How to Test a Business Idea?

How to test a business idea

The feeling you get when inspiration strikes, and suddenly everything in your mind falls perfectly into place. If this only happens more often?

But there is a five-step plan that helps you find a brilliant idea and make inspiration a habit.

How to find an idea

Often people have their daily routines and are busy with work, so it is hard to get fresh and renewed attention to existing problems.

One one of the first things you can change is to approach this problem from multiple angles. It means getting an understanding from other people of what their predicaments are.

For an established firm, you should pay attention to the most innovative and extreme customer. For example, Ikea designs are inspired by their creative and dedicated customers. They take part in furniture competitions striving to create the best new product out of the exciting pieces.

These sessions give them key insight to bring fresh ideas to IKEAs offering season after season.

You can not every time you need a good idea fly out of the country. But you can use well-timed breaks to reshape your normal thinking and encourage innovation.

It involves fully engaging the moments of reflection and encouraging innovation. When you got 30 minutes of quiet time in the morning or evening, use it to reflect on an issue you normally wouldn't think about in the context. It might surprise you what insight can arise.

Diversity is key to getting new ideas

diverse team

When we were children, we all had a large imagination. But something has happened. It is only about memorization in school, which becomes more important than generating new ideas and exercising our imagination. So over time, of course, our imagination got weaker.

We learned that it was childish and unimportant. So we pay attention to other things, and now we are paying the price.

To change, an organization needs to bring diverse and brilliant minds together to find new ideas.

For example, a paper-making firm called Stora Enso set up a pathfinder program. They put diverse teams together, picked candidates with all levels of experience in the firm, and set them on a six-week-long trip to different locations in China, India, the Us, and Latin America.

They were told not to come back with a simple Powerpoint presentation but nothing less than a revolution. And somehow, it worked; they succeeded. The Pathfinder team encourages the company leaders that sustainability is the key to growth. Their imaginative advice proved right now Stora Enso is a global renewable materials company.

So bringing together diverse and stimulating minds can old fashioned organization bring a new life.

Foster the spirit of experimentation

The biggest problem many firms face is that they can no longer respond to market threats and opportunities quickly. Such companies lost the ability and will to try new things. They simply stopped experimenting.

So, for instance, there needs to be an event with top executives where it is only about promoting new, experimental ideas. They get feedback from their colleagues, and the executives have six months to develop and refine their ideas into a proposal.

The main purpose of this example isn't to generate hundreds of new ideas. It is more about fostering the spirit of experimentation in a business that desperately needs it.

So come up with as many ideas and hypothetical plans as you can and consider them all. But consult customers, experts, and simple facts and abandon any ideas that are not good enough.

A company shouldn't ignore new ideas

It is easy to say that having a good idea is all it takes to succeed. You just sit down and brainstorm all it, and then comes the overnight success!

Unfortunately, in the real world, things often tend not to work out like that. You can't just throw an idea into the word undefended without protection from criticism or powerful support and expect to run itself. You make sure that is being taken seriously.

There are many barriers innovative ideas have to overcome in established organizations. Often ideas struggle to get heard, but anonymous companies and the start-up model encourage creativity, innovation, and initiative thinking.

The problem is in many organizations; the employer proposals are often ignored. So the company needs to cultivate an environment in which the workers know their innovative ideas are heard.

While you might not be lucky to have such a supportive environment, you can link your ideas to the company's past and its current aims and goals. That way, you can disguise ideas as something rooted in the firm's identity.

Use the ALIEN technique to generate new ideas

You have seen a few strategies for generating and implementing creative ideas. When you put them all together, you get the ALIEN technique.

ALIEN is an acronym and stands for:

  • A for attention to see the world with fresh eyes
  • L is for elevation removing you from a situation and approaching it from a different perspective,
  • I is for imagination, the vision of future possibility based on current situations.
  • E stands for experimentation
  • N is for navigation, helping your ideas to navigate in a sometimes uninterested world.

The ALIEN framework isn't magic, but it offers a toolkit to generate novel ideas in any situation.

Not all of your new proposals will revolutionize the world. But when you practice using the above-explored tools, you will find that you have more quality ideas over time.

Remember that every part of the ALIEN method is designed to help you overcome existing prejudice and narrow ways of thinking. It isn't about tapping into some kind of otherworldly realm where ideas just fly to you. Rather it simply allows you to rediscover the abilities you already possed. And use them in a more selected easier and normal way of thinking.

There might be resistance and even some fear when you try to shake up this habitual way of thinking. It is normal as you are worried about failing, but you can use this energy to find flaws in your idea.

You let the fear instead of preventing you from acting on your ideas and help you master your plans. Make any anxiety an extra tool, not an extra obstacle.

You don't need to wait for inspiration to strike. Use the ALIEN technique to better your everyday ways of thinking, see past your blind spots, and make having great ideas feel good again.

Biases can stop use from identifying problems, generating solutions, and putting great ideas into practice. To overcome your own blind spots, you need to rely on objective data and technology so you can form hypotheses and really test your ideas.

