http://www.storyboardthat.com/articles/b/validate-business-idea

SBT's Illustrated Guide to Product Development

Validating Your Business Idea and Assumptions

By Aaron Sherman


This is the fifth part of our Illustrated Guide to Product Development series.



Throughout this series we have extended a product idea into a business concept, the beginning of a Go-to-Market Plan and developed personas to correspond to all of these parts. We have also warned repeatedly that the biggest risk a company, new product or service has is making something nobody wants.

In this article we are going to dissect a few assumptions we have made, how they impact our work, and how we can test them. Many of the aspects of our business plan require the previous assumption to be true, but if all of a sudden the previous assumption is false, large parts of future work can and should be skipped.

For this, just getting started you may want to review The “Elevator Pitch” as we discuss our solution for Social Local Mobile Food Alerts, affectionately called SoLoMoFoo.


Identifying Key Assumptions

Let’s go back to a few key scenes from our very storyboard about SoLoMoFoo. In this storyboard we see Baking Bridget happily bringing in cupcakes to work, alerting her co-workers, and Hangry Henry enjoying a snack. To make it even clearer, I have relabeled the storyboard with the assumptions.

By coincidence the magnitude of the assumptions are in order, but it is typical that each cell in the narrative relies on a previous assumption.

SoLoMoFoo Core Assumptions
Create your own at Storyboard That Assumption 1 Assumption 2 Assumption 3 People will make food and want to give it away for free at work. People will be willing to go to the effort to post and watch for free alerts. People will eat free food found in the kitchen. Share Food Cupcakes in the Breakroom! Cupcakes in the Breakroom! I hope people find my cupcakes! ALERT!

Example

Start My Free Business Trial

Sanity Checking Our First Assumption

People will make food and want to give it away for free at work.

How can we test if Baking Bridgets and Bobs are real?

In order for SoLoMoFoo to be useful, it has to provide a healthy frequency of alerts of free food and enough free food with each alert that users are left finding a snack if they want one, and not one of hundreds of people showing up for cupcake remnants. Engaging our crack team of analysts, we can determine an optimal ratio of frequency : food : users : happiness.

Now that we have a nice complicated formula for return on cupcakes baked, we can send a survey to 100 average office workers and ask them:


With this data and our formula we can have a sense if there are truly enough Baking Bridgets and Bobs.


What if the survey gives data we don’t like?

The best scenario is your quick test says you are 100% correct. This is rare and unusual on your first try, so you may want to double check!

On the other hand, you should be thrilled if the survey says your assumptions are wrong! At this point we have invested the time to make a storyboard, think about our storyboard, talk about our storyboard, and the time to make and send a survey. If we find out our idea doesn’t work, we still have time to change our idea before we run out of time and money!


Think of how expensive it would have been to build this entire platform, only to find out the supply side doesn’t work!


After taking a few deep breaths to collect ourselves, it is now time to start thinking of another scenario where the product could still work. We have noticed in our own office that while Baking Bridget may appear once a quarter, twice a week there is a catered lunch meeting, and Lunch Meeting Larry always orders a few extra meals to cover dietary preferences and restrictions. Truth be told, I may be spilling some leftovers on my keyboard as I write this…


Putting it Together

This storyboard shows the first three assumptions listed, an empirical test to validate or reject the hypothesis, and a potential change to our storyboard if we need to iterate.

SoLoMoFoo Validating Assumptions
Create your own at Storyboard That Baking Bridget Exists Survey Office Workers Switch to Lunch Meeting Larry People Will Use an App Offer a Cupcake to Install an App Ring a Physical Bell People Like Free Food Leave Free Food in a Kitchen Come Up with a New Idea People will make food and want to give it away for free at work. Create a survey to determine how many people bring in free food, and how often. ALSO create a formula with a baseline required to pass. Switch the scenario to food being provided from left over meetings and see how this evolves the product. People will be willing to go to the effort to post and watch for free alerts. This assumption is really two fold: 1) Will people install an app to RECEIVE free food? 2) Will people install an app to PROMOTE free food? Create a physical mechanism to alert people in the company about free food. No app required! People will eat free food found in the kitchen. Test if people will eat free food in a kitchen, we can go and buy cupcakes and leave them in the kitchen. Come back an hour later... Probably all gone. If no one wants your cupcakes, get a glass of milk, eat your cupcakes, and brainstorm a new business idea! Assumption Test Change if Test Fails FREE FREE Share Food Cupcakes in the Breakroom! Cupcakes in the Breakroom! 4 Times per Year Do you bring food in to share with your office? How many average servings are there? 10 Servings If I give you this cupcake, will you install SoLoMoFoo? Ring bell to alert people to free food! Ding Ding FREE I hope people find my cupcakes! I hope people find the left over Chinese Food! ALERT! Hmm...

