Monitor Your Business Model Tests to Validate Assumptions and Learn about the Unexpected
- Date: 2008-05-15 - Word Count: 410
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Why stay with an old business model, when you could have a better one? This takes identifying an idea you want to try. Next, you need to validate that idea. You are now ready to test your best ideas. By running more than one test at a time, you speed the chance that you will verify a good idea.
You want to get into the market fast with your improved business model. Freeing up resources from tests that are failing can help you do that. How can you speed up the process of making those resources available again?
Some of the tests will start to flop as soon as you begin them. That lack of results may come from finding out that a key assumption was wrong (for example, that it is easy to put together a prototype process to provide the new benefit), or from total disinterest by those who are supposed to be excited.
Many of these tests should be immediately and permanently stopped. Some should be re-framed and focused to reflect what has been learned, especially where there is an execution problem. In either case, little purpose is served by continuing with the planned test.
At each review ask why the test should continue any further and what will be gained. Often, the answer will be that the test should not continue and that nothing will be gained because as much useful information has already been gathered as one can hope for.
On the other hand, the unexpected will often provide clues to breakthroughs. Especially pay attention to situations where a customer buys a great deal more than you would have ever thought possible, and where customers ignore something that looks like a great deal.
In the former instance, you may simply be seeing leakage. A local unit of a national organization may be buying into your new offering for their whole company. That means that your test is working, but not as well as you thought.
Of even greater significance is the possibility that they have found a new way to use your offering. Ray Kroc's first introduction to McDonald's came from his curiosity about why one hamburger stand in San Bernardino, California was ordering so many more milk shake mixers than any of his other customers.
When customers ignore something you think will expand their use, you also have the opportunity to learn something valuable. What were you missing when you decided to run the test?
Copyright 2008 Donald W. Mitchell, All Rights Reserved
You want to get into the market fast with your improved business model. Freeing up resources from tests that are failing can help you do that. How can you speed up the process of making those resources available again?
Some of the tests will start to flop as soon as you begin them. That lack of results may come from finding out that a key assumption was wrong (for example, that it is easy to put together a prototype process to provide the new benefit), or from total disinterest by those who are supposed to be excited.
Many of these tests should be immediately and permanently stopped. Some should be re-framed and focused to reflect what has been learned, especially where there is an execution problem. In either case, little purpose is served by continuing with the planned test.
At each review ask why the test should continue any further and what will be gained. Often, the answer will be that the test should not continue and that nothing will be gained because as much useful information has already been gathered as one can hope for.
On the other hand, the unexpected will often provide clues to breakthroughs. Especially pay attention to situations where a customer buys a great deal more than you would have ever thought possible, and where customers ignore something that looks like a great deal.
In the former instance, you may simply be seeing leakage. A local unit of a national organization may be buying into your new offering for their whole company. That means that your test is working, but not as well as you thought.
Of even greater significance is the possibility that they have found a new way to use your offering. Ray Kroc's first introduction to McDonald's came from his curiosity about why one hamburger stand in San Bernardino, California was ordering so many more milk shake mixers than any of his other customers.
When customers ignore something you think will expand their use, you also have the opportunity to learn something valuable. What were you missing when you decided to run the test?
Copyright 2008 Donald W. Mitchell, All Rights Reserved
Related Tags: sales, growth, profitability, cost reduction, business model, business model innovation, sales increase
Donald Mitchell is chairman of Mitchell and Company, a strategy and financial consulting firm in Weston, MA. He is coauthor of seven books including Adventures of an Optimist, The 2,000 Percent Solution, and The Ultimate Competitive Advantage. You can find free tips for accomplishing 20 times more by registering at:www.2000percentsolution.com Your Article Search Directory : Find in Articles
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