As you may know, I’m a big advocate of idea validation – the activities around deciding whether you should pursue your idea. In a previous article, I talked about why it was important, and some ways that you can get an initial view of whether your idea is a good one.
With alarming stats on small business and new product failures, it still surprises me the number of people that don’t take idea validation to heart.
Actually, maybe it doesn’t.
Idea validation sucks
Market research, competitor research, talking to potential customers and users – it’s hard work… and not very sexy. In fact, it’s not much fun at all. You sit at your desk, checking competitor website after competitor website, doing keyword research or begging people to reply to your survey. Then you might dig through mounds and mounds of industry reports to get some statistics to back up your business idea. You might even put some inflated numbers on a spreadsheet to see if you can make any money. If you’re truly ambitious, you’ll try to test your idea – whack up a landing page and try to get people to sign up for your future product. Or maybe you go out and actually talk to some potential customers or users.
Let’s face it - many of you probably wouldn’t consider doing most of this. Most of you would rather go straight to building your platform or app, and turning your idea into a reality. That’s the sexy bit.
There are lots of reasons why people start businesses or build products, but if your goals in any way involve making money or they rely on lots of users, then idea validation is a critical step.
Let’s put it into perspective
Popped some acetaminophen or ibuprofen lately? Imagine pharmaceutical companies didn’t validate their ideas for new drugs; they didn’t spend years tweaking formulas, and researching their behaviours and interactions with the body. What if they just made a pill and starting selling it?
“But Karen”, you might say, “that’s different – I just want to build an app.”
Ok then, let’s look at something closer to home.
Founded by Eric Reis, “lean startup” is a product development approach that some of you might have heard of. Did you know that lean startup borrows from scientific method to build new products?
The theory is that traditional business plans don’t work for products that have a high-degree of uncertainty. Opening a new restaurant or starting a new skin care business both have fairly well-known business models that allow people to follow a standard path of product development. When the outcome of the product is not as sure, then Reis argues that experimentation is the approach required to confirm (or refute) the assumptions that you’re making about your idea. Therefore, you have to test every single part of your business plan (e.g. the problem your idea solves, the solution you propose for it, your target customers, the benefits the product provides, costs, revenue, etc). Until you do that, you shouldn't spend a lot of money developing your product. This process of testing could take 6 to 12 months to complete. You have to run experiment after experiment – using control and variable groups to prove (or disprove) a hypothesis.
Imagine idea validation on that scale?! Generally, this kind of validation requires a team of people and a heft monetary investment. However, the potential rewards are in the millions of dollars.
So, where’s the middle ground?
My view is to do the least amount of work possible to either prove or disprove that an idea is good one. If you're not sure, then dig a little deeper. Start with getting online, and doing searches on potential competitors and getting statistics on market size. You can get a lot of information online these days, which makes it a good place to start. You’ll soon find out pretty quickly whether an idea is feasible or not.
Don't forget to run the numbers. Platforms and apps have overheads and require ongoing updates. Make sure you have the money - not just to build one - but also to keep it going. On the revenue side, think about your pricing and how many users you need to cover your costs - and hopefully make some money. If you can't make it work on paper with sensible numbers, then it's going to be even harder to do it real life!
At the end of the day though, there’s no substitute for talking to people that you don't know – especially those that will be your users. So, start with a survey to get a feel for the interest. Follow it up with a few 1-on-1 interviews. You’ll learn so much from them about what they're really looking for.
Finally, if you want to really get serious about validation, look for ways to test your idea with real people. Can you get people to pay money for something that doesn't exist yet?!
Validation doesn’t guarantee success, but it can prevent you from making a mistake
Ultimately, there are no guarantees for success – which is maybe why people skip validation in the first place. The instinct to just “have a go”, is a strong one, and we don’t get anywhere by doing nothing. If money weren’t involved, I would probably agree. The experience of “doing” is so valuable and so powerful. However, if I have to spend 6 to 12 months, and $50K or more to build a product, then I want to be sure that I’m getting at least $50K of learning out of it! Otherwise, you’ll just have a hole in your pocket. At the end of the day, that’s what idea validation is all about. Will you get something out of developing your idea that is worth the investment? If not, then maybe it’s not such a good idea after all.
Want to get serious about validating your idea? Check out our Idea Validation courseYes! I want to learn how to validate my idea