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Library Of Tests To Validate A Business Idea

How to Select a Test to Get Market Validation for a New Product or Business Idea

Library Of Tests To Validate A Business Idea

To test assumptions for a new business or new product idea is among the foundations of the Lean Startup methodology.
By selecting the riskiest assumption, defining an hypothesis, testing it with customers and then analysing the results to decide the way forward, entrepreneurs can systematically reduce the risk of launching a new product.
This is extremely important, since 72% of all new products fail to generate the expected results in terms of positive impact on profit.

But how do we choose the right test to validate the riskiest assumption?
Any 3 pennies out of 4 spent during the early stage of a new business or product idea are very likely to be wasted, so it’s best to minimise by:

  • using cheap and quick tests when uncertainty is high
  • using more expensive and longer tests when the riskiest assumptions have been tested and validated already

In order to facilitate the difficult task of choosing the right test at the right time, I’ve collected a library of tests to get market validation, combining my personal experience with what the Strategyzer team have written in their Value Proposition Design bestseller book.

The tests are ordered below from the cheapest and quickest one to the longest and most expensive.
One note though: this is just an overview, intended to be a catalogue to facilitate choice, not execution. You will find in the text links to other posts where I’ve collected more details on how to conduct specific actions required by each test.
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value proposition market test

How to validate a value proposition with the least possible investment?

value proposition market test

The most exciting part of having understood customers frustrations and pains through interviews is to be able to come up with a value proposition ready to be tested and validated. This is important because without a valuable value proposition in place, no new product or business idea is ever going to work.

The thing that makes bringing to life a value proposition a critical stage is that at this point entrepreneurs and companies start spending money.
The size of the investment really depends from the type of business, but the key thing is: whatever the business is, the level of uncertainty at this stage is still so high that it’s imperative to minimize the expenditure, as it all might turn out in a massive loss.

The best way to approach this is to fake the proposition in the most credible way and test it on the field, with the objective of minimising potential losses in case something was fundamentally wrong or needs to be drastically changed.
This is a practice that Alberto Savoia called “pre-totyping“. He defined pre-totyping as “fake it and test it before you make it“. It’s quite clear what “make it” means in this case: do not necessarily start coding for months, or do not secure a premium commercial location on a busy road to open that organic restaurant. Instead, there are at least seven techniques to be explored to gather customer commitment, and possibly start collecting revenue, before putting big money on the table.
The seven techniques are roughly ordered below so that the ones requiring the least amount of financial resources are at the top:

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