Testing Business Ideas

The Iterative Process

Business Concept Design

Design is the activity of turning vague ideas, market insights, and evidence into concrete value propositions and solid business models. Good design involves the use of strong business model patterns to maximize returns and compete beyond product, price, and technology.

The risk is that a business can’t get access to key resources (technology, IP, brand, etc.), can’t develop capabilities to perform key activities, or can’t find key partners to build and scale the value proposition.

Testing and reducing risk

To test a big business idea you break it down into smaller chunks of testable hypotheses. These hypotheses cover three types of risk. First, that customers aren’t interested in your idea (desirability).

Second, that you can’t build and deliver your idea (feasibility). Third, that you can’t earn enough money from your idea (viability).

You test your most important hypotheses with appropriate experiments. Each experiment generates evidence and insights that allow you to learn and decide. Based on the evidence and your insights you either adapt your idea, if you learn you were on the wrong path, or continue testing other aspects of your idea, if the evidence supports your direction.