September 5, 2018

The Best Time To Test Is BEFORE You Launch

How is business strategy like a new car? For one thing, if the strategy’s design isn’t quite right, the wheels can come off. Even worse, if the design is flawed, someone can get hurt.

Enter the crash test dummy, the handy avatar for disaster avoidance.

In tests of new cars, crash test dummies simulate the physical reactions of humans to worst-case-scenario conditions. Results allow car makers to reduce risk by identifying and addressing flaws in the car’s design before it goes on sale.
Business concept testing is the crash test dummy of strategy.
Just like a crash test dummy it addresses the point of greatest risk, which is usually demand.
For many products, testing demand can take place before a product is built in an environment that doesn’t just simulate the real world—it is the real world. Testing an offer for a new product online (“coming soon”) delivers data about target market, positioning, customer acquisition cost, and—most importantly—demand. It can avert disaster, particularly the kind that results from building the entirely wrong product.

Read on for examples of companies that used crash test dummy approaches prior to launch.

Creating Runway

Rent the Runway seems like a genius business, right? A riff on the so-called sharing economy, RTR enables its customers to rent special-occasion apparel when they need it at a fraction of the entire purchase price.

But the concept of renting high-end apparel was not a slam-dunk. Who knew if consumers would really sign up to wear a glittery dress that someone else had worn only days before?

In this excellent article, Jon Fjeld discusses how the Rent the Runway founders tested the most “severe” assumption in their business strategy: market demand. Severity is a measure of impact on a business’s strategy. By validating the assumption with the highest severity first, Fjeld says, ventures like RTR remove the greatest risk at the lowest cost.

(Click for summary; subscription required for full access)

Gut Check

Should you ever trust your intuition on big decisions like what product to build and how and when to launch it? Fans of Nobel laureate Daniel Kahneman of Thinking Fast and Slow fame will enjoy this exchange about when to trust your gut in business situations. Kahneman debates psychologist Gary Klein, who promotes the power of intuition in certain situations, and the result has some really useful tips for reaching good decisions—and not just in business. (Spoiler: nothing we read changed our belief in the power of testing to avoid giant screw-ups.)

Game Theory

As competition in games has increased, development costs have risen to meet players’ expectations of bells, whistles, and clever gameplay. With higher stakes, smart developers have shifted company cultures—no small feat—to embrace a process of “stage-gating” each step of development subject to market testing. This post by a Google Play business development exec is detailed—it gives a lot of examples of specific types of testing—but it’s also a fascinating study in how industry dynamics drive shifts in product development practices.

Your Turn

We get a lot of requests at Spark along the lines of “Can you teach our team what you do? We want to test demand/brand positioning/launch strategy.” At last, we are putting the finishing touches on a program to train small groups in a learn-by-doing methodology.

Drop us a line at hello@sparkno9.com for more info.

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