As it is, however, they aren’t and we don’t.
Most successful startups have one thing in common: they talked to their target customers, tested their assumptions, and generated gobs of validated learning that helped them tailor their product or service to the needs of their customers.
Business isn’t about you or your ego. You don’t know your customer until you talk to them. You don’t know if your idea is good until you test it. Because your idea of good doesn’t matter unless you plan to hole up in your bedroom and play with the thing you’ve built by yourself.
For the rest of us, this means we need to get out of the building and talk to our customers. You’re building something to sell to people, so why not find out if those people actually want the thing you’re building?
And to build something our target market actually wants we’ll need to, in Lean Startup parlance, solve a problem that’s actually worth solving.
In other words, sometimes a product solves a problem that might be annoying, but isn’t big enough or hairy enough for anyone to care about purchasing something to solve it.
Testing assumptions and generating validating learning helps us understand what our customers actually care about and whether or not the problem we’re trying to solve is a problem worth solving in the first place.
Common pitfalls for testing and validating ideas.
Before we cut you loose to go testing ideas, there are three big pitfalls we want you to be aware of and, hopefully, avoid.
First, testing is hard. So do a lot of it and do it often to get better and to generate better results.
There are professionals, most of them in scientific community, who specialize in crafting surveys, tests, and focus groups that generate super high quality, statistically relevant, and clean data.
We aren’t those people and, we’re guessing, neither are you.
In lieu of spending a ton of money hiring these folks to help you test your ideas, we think a better way is to simply do a lot of testing. Trends tend to emerge from large volumes of data which, if you’re careful (and we hope you will be) can compensate for not being able to generate smaller volumes of much cleaner data.
So, read the next two pitfalls first, then go and test a whole lot. Find a way that works for you and your team to compile and analyze the data and get the data into that system. Look for trends and act on those when they make themselves known.
Second, your ego is the enemy. Kill it sooner than later.
If there’s one pitfall we’ve seen undo not only testing, but also entire business processes and even the business itself, it’s ego.
And it’s not just because no one likes an ego maniac. Instead, it’s for the reasons we’ve already stated above.
We build products and services to sell to other people. It stands to reason, then, that what we think and feel about the product or service we’re building plays second fiddle to the thoughts and feelings of our target customers.
When we’re testing, the ego can manipulate questions, subtly steer conversations in directions that the ego wants to go, and even discount validated learning that isn’t consistent with its whims and desires altogether.
This can spell disaster and will result in a lot of wasted time testing and generating dirty, useless data.
Look, the hardest truth for many business owners is this: your customer doesn’t care about you or your business. Your customer cares whether you can help them solve a burning problem, improve their quality of life, and maybe even become the hero of their own story.
And your ego stands to ruin all of that.
So kill your ego.
Third, slow down to go faster. But don’t go too slow…
Starting a business is hard. It almost always costs more than you think it will and will absolutely take much longer than you’d hoped.
A tendency many new business owners fall victim to is to rush things along.
And we get it. You’ve invested six figures into this thing and you’re ready to start seeing results.
That’s all well and good. Things should move as quickly as they can in a healthy, sustainable way.
This pitfall is, perhaps, the most difficult of all to navigate. That’s because there’s no black or while rule to help negotiate speed. You have to move as quickly as possible and as slow as you need to in order to bring a quality, tested, and verified product or service to market. All at the same time.
Our advice here is to err toward slower than faster. This is the “Tortoise and the Hare Effect” at work. When you take your time, test frequently, and analyze the validated learning you’re generating carefully, you’ll end up making better decisions and, as a result, spend less time fixing mistakes due to rushed decision making.
There is one big caveat here, however, and we don’t want to ignore it.
That caveat is cash, or, as we call it, runway. You need runway to slow down and money is often the limiting factor here. If you’re low on cash, you have less runway and you have to move quicker to market.
Conversely, if you’re flush with cash or you have an alternative funding source, you can afford to take things slower and be more careful.
If you find yourself low on cash, prioritize finding funding that will extend your runway while adjusting your velocity to match your situation.
Conclusion
As we’ve mentioned before, startups are hard. They’re also exhilarating.
But they are definitely hard.
To give yourself and your startup the best chance of success, start with some core assumptions and test those assumptions frequently to generate validated learning.
When you’ve gathered enough validated learning, adjust your product or service to reflect that learning.
Rinse and repeat.
Only you and your team will know when it’s time to make the transition from testing to launch, but please don’t rush the testing phase. We need you and your idea to help change cultures for the better. We need people creating products and services that move us forward, improve lives, and build community.
Whether you realize it or not, the stakes are high.
If you’re ready to build something momentous, give us a shout. At Newberry Consulting, our primary mission is to help people launch new products, services, and even entirely new businesses that tell powerful stories, have sustainable business models, and that build community.
We would love to talk with you about your concept and be a part of your startup journey in anyway that we can.
Thanks for reading!