Founders and entrepreneurs are driven by passion, setting up visions and building startups to disrupt the world and change it for a better one. The pitfull of this entrepreneurial enthusiasm is that you might fall in love with your own idea which might result in losing connection with your end customer. And since it is the end customer who will ultimately use and pay for your solution this connection is of critical importance. It is the end customer rather than you who should fall in love with your innovation. Unfortunately far too often we, entrepreneurs, are creating moonshots that are difficult to land and with the hard fact that up to 75% of the products launched fail in the first year.
Startups are based on two simple elements: ideas and assumptions. The difference between a good and a great startup is in the ability to take the time to validate those assumptions. By validating core assumptions in the beginning of your journey you significantly reduce the risk of innovation, in fact you just save time, ensure and money. A validated set of assumptions assures you your startup’s business model will be able to weather the storms, be attractive and create a profit.
In this article, DCamp and Buffl will highlight how important it is to take the time to validate hypotheses and provide you with a framework to validate your hypotheses in a structured way. Simple steps to accelerate innovation and speed to market with a solid business model.
First focus is the world out there: the customers. You’ve made assumptions of their pain points but the question is whether these pain points are real or not. It can be tempting as a startup owner to think customers want the solution you are offering, but you really need to prove the pain is there: you need to validate the problem in order to validate the customers willingness to adopt your solution.
Validating a startup’s business model is reliant on six key behaviours: acknowledging, doing something, prioritizing, testing, understanding and adapting. You don’t want to approach validation without having a clear set of assumptions you are testing – if you haven’t defined your hypothesis carefully it will be hard to validate whether you’re are going towards market fit or digging a gap between what you're building and what the market is expecting.
Like a good entrepreneur and founder, you’re busy taking care of your business making sure it is running smoothly. The challenge is that often it isn’t that smooth at all and you often have to rethink how to improve your business model to grow further, faster, survive or simply make the end of the year with the current cash burn. In that challenge goes acknowledging something needs to be done. It isn’t the easiest thing but vital.
An interesting trick is before you wake up, stay 3 to 5 minutes seated on your bed and think about your day, the tasks you need to achieve and also think about your long term goal and how these tasks are helping you getting there.
In business like in sport the most difficult is not just “doing something” it is going out of your comfort zone for something impactful ( in sport it’s often simply going out of your sofa and go to the gym ;)). Once the founder has acknowledged he should work on certain aspects of his business (what we call hypotheses), now it is time to put things in action and choose a modus operandi.
We suggest to organise a deep dive going to a different physical space. Familiar surroundings reinforce traditional thinking and the office is full of distractions: chats with colleagues in the hallway, the temptation to duck into one’s office to catch up on email,...
You can go on retreat at the other side of the world, but to use your time more efficiently we invite you to take your team to a one day or 2 days offsite in the vicinity to the office or/and where the team lives. We prefer the 2 days formula as it helps you to disconnect completely from the frenetic pace of everyday business life.
Prioritizing your hypotheses is important. It’s one thing to have a hunch, it’s another thing to have a hunch that you can test. It’s crucial that your hypotheses are testable. If you can’t test and validate properly then you won’t be able to innovate and learn.
Not all hypotheses will have the same merit. Some hypotheses will be right on the money and precisely what your users are begging for. Other times, your hypothesis might go directly into the trash.
In order to not lose time testing everything you can use something like the “ICE” prioritization tool, this is a good exercise you can do alone or with your team and which can guide you to avoid falling off track when it comes to understanding which assumptions to pursue an why. ICE is an acronym for the three factors that should be considered whenever priorities are set: impact, cost and effort.
Let us show you how it works:
By analyzing which assumptions are having the best ICE score, you can begin to prioritize which assumptions to put to the test. Just because some assumptions don’t make the cut doesn’t mean they’re bad. Pop them in a backlog and come back to them another time.
There are a lot of questions which you need to be able to answer smoothly. First you should dive deeper in your customers world. Which problem they face? For which target group this problem is most outspoken? What are the pains and emotions customers currently face? Is your solution a valuable means to solve the customers problem? Which key features should you implement? Are you able to grab that value and create a product people are willing to pay for?
If you answer this question in a logical order this job might be easier than you think. Focus, know what you know and what you have to discover.
What are some of the ways you can test your hypotheses? There are many qualitative and quantitative methods out there which can help you test your hypothesis:
👉 A/B testing
👉 Prototyping and wireframing
👉 User testing
👉 Demos and previews
👉 Surveys and questionnaires
👉 Blogging about what you’re doing
👉 Use websites like Reddit or Quora
👉 Google Ads
You don’t have to do all of those. Some methods will be more suitable than others for what you’re trying to do.
If you’re building a new feature, asking users via Buffl could help you gain quickly valuable feedback. Likewise, A/B testing can help you make a decision over two different UI elements. It all depends on what exactly your hypothesis is.
Once you’ve conducted all of your tests, making sure to capture all your data along the way, debrief with your team to go through the data, synthesize it, and capture learnings.
Some of your hypotheses will have been straight up invalidated while others will be proven true. But more often than not, the reality is more murky: your hypothesis might have been true, but not for the reason you thought; or your hypothesis wasn’t true, but in showing it to be false exposed to a deeper truth that hadn’t been articulated.
The “understanding” step can be messy, but it pays to take the time and pour over your results carefully. It will eventually help you accelerate your way forward.
The critical thing to realise about a business model is that it cannot be set in stone. When you are validating your core hypothesis, you might notice that things require refinement. Don’t be afraid to go through with this process and change your model but be clear with your focus and what you and your team are going to do to make it happen.
To help you be sharp with your way forward we have developed a framework to help you be focus-perfect, accountable and where you indicate the things you will start doing, stop doing and continue doing and commit on a timing. Because there is a strong correlation between starting doing and saying stop to other activities. We all have 24 hours in a day. Therefore, “hustling” harder can only get us so far and a dream without a plan stays a dream...