By: Jennifer Law
There is a saying in innovation circles that new ideas are cheap—if you get a decent group together, you can brainstorm a hundred new ideas in no time. The real challenge is figuring out what to do with all those ideas. How can you test your ideas and identify the winners, without spending a fortune?
In our work advising companies on how to become more innovative, we’ve found that learning to conduct quick (and frequent!) business experiments in an underrated and too-often-overlooked skill. The natural tendency for many high-achieving teams is to go all in perfecting their new ideas, building increasingly long decks, commissioning full-scale market research, and triple-checking the numbers in anticipation of a full launch. Instead of finding cheap and quick ways to test early and often, it is tempting (and for many, quite satisfying) to spend time polishing a final draft. But this leaves new offerings vulnerable to blind spots and misplaced assumptions.
Low-cost ways to test business ideas
Business experiments don’t have to be costly or time-consuming, especially not at the early stage. Below are 5 techniques that we use in our consulting work to quickly assess the validity of a new idea.
1. Check online. Cheap and quick, an online search should be your first stop. Don’t underestimate what you can learn from the Internet. McDonald’s shrimp salad, for instance, was killed not by a concept test, but by an afternoon of free Internet research on the global supply of shrimp. And one of our clients’ ideas to create a product specifically for unions was put into new perspective when we performed a quick search into the declining trend in union membership. You can spend weeks doing secondary research online, but even just a 10-minute Google search can be a useful temperature check.
2. Ask “What would you have to believe?” This thought exercise is a quick reality check. Start with your end goal—such as a revenue target—and walk backwards to determine how many units you would need to sell or the number of long-term customer relationships you would need to cultivate. For this idea to succeed, what would you have to believe to be true?
A few years ago, we were assessing the opportunity to provide business services to large hospitals in Mexico. It was an untapped market that fit nicely with the company’s existing services. But our back-of-the-envelope calculations quickly stopped us short: to build a $10 million business, the service would have had to be sold to every single large hospital in the country, at price ranges that were sure to be above the hospitals’ appetites.
3. Send out a quick survey. Market research surveys don’t have to be huge undertakings with thousands of respondents. You can often get great quick feedback using cheap online surveys or even five-minute in-person “intercepts.”
While assessing wellness concepts for a health system, for instance, we intercepted people outside a health-food store for a quick survey. It was a purposely skewed sample population. The people who shopped at a health-food store, we figured, would be most interested in the new wellness concept. If we couldn’t get positive interest from that crowd, it could be pointless to push further.
4. Scrape together an early prototype. A prototype doesn’t need to represent your idea in its complete form. It doesn’t need to be fully functional, and it certainly doesn’t need to be elegant. Prototyping simply means getting ideas out of your head and into the physical world. Remember that the point is to test demand, not perfect the offering for its world debut. In the early stages, prototypes should be rough and rapid.
BloomThat, a flower delivery startup acquired by FTD Companies that promised flowers in ninety minutes, tested its concept on a Valentine’s Day by buying flowers in bulk from the San Francisco Flower Mart, assembling them into bouquets, wrapping them with butcher paper on the patio of one of the founders, and putting out Facebook ads promising delivery in ninety minutes. They didn’t make a huge profit, but revenue wasn’t the point of the test. The most important thing was that they confirmed customer interest in their idea.
Jenny Fleiss and Jenn Hyman, co-founders of online luxury clothing rental service Rent The Runway, tested their concept in a similarly scrappy way: with a pop-up shop on their college campus. Students could browse, try on, and rent outfits on the spot. This wasn’t the business model Hyman and Fleiss were hoping to build—to scale, they would need to develop a website to manage the rentals—but the pop-up shop was a cheap and simple way to find out how people would feel about renting clothes, how the dry cleaning mechanics would work after rentals came back, and how enthusiastic the two founders were about running a clothing rental business.
5. Use analogies. Are there similar contexts that you can compare to and learn from? If full-scale market testing is challenging because of geographic distance, pick something closer to 凯发k8娱乐全球公开home. A North American client of ours, for example, was exploring a new way to distribute its products in Delhi. It would have been costly to fly a team out to Delhi, so we encouraged the company to start by thinking through the logistics with a megacity closer to 凯发k8娱乐全球公开home, like New York City. There are countless differences between these two markets, of course, and we had to keep careful track of the assumptions that we were making. But as a cheaper way to test a few key hypotheses before further investment was made, this analogy was sufficient.
As with writing, the real work of innovation is not in the first draft, but in many subsequent cycles of iteration and editing. This doesn’t have to be an expensive or elaborate process. Business experiments can be quick and scrappy. If it works, keep testing and building. If not, move on to your next idea.
This article was adapted from Costovation: Innovation That Gives Your Customers Exactly What They Want—And Nothing More by Stephen Wunker and Jennifer Law (Harper Collins, 2018).
1. Janet Adamy, “For McDonald’s, It’s a Wrap,” Wall Street Journal, 30 January 2007
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