Moving faster and cheaper when creating new product and service ideas separates successful innovators from the pack. Here’s how to use Lean Startup strategies to market test your ideas with customers faster and cheaper – To save money, time, and increase innovation success.
These days, just about every company and innovator wants predictable and measurable innovation. The problem is that most companies aren’t set-up for fast-cycle time, lean-startup type innovation.
Jeff Bezos recently voiced a dirty little secret about disruptive innovation: it’s not just about creating groundbreaking new products and services, it’s about creating groundbreaking new products and services that people actually want to buy. “At Amazon, we’ve had a lot of inventions that we were very excited about, and customers didn’t care at all,” Bezos said. “And believe me, those inventions were not disruptive in any way. The only thing that’s disruptive is customer adoption.”
A company like Amazon can obviously afford a few big misses and sales flops – like it’s failed attempt to get into mobile phones a few years back. But for most organizations, especially startups and smaller firms, distinguishing between the next Kindle and the next Fire Phone before they come to market can be the difference between survival and bankruptcy. That’s why so many companies now spend sizable chunks of their research and development budgets on things like focus groups and market research. The problem is, oceans of extraneous data often swamp decision makers and stall progress, and a company’s competitors are usually all looking at the same research, which makes finding truly differentiated ideas a monstrous challenge.
Smart management teams at new and mature organizations alike have started to recognize these challenges. In response, they’ve implemented budget-friendly strategies that both speed up and enhance the innovation process. Here are five approaches that can help businesses of all sizes prove out new concepts, ratify market needs, and jumpstart innovation without breaking the bank:
1) Market Test by Counting the Clicks. The key to innovation is iteration. Get stuff into the world, see what comes back in response, then refine, retool and repeat. The challenge is to iterate as efficiently as possible, allowing the best ideas to continue to evolve while abandoning uncompetitive concepts. Adobe’s “Kickbox” innovation toolkit gives employees $1000 prepaid credit cards to place online ads for new products and services that don’t yet exist. The ads are not allowed to mention Adobe’s brand, especially since most ad links don’t go anywhere. New product taglines and descriptions have to garner clicks on their own merits, which lets the best ideas bubble to the top. While many companies may not have the budget to dole out $1000 a pop, smaller ad buys can still provide insight. Adobe’s Kickbox is now open-source, as well, making it available for other organizations to use and tailor to their own needs.
2) Test Drive Lean Concepts. Another strategy to measure an idea’s value proposition is to create a beta version website for it early in the development cycle and simply count how many people are willing to sign up. If a high percentage of visitors volunteer to test out the product for you as you perfect it, you can move forward with confidence that you’ve almost certainly tapped into a market need. Zappos founder Nick Swinmurn snapped the site’s first product photos at local shoes stores and paid full retail prices to fulfill his initial orders. The goal was to create a cheap website with no inventory to test whether or not people would buy shoes on the internet. He didn’t make any money on the sales, and might have even lost a few dollars, but the proof-of-concept for a future billion-dollar enterprise was clearly established.
3) Build a One-Page Business Plan. One of my favorite innovation projects, which I featured in my first book Leapfrogging, was Kimberly-Clark’s Huggies MomInspired Grant Program. After inviting aspiring “Mompreneurs” to submit one-page business plans, the company funded dozens of exciting new ventures. Limiting the submissions to a single page wasn’t just a time-saving strategy for the folks judging the proposals. Like the online ads in Adobe’s Kickbox program, the space constraint compelled applicants to crystallize their ideas into easily digestible formats. The best part of one-page business plans is that they facilitate, rather than discourage feedback and collaboration. It’s hard to get a large number of people to pore through a detailed prospectus, but just about everyone can carve out a few minutes to offer their thoughts on a page-long overview. Thus, one brief email to trusted colleagues, mentors, and even family members can generate a large and invaluable trove of feedback.
4) Seek Quality Customer Insight over a Quantity of Market Data. Good data is priceless, but early in the innovation process a small sample size often produces better insight than even the most exhaustive report on wider quantitative trends. Chuck Templeton came up with the idea for OpenTable after his wife wasted hours on the phone one night trying to make dinner reservations for a family visit. Chuck didn’t need further proof to ratify a market need. He was experiencing the effects of that need in real time right in his own living room! The lesson of Chuck’s experience is not to discount the views and opinions of the people we trust the most in our personal and professional lives—especially if they are reliable representatives of our target markets. Want to know if an idea will resonate? See if it resonates with your friends, family, and colleagues first then work outward from there.
5) Look at Competitors (and let them do the hard parts). It’s almost impossible to come up with a truly unique idea. Competition always exists. Even the most innovative businesses usually contend with comparable ventures. And that’s not necessarily a bad thing. Related business models can accomplish much of the hard work of proving out a concept. They can also provide valuable opportunities for differentiation. AirBnB’s first pitch deck for investors specifically cited services like couchsurfing.com and Craigslist in order to validate the potential size of the home-sharing market and introduce the company’s plans to capture market share by offering a better alternative. Nick Swinmurn used the mail order catalog business in a similar fashion when he was building Zappos. At the time, five percent of all shoes were sold by catalog, totaling $2 billion in sales. Swinmurn recognized that if that many consumers were willing to go through the hassle of mailing in handwritten catalog forms, he could grab a much larger slice of the market with an online platform.
In today’s world, faster and cheaper can actually mean better. Some call it lean start-up strategy. Others call it fast cycle time. While still others calls it rapid iteration. Whatever you call it, companies that perfect the process of developing imperfect ideas have the best chance of finding products and services that people will actually adopt – the only sure path to market disruption.
Soren Kaplan is the bestselling and award-winning author of Leapfrogging and The Invisible Advantage, an affiliated professor at USC’s Center for Effective Organizations, a former corporate executive, and a co-founder of UpBOARD. He has been recognized by the Thinkers50 as one of the world’s top keynote speakers and thought leaders in business strategy and innovation.
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