It is better to realize that you did things wrong when the data doesn't add up early rather than in months or years down the line.

How to test a business idea

While many entrepreneurs have a great idea for a new product, they often rush to bring the product to the market to make a fast profit. However, those who test and test will win longer-term.

You can experimentation save precious time and money by testing how desirable, feasible, and desirable your plans are, from risk reduction to data analysis.

What makes a great team

To test business ideas, you need a great team. But you need a team that has the right skill, and that can work together well. It is best if the people have crossfunctional skills and know the industry.

Some of the important skills are product, tech, data management knowledge, and sales and marketing expertise. Other necessary abilities are legal know-how for patents, trademarks, science, and whatever is needed.

While you might not always have the right people with such skills, you can always hire freelancers or people from other organizations. You can also invest in courses and technical programs to fill this gap.

A successful team is diverse with people of different genders, ethnicity, ages, and career. Because businesses need to impact people's lives, and the whole society and society includes people from all walks of life.

There are three specific behaviors that can help improve their performances:

1. A great team accepts that they can't always get things right. They need to be unafraid to experiment and test their assumptions and be honest with themselves when the results show they were wrong.

2. A winning team is highly customer-centric. They know exactly why the business can solve customers' problems and make their lives better, and they have a genuine connection to the people who their products. Also, they stay in touch with old customers as well as the newest ones.

3. The team has an entrepreneurial spirit to follow the mission and values of the business. They work fast and can solve problems creatively and validate new ideas. The right team has a feeling of urgency and momentum and wants to make things happen today rather than tomorrow.

How to shape and transform ideas

With the design loop, you can shape and tweak your initial ideas to transform them into the best possible business model. There are two phases of the design loop.

In the first phase, you come up with as many ideas as you can. But you don't just use your earliest idea; instead, you generate alternative concepts to progress your venture.

In the second phase, you synthesize by narrowing downfield for initial ideas and decide which are the most promising.

Another tool is the Business Model Canvas, a worksheet that helps you define the risk and opportunities that are associated with your business ideas. It is about looking at many aspects of your potential new venture by asking yourself questions and writing down the answers.

For instance, your targeted audience and the sort of people you want to reach. How do you communicate with these people what sort of revenue you want to get from the different customers? Ask yourself about the key resources and assets you need and what actives and tasks are important to make your business model work.

What key partners and suppliers do you want to work with? Answer all of these questions on your canvas.

The other useful tool is the Value Proposition Canvas to collate your ideas. You show your understanding of your customers' lives, how your offer creates value for them, and what they gain from using your product.

Also include information about the creator and list all the pain relives associated with your idea. What pain or fear do you eliminate that your customers are experiencing.

These tools are essentially a short version of a business plan but help you better understand your ideas.

Test your ideas with a hypothesis

When you have a promising idea, it is tempting to rush and implement it right away. But you should slow down because you already have a bunch of assumptions at this stage, and those can be wrong.

It is crucial that you test your assumptions before you rely on them. You can do this with a simple step-by-step process.

First, you make a list list of all the most important assumptions that underpin your idea. Then you turn these assumptions into hypotheses. These are statements you assume to be true, but you need to test to find out whether they actually are.

child programming

For instance, your idea is to create a programming course for children. You can start your hypothesis with a phrase like We think that parents will pay for such a programming course for their children. Then you and your team try to prove this assumption is true that parents would pay for such a course.

Based on the data you get, your hypothesis can be either proven true or false. For example, parents prefer a carefully crafted and fun way that teaches programming and is tailored to their kid's age group.

The best hypotheses are precise and not vague. For instance, a vague hypothesis would-be parents are willing to spend a lot on educational programs. But a pervasive one would state that parents are willing to spend $15 amount on an educational programming course.

Finally, useful hypotheses are discrete, so only test distinct things at a time. And interest hypothesis would state: "We think we can buy and distribute programming courses for a profit. This hypothesis has two different statements. One states We think we can buy programming courses, and the other states We think we can distribute such courses profitable.

These could lead to two separate experiments to test each hypothesis.

There are three different types of hypotheses that address three questions:

  • Feasibility hypotheses concern questions surrounding whatever it is possible to get your venture up and running with the resources and constraints you have.
  • Viability hypotheses answer the question about how profitable your idea is.
  • Desirably hypotheses address the question if your targeted audience actually wants your product or service.

Run experiments in the real world

As you decide on your hypothesis, you can test it by running some experiments. This necessarily doesn't involve additional investment or even new hires. It is better to run your own early experiments quickly and cheaply. It helps you run even more experiments, reducing your chance of spending time, money, and energy on things that won't work out.

There are some factors you need for an effective experiment. You first start with a precise, discrete, and testable hypothesis. Next, you decide what you can do to test the hypothesis. These are where you start experimenting accurately.

All experiments should have a metric component which is data that will be generated and measured when you run the experiment. Each experiment has criteria that define success and figuring how your data should look to conclude that your hypothesis is correct.

