Entrepreneurship Research Guide : Testing
This guide is a collaborative effort between the Wisconsin School of Business and the Business Library.
One: Assess problem-solution fit quickly, cheaply if possible
How do you know customers value your solution to the perceived problem?
- Construct hypotheses to test important beliefs about customers’ needs.
- What makes people try your product or service?
- Who will be the first paying customer?
Two: Sharpening the ability to design good experiments
- Define the objective – what you want to learn – from your experiment
- Describe the data to be collected and how it will be acquired
- Secure permission from people you approach
- Use a sample of people that are a good proxy for your intended customer profile
- Include a control group for comparison
- Larger samples and repeated experiments provide more insights
Three: Sample techniques/frameworks
Suggested readings
The Lean Startup by Call Number: Available through UW SystemISBN: 9780307887894Publication Date: 2011-09-13Most startups fail. But many of those failures are preventable. The Lean Startup is a new approach being adopted across the globe, changing the way companies are built and new products are launched. Eric Ries defines a startup as "an organization dedicated to creating something new under conditions of extreme uncertainty. This is just as true for one person in a garage or a group of seasoned professionals in a Fortune 500 boardroom. What they have in common is a mission to penetrate that fog of uncertainty to discover a successful path to a sustainable business. The Lean Startup approach fosters companies that are both more capital efficient and that leverage human creativity more effectively." Inspired by lessons from lean manufacturing, it relies on "validated learning," rapid scientific experimentation, as well as a number of counter-intuitive practices that shorten product development cycles, measure actual progress without resorting to vanity metrics, and learn what customers really want. It enables a company to shift directions with agility, altering plans inch by inch, minute by minute. Rather than wasting time creating elaborate business plans, The Lean Startup offers entrepreneurs - in companies of all sizes - a way to test their vision continuously, to adapt and adjust before it's too late. Ries provides a scientific approach to creating and managing successful startups in a age when companies need to innovate more than ever.
- Why the Lean Start-Up Changes EverythingBy Steve Blank. Harvard Business Review. May 2013.
In the past few years, a new methodology for launching companies, called “the lean start-up,” has begun to replace the old regimen. Traditionally, a venture’s founders would write a business plan, complete with a five-year forecast, use it to raise money, and then go into “stealth mode” to develop their offerings, all without getting much feedback from the people they intended to sell to. Lean start-ups, in contrast, begin by searching for a business model. They test, revise, and discard hypotheses, continually gathering customer feedback and rapidly iterating on and reengineering their products. This strategy greatly reduces the chances that start-ups will spend a lot of time and money launching products that no one actually will pay for.
Blank, a consulting associate professor at Stanford, is one of the architects of the lean start-up movement and has seen this approach help businesses get off the ground quickly and successfully. He believes that if it’s widely adopted, it would reduce the incidence of start-up failure. In combination with other trends, such as open source software and the democratization of venture financing, it could ignite a new, more entrepreneurial economy.
There are numerous indicators that the approach is catching on: Business schools and universities are incorporating lean start-up principles into their curricula. Even more interesting, large companies like GE are applying them to internal innovation initiatives.
Value Proposition Design by Call Number: Online ebookISBN: 9781118968079Publication Date: 2015-01-28Value Proposition Design helps you tackle the core challenge of every business -- creating compelling products and services customers want to buy. A sequel to Business Model Generation this book explains how to use the "Value Proposition Canvas" to design, test, create, and manage products and services customers actually want. Value Proposition Design is for anyone who has been frustrated by new product meetings based on hunches and intuitions; it's for anyone who has watched an expensive new product launch fail in the market. The book will help you understand the patterns of great value propositions, get closer to customers, and avoid wasting time with ideas that won't work. You'll learn the simple process of designing and testing value propositions, that perfectly match customers' needs and desires.
Resources
- 3D Printing Services3D Printing Services available at University of Wisconsin - Madison