Design an experiment to begin validating business model assumptions
We have entered the phase of this class where you need to actively begin validating the various business model assumptions you have. Some of you have already started. All of you are expected to speak with at least 100 people over the semester in order to validate the many questions you need to answer. You also need to track this information and put it into the feasibility plan. This assignment is designed to get you jump started with conducting experiments around your business idea. You are expected to continue with rapid business model experimentation for the balance of the course, and report your findings using the "tracker" spreadsheet (see link below).
Video: Testing Your Product and Getting Feedback - (12:17)
One of the main reasons a business fails is because the entrepreneur thought their idea was good, only to discover that the idea really didn’t appeal to many potential customers. The lean startup method allows us to validate the many business model assumptions we have, so we never end up launching a business that we "think" is a great idea. By working through a rigorous process of validating the assumptions we think are true, allows us to know, not think that the business has potential for success. When working on a new business idea, or a new product/service offering through your existing business, the lean startup method we are using in this course is based upon applying the scientific method, of hypothesis testing to a business model. In this activity, you will be introduced to two tools that will help you to develop and design your experiments. These experiments will test the many assumptions you have about your business. Generally, we prefer going after the most critical assumptions you have. This means that you should select an experiment that will validate or invalidate the critical core assumption you have about your business. In other words, if you were to discover that this critical assumption was not true, you would stop working on the business idea, and move on to another.
To complete this task you will need to download three documents: 1) The Experiment Tracker (Excel), 2) An article about how to conduct an experiment, and 3)The Startup Experiment Design Tool
Open the Startup Experiment Design Tool in Microsoft Word. If you did not download it already, click here. This tool has 6 phases or sections, and 14 steps. For this assignment you will be developing an experiment, and then uploading the Startup Experiment Design Tool to canvas. Over the next few days you will conduct your experiment to validate a business model assumption.
In order to develop your first experiment, begin with Phase 1, Step 1, and stop at Phase 5, Step 12. Please note that "Step 3 - Define your solution" should be skipped until you have validated the customer group and problem you are trying to solve. You should never introduce your solution early on with your research, until you know that the problem is real, and you know what group of people have the problem you wish to solve. Once you work through the form to Step 12, you will have created your first hypothesis and selected the type of experiment you are intending to carry out.
There are three basic types of experimentation you can consider for this process: 1) Exploration. Exploration research is easiest, because you simply have to either observe others (easiest) and take notes without engaging in live conversation, or engage in an in-person interview (a bit more difficult) that involves approaching people you do not know, or hosting some kind of focus group. For exploration research you have pre-determined questions that you seek answers to through either observation or by interviewing people directly. Some questions should be open ended discussion questions (qualitative), and other questions should be measurable or quantitative scaled questions (i.e. on a scale of 1-10...). 2) Pre-sell. A pre-sell experiment has many different variants. It is designed for someone that has already validated the customer segment and the problem that those customers are experiencing. By trying to pre-sell, a product/service solution can tell you a lot. Do people like your solution? Are they willing to pay? Do they understand why it is beneficial to them? Even when you do not yet have the product or service available, pre-sell experiments can be used to measure customer interest. For example, by creating a landing page website, you can send people to the website, ask for their email address if they are interested in learning more and see if people are willing to do so. 3) Concierge. A concierge experiment is when you test your solution out by delivering the solution to a group of prospective customers. For example, let’s say you wanted to startup a pie company. You might bake some pies and rent space at a community market and see if people are willing to but the pies and/or give you feedback.
Once you complete filling in the form, upload it to this canvas assignment.