More experiments mean you get more data. This data gives you an evidence base; this is what you use to determine if your hypothesis is correct. But not all evidence is created equal. Business experiments have strong evidence and weak evidence.

Ask whether the evidence is based on opinion or fact because facts are more valuable than opinions.

You will get weak evidence if you only test potential customers in a controlled group with artificial conditions. The problem is customers know that you are watching/recording what they are saying, so they might behave as they usually would. It is better to run your experiment in real-world conditions where people don't know they are being tested.

Interview your customers

customer interview

You can part the different experiments into two categories discovery and validation experiments.

With discovery experiments, you can examine assumptions and determine wherever they are right. What you learn in these experiments allows you to correct your course fast if the evidence doesn't align with your assumptions.

There are a lot of useful discovery experiments. For example, you could conduct customer interviews to gain insight into the pains your customers have, what they hope to gain, and how much they would pay for your offer. Of course, such interviews don't produce as strong evidence as observing customers in the real world, but still, they are useful.

Interviews are quite fast and cheap and have straightforward to set up. They also give you an idea of how well your value proposition matches your customer's needs. And you get a rough idea of what your price point should be.

To do a customer interview, you should write a script and take notes during the sessions. Also, take notes on the body langue of the participants and aim to interview around 15 to 20 people. And use the insights you get to update your value proposition.

For even stronger evidence of your customer's desires, pains, and behaviors, you can do a website traffic analysis of your own site or a website from a competitor. You look at data reporting and analysis for websites to find patter of your potential customers' behavior. Think about what area of customer behavior you want to change

Simply look at the type of action you want to improve, wherever it is more sales, sign-ups, downloads, or views. Also, research and collect data that lead to the action. When are people dropping out, or what changed their minds? What is the weakest point in the step to reach your desired outcome?

You can use this information to make adjustments to your online presence.

How to validate your experiment

Once you have done discovery experiments, you can move forward and start with an important phase of validation testing. This phase will help you to know whether the path you choose is the right one. Has it led to promising concepts that meet your customer's needs, or did you get the wrong conclusion from the discovery phase? To this, out you need to continue testing.

One useful validation experiment is called a single feature MVP (Minimum viable product). Imagine you want to test an assumption about an important feature of your product if it helps your customer in the way you assume it will.

To this, you need to create the smallest version of this particular feature of your product and acquire customers to use it. You can ask for feedback about how satisfied they are with it.

An MVP experiment is quite cheap to run because you only produce a small and basic product version. But the evidence you get from these tests is very strong. The customers actually use your product feature rather than just thinking or talking about using it.

Additionally, you can charge customers to use your product, even if it is just a basic one-feature version. It helps you gain valuable insight into their purchasing behavior.

To make the MVP test a success, you need to spend a good amount of time setting up the feature and testing that it all works properly. After all, you charge customers to use it and take their satisfaction as evidence. Then you need to make it as great as it can be.

What you can also do as an experiment is crowdfunding. To do this, you need to set up an online presence and ask your targeted audience to provide start-up funding for your venture. This experiment gives you strong evidence about how desirable your product or service is. You can collect what people are interested in your idea how much they would pay for it.

How to avoid testing pitfalls

Sometimes the best plans don't work out. Failure will happen on the path to success, but you can avoid some common testing pitfalls.

The first trap is not to spend enough time testing. Teams underestimate the time it takes to run multiple, high-quality experiments. When it comes to experimentation, you only get out what you put in.

To ensure you experiment enough to dedicate time each week for your team to test, discover and adapt. Also, make a plan of everything you learn in the week, so you have something tangible to work towards.

Sometimes an unhelpful mindset can arise when you are too careful. If you spend too much time on your concepts, you properly fall into the trap of analysis paralysis. This happens when you can't move forward as you are preoccupied with choosing the right course of action.

It is best to simply test your ideas and see what the evidence says in such a situation. Don't get into long conversations that are based on opinions about what works or won't. Instead, base your decision on data that shows and hasn't been shown to work.

Make a distinction between a reversible and irreversible decision. If you know you can reverse a decision farther down the road, you don't need to think too much about it. But if it is irreversible, you need to spend more time on it.

You can avoid pitfalls by using the mantra "Strong opinions weakly held." It means that business leaders need to form strong opinions but keep an open mind about whether their hypotheses are correct.

This is where testing comes in because when you only stick to the first part of the mantra, you set out to prove that you are right. And not entertain the possibility you are wrong.

By creating an experimentation culture in your workplace, you can adopt this advice. This type of culture is built by discussing questions rather than answers and paying attention to evidence even when it isn't what you want to hear.


In the business world, a good idea isn't enough. Instead, you need lots of good ideas. Then you carefully choose the most promising concept to take forward. When you decide on a direction, it is time to test your chosen ideas and concept by doing reliable and cost-effective experiments.

This is the best way to find out if your idea works in practice as well as in theory.

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