Example

Start My Free Business Trial

Throughout our storyboards we intentionally littered our examples with lots of unproven hypotheses, since we believe in our business and in yours we are constantly making big assertions and assumptions that we will need to test and iterate on.


Other Big Assumptions We Made

  1. There is even a desire for this product over just leaving free food in the kitchen which seems to work well enough …

  2. HR would be the target customer to actually pay for this

  3. IT would be willing with security concerns to actually deploy the application and then have the time to do this

  4. Management wants employees spending more time eating cupcakes and less time making TPS reports

  5. What other big assumptions did you see here?


Digging Deeper with Minimum Viable Products

Identifying, testing, and iterating over your product assumptions is one of the most important parts of product development. Very few business ideas or assumptions are correct, and it is only be methodically testing, learning and improving will you be able to create world class products.

My absolute favorite book on this subject is Lean Startup by Eric Ries , which I re-read regularly. He has taken this concept of incredibly tight feedback and testing loops and paired them with the solution of making a Minimum Viable Product (MVP). An MVP is the cheapest simplest possible solution/prototype to see how real customers react to your ideas, and it enables powerful learnings at a fraction of the cost.

After years of my own product development experiences I found the philosophies of MVPs and Agile Development echoed by what I had seen again and again, but didn’t have the terminology, or a 10,000 foot viewpoint to explain. When I, Aaron Sherman, created Storyboard That, my goal from day one was to empower product developers to

  1. Be able to sit down and express their product ideas in a more natural, storytelling way

  2. Make it simple to share ideas (think of how simple and clear the examples have been)

  3. Get real feedback from stakeholders and potential customers

    • This is the MVP.


Pairing this with all of the exercises we have done, we now have the tools and knowledge to think like a customer, create simple prototypes, and get feedback to make sure you are not part of the 90% of startups that fail, 42% from building a product no one wanted (Forbes).

Product Development Cycle
Create your own at Storyboard That Think Like a Customer Rapid Prototyping for Rapid Learning Learn From Your Customers Try to ask yourself about a real situation your customers would be in, and how your product / solution would help. As quickly as possible keep releasing new versions of your product to see how people react. Listen to both what your customers are saying, and observe their underlying less obvious problems. Team Alignment :< :( :)

Example

Start My Free Business Trial

Now It's Your Turn!

Now that you have created a large portfolio of storyboards, customer journey maps, personas, and all your other assets, take some time to look for your big assumptions. Think about what you would need to prove to know if your assumptions are true, and what you can do to test them.

After you have begun to compile a list, use the template below to document your findings and then go about the fun process of proving and disproving your hypotheses. I strongly encourage you to take at least an hour and write your thoughts down; it makes it much easier over time to verify you are truly learning and prevent revisionist assumption making!

Product Development Assumption Tester
Create your own at Storyboard That Key Assumption Test to Run Plan B What is the key assumption you are concerned about? Describe a quantitative test to prove or disprove your hypothesis. If your test fails, what is Plan B (or whatever letter you are up to)? Assumption Test Change if Test Fails

Example

Start My Free Business Trial

Storyboard That's Illustrated Guide to Product Development


  1. The “Elevator Pitch”

  2. Choosing the Right Go-To-Market Strategy

  3. Personas for Product Development

  4. Customer Journey Mapping

  5. Validating Your Business Assumptions


About Aaron Sherman

Aaron Sherman (@AaronBenSherman) is the CEO and Creator of Storyboard That (www.storyboardthat.com) – the award-winning, world leader in digital storytelling technology. Aaron founded Storyboard That in 2012 after 10 years working the full gamut of product development roles (Developer, Project Manager, Product Owner, and Long Term Strategist) across three continents (North America, Europe and Australia) to fundamentally improve how products were internally prototyped and discussed.

Aaron has spoken as a guest Lecturer to MBA students at Northeastern, and with General Assembly leading workshops on Product Development.


Further Reading on Product Development

Start My Free Business Trial

Help Share Storyboard That!

Looking for More?

Check out the rest of our Business Articles and Resources!

All Business Resources | Product Development | Negotiation | Business Frameworks | Film and Video Resources

Start My Free Trial
Want a Free Trial? Learn More about our Business Edition     Start My Free Trial
http://www.storyboardthat.com/articles/b/validate-business-idea
© 2017 - Clever Prototypes, LLC - All rights reserved.