When it comes to innovation, entrepreneurship, ventures, etc., there is too much theory out there: many books, guides, blogs, and videos. Everyone has the secret recipe for innovation to succeed. However, most business ideas fail within the first year. So, how can I make my business idea a profitable success? There is no simple answer.
There are tons of factors that contribute to the success or failure of business ideas: team members, skills, resources, market, and even the mindset of the people working on it.
As a validation studio, we’ve seen all. But what we find in common on those ideas that never flourish is the team’s mindset.
What is idea validation?
Idea Validation is the process of gathering evidence and learnings about business ideas through experimentation to make faster, informed, and de-risked decisions.
Why should you validate your business idea?
Imagine investing time, money, and all your efforts in creating a solution for a problem you believe many people have, and once it is launched, nobody is willing to pay for it. Google made that mistake a few years ago with the Google glasses. They created the product (invested money and plenty of resources), and no one really wanted or needed it.
The purpose of idea validation is to make sure your idea has actual demand and is not only “another cool idea”.
The experiment mindset
If you haven’t noticed, there is no “normal” anymore. The speed of change came to the point that every day is entirely different from the day before—new rules, new technology, and even new viruses. Peter Hensen describes it as the “never normal“. So if you want to be an entrepreneur, you and your team must adopt a growth mindset.
The Growth Mindset is a powerful concept developed by Professor Carol Dweck from Stanford University. This mindset teaches us that skills are built and nurtured. It’s about knowing you can constantly improve your hard and soft skills, regardless of age or accolades. In short, the Growth Mindset is the foundation for learning.
Adopting this mindset will help you become more comfortable with change, embrace failure, and quickly adapt to a new environment.
Understanding that learning is a never-ending journey allows you to make mistakes, indispensable for idea validation.
Validation through experimentation
Experimentation is the best way to gather insights from future customers. It helps you validate how desirable your product/service is, how profitable it can be, and how viable it is for you to build.
When you decide to validate your business idea, you’re not only innovative, but you’re open to receiving two different outcomes: validation or invalidation.
Be aware that 93% of all business experiments fail, so most of your experiments will inevitably fail. However, every failed experiment you run is NOT YET achieving validation. You’ll get there eventually, just not yet. When you follow this path of continuous learning, you’ll come to see failing as a learning opportunity.
Ideas, assumptions, and hypotheses.
An idea is in itself not a big deal. The challenge is to turn your ideas into action.
To validate business ideas, you will have to run many small experiments. We know that experimentation is the process of testing assumptions to reality. However, an assumption is not testable. Before validating an assumption, you need to translate it into a hypothesis, a measurable statement with a predictable outcome.
“If we do X, then Y% of the customer segment will behave in way Z.”
Selecting the right experiment
There are plenty of experiments you can choose to validate your hypothesis. We’ve listed +30 validation experiments and classified them by different stages of your innovation process. You can download it free here.
There are a couple of principles you can follow to know what type of experiment you need to run to validate your hypothesis:
- Speed over perfection: Especially for the early stages of your journey, when speed is crucial. Choose experiments that don’t require too much time or money to achieve perfection.
- The strength of evidence: Formulate an experiment plan to map the different experiments you have to run to validate your hypothesis. This plan will give you confidence in the evidence you collect.
- Use no-code tools: De-risk your solution and reduce uncertainty as much as possible before you commit to building anything. At this stage, you’re still trying to learn as cheap and as fast as possible.
Make evidence-based decisions
Once you have the numbers in front of you, you can look for patterns and define learnings. Looking back at your formulated hypothesis and success criteria should help you find learnings that are scalable.
When making your decision be aware of confirmation biases (tendency to search for, interpret, favour, and recall information in a way that confirms or supports priors beliefs) and remember to take time to analyse the evidence and learn, but always make a decision.
There is too much to learn about validation. We know how hard it is to digest all this information. So we created 60 page eBook with all you need to know about validating business ideas. Sixty pages sound long, but don’t worry. It contains actionable tips and tools you can use during your innovation process. It also includes